Tax breaks granted by Ulster County for Nevele Casino project

A model to show what the future Nevele casino resort and spa in Ellenville will look like. Photo:Tania Barricklo – Daily Freeman

By William J. Kemble, news@freemanonline.com

KINGSTON >> The Nevele Casino, Resort and Spa on Wednesday was granted the payment-in-lieu-of-taxes (PILOT) agreement developers were looking for but lost support from an Ulster County legislator who said she felt deceived over the request for tax breaks.  Approval of a 15-year tax plan for the Wawarsing-based property was authorized during an Ulster County Industrial Development Agency meeting, with the Nevele to be given a five-year tax freeze at $173,104 followed by an incremented 10-year escalation to $11.56 million.  Officials said the payment plan will only be implemented if Nevele developers receive one of the seven state licences expected to be granted this year.

“If this licence isn’t granted, we have an authorization floating out there, but there’s no closing obviously because no one comes back to us to finalize the documents to close,” agency attorney Joseph Scott said.  Nevele officials have said if the tax freeze scheduled to begin when gaming operations start in October 2016 were turned down, there would have to be a $50 million reduction in the $464.67 million construction price to cover the financing.  Developers bought the former resort in April 2012 for $2,312,600 after a court battle with former owners. Plans for the project call for the site to be renovated and expanded to have a 446-room hotel; 70,000-square-foot casino; 22,000-square-foot ice rink; a conference center; and a golf course.  The applications also seeks exemptions for an estimated $15.35 million in state sales and use taxes and $3 million in mortgage taxes.
County Legislator Manna Jo Greene, D-Rosendale, following the vote said she was upset by the tax breaks because developers did not mention the application when seeking to sway her vote from abstaining to support on an endorsement resolution earlier this year.

“When this project came in front of the Legislature, one of the things that the developers touted were the tax benefits ... and now they’re asking for a PILOT,” she said.
“I had some concerns about a casino because I don’t believe that casinos are truly sustainable economic development,” Greene said. “But there are a lot of pros and cons and Ellenville certainly needs the economic boost and the jobs.”  Greene said developers, in a meeting before the endorsement vote, included an emphasis on solar energy, which is among her priorities when new projects are proposed in the region.  “I do not think we should be giving PILOTs to entities that are otherwise economically viable,” she said. “That was the picture that was painted. ... It leaves me with the sense that we are giving an unnecessary benefit to a developer.”  Developers during the session were met with some concerns about the absence of transparency involving financial backing of the casino, with agency board member Floyd Lattin questioning the wisdom of supporting a group that seeks overseas investors.

“ED5 is an entity based in Washington [D.C.] which pools investments from foreign nationals at a minimum of $500,000 per foreign national in order to get a theme park for residents in the United States,” he said. “Their web site talks about the fact that they look at projects that have an identified exit strategy of five to six years for their investors.”

Lattin, who voted in favor of the tax breaks, said his concern was based in recent closings announced among Atlantic City investors.  “I think that the obligation that ... we have as an agency is not only to foster employment growth but to foster sustainable employment growth,” he said.  “I think that [with] the capitalization of the Nevele, it’s very important to understand how secure and stable it is going forward because if we give you $100 million in tax incentives it’s a dramatic amount and we all hope that the project is successful,” Lattin said. “If we give you the tax incentives and you basically are unsuccessful and we face an Atlantic City sort of situation in two years it’s not a great use of our time.”

Nevele investment specialist Paul Hakim responded that investors would not have supported the application if there weren’t studies showing the long-term viability of a casino at the site.
“Multiple economic studies have been completed and due diligence has been completed by the investors,” he said.  Hakim said the Nevele is being developed differently from the plans used for Atlantic City casinos.  “When people go there, unfortunately, I think they just go gamble and they leave,” he said. “I think we’ve got much more to offer in the area. So we go back to the point of the [Nevele being] a destination resort.”