A developer seeking to renovate the former Washington Street School is seeking a 15-year Payment in Lieu of Taxes (PILOT) from the City of Newburgh.

The development group 191 Washington Street LLC seeks to convert the former 40,000 square foot school site, which is made up of the parking lot, school auditorium and classrooms into a mixed used commercial and residential site. According to documents, the former school building, which was built in 1958, has remained off the city tax roll.
191 Washington Street LLC, represented by partners Sisha Ortuzar and Erik Cooney appeared before the City of Newburgh Industrial Development Agency (IDA) last week to discuss the project.

For the PILOT and other financial related questions, on behalf of the IDA, MRB Group prepared a cost-benefit analysis report for the IDA and the general public for their review. According to the report, the total cost of the project construction and renovation was projected by MRB to be at $23 million. Ortuzar said funding for the project would be provided by the developer.

MRB reported that the current site is currently assessed at $1 million. Upon completion of the project, the assessed value would increase to $9.8 million by the 15th year, the first year of full taxes. This figure was estimated by the city assessor. For PILOT revenue, the report listed that in the first year, revenue generated would be $50,671 and would steadily increase year to year and by the end of the PILOT period, $3.1 million would be ultimately generated in PILOT payments. The construction phase would create 41 on-site and 12 indirect construction jobs, 53 in total that would generate $2.8 million annually. Once the project is completed, 47 jobs would still be available that would earn $2.8 million annually as well.

The fiscal benefits from the project included $18,635, associated with wages, which is a one-time sales tax revenue that would benefit Orange County. The county would also benefit from an estimated $456,872 sales tax revenue once the project is completed over the 15 year PILOT term. This figure would be related to ongoing jobs and local spending after project completion. $3.1 million in property tax revenue would be generated for Orange County, the city and the Newburgh Enlarged City School District and $2.8 million of sales tax revenue would be generated for the county from the retail spaces. Over the course of the PILOT’s span, the total benefits would be $6.3 million.

The report also listed a one-time sales tax exemption at $652,015 and a mortgage recording tax exemption at $215,393. This would total $5.5 million in net total exemptions over the 15 year PILOT schedule. However, this is a theoretical figure according to the report because should the PILOT not be approved, the project would not move forward at all.

The school auditorium was proposed to be a commercial space with a brewery serving as the main anchor tenant. Snowfall Brewing LLC, which is owned and operated by Nate Morey and his wife, Sylvia, had been in contact with Ortuzar who showed them the auditorium space and from there they both expressed interest in bringing their business to Newburgh. The new business, according to IDA documents, was anticipated to create 15 new full-time and five part-time jobs with three additional maintenance positions created.