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Date: 2/7/2023
NORTHAMPTON — The current owner of Hotel Northampton is eyeing plans to build a new hotel at 115 Conz St., which used to house the Daily Hampshire Gazette newspaper offices.
During the Feb. 2 City Council meeting, Mayor Gina-Louise Sciarra presented a proposal that would grant Rankin Holdings — the owner of Hotel Northampton and the Fairfield Inn & Suites — a tax break to achieve this project.
The proposal states that Mansour Ghalibaf, the owner of Rankin Holdings, intends to construct a 109-room extended-stay hotel with two additional retail/restaurant facilities at the Conz Street location. Ghalibaf bought the 46,000-square-foot Gazette building in June 2022 for $3 million.
If passed, the city would grant a tax break to Rankin through a process known as Tax Increment Financing (TIF). According to Sciarra’s proposal, a TIF reduces the incremental increase in property tax revenues generated by a redeveloped and improved property, reducing some of the project’s costs to make the project financially feasible.
“The incremental tax is the difference between the property’s existing tax assessment and the tax assessment of the property after the improvements have been completed,” reads the proposal.
The city is willing to grant such a break in return for a guarantee of capital investment, increased employment opportunities for local workers in creating hundreds of construction jobs and 50 new permanent positions.
“This will be a very significant redevelopment of that lot and that area, which will very greatly increase the value of the property, and therefore the taxes to the General Fund,” said Sciarra. “And it will also add to our hotel/motel excise, and there is a restaurant, to our meals tax.”
According to Sciarra, these additional hotel rooms will help build back some of the hotel rooms lost since the Clarion Hotel was demolished. If created, the new hotel would increase the city’s hotel inventory from 331 to 440 rooms, thus providing more room for additional visitors and tourists.
“Since losing that inventory, we are losing guests to other communities,” said Sciarra. “Therefore, we’re losing other business, as well.”
Aside from the economic effects, Sciarra also explained how this could benefit an “extremely tight” rental market. “Our scarcity of hotel rooms has encouraged the growth of the short-term rental market here in Northampton, which has greatly impacted our residential rental market,” said Sciarra. “Rents have risen beyond what many people can afford here.”
According to Sciarra, the current unimproved value assessment of the former Gazette building is $4.2 million. With just the building of the hotel, the value of the property is expected to increase to $6 million. Then, when the two retail/restaurant buildings are added afterward, the property value increases to $9 million.
Because of this, the proposed TIF for this project would last eight years to coincide with the construction and increased property values.The TIF would reduce the tax difference between the current property value and improved property value by 75 percent in year one, 50 percent in year two, 25 percent in year three, 15 percent in year four, 10 percent in year 5, and 5 percent in subsequent years.
According to the proposal, the property could host at least 22,000 guests per year, which could equate to the spending of $4.5 million annually in Northampton.
“A big piece of this is it’s a very nominal amount for the locality, but it helps access things at the state level,” said Alan Wolf, the mayor’s chief of staff. “It shows that the municipality has skin in the game for an important project that contributed greatly to our local economic profile.”
Ward 6 City Councilor Marianne LaBarge praised Ghalibaf for all they have done for the city when it comes to their hotel scene, calling Hotel Northampton “beautiful.”
“I feel that it’s the right way to go by doing the TIF with him because of who he is, what he does for the community, and what he does to his buildings,” she said.
Some councilors, however, want to further deliberate about the risk of labor concerns since Ghalibaf’s Hotel Northampton faced outrage over understaffing and disrespect from management back in 2015.
Ghalibaf eventually fought his workers’ efforts to unionize.
Community Resources and the Finance Committee will host a joint meeting to deliberate further.