A state Supreme Court justice has ruled that the Amherst Industrial Development Agency was wrong earlier this year when it turned down Iskalo Development’s request for an extra $1.1 million in tax breaks for its revamped project to turn the Lord Amherst hotel into a high-end boutique hotel.
Iskalo executives had argued that the IDA’s rejection of the additional tax breaks was an “arbitrary and capricious” move by the agency’s directors, which in a 4-3 vote rejected arguments that the hotel qualified for tax breaks because it would be a tourism destination and was located in an enhancement zone that the town has targeted for redevelopment.
State Supreme Court Justice John Michalski sided with Iskalo in a ruling issued late last month.
The IDA said it would appeal the decision in the Appellate Division of state Supreme Court. Carlton N. Brock, Jr., the IDA’s chairman, said he believes the rejection of the additional tax breaks was “an appropriate and proper exercise of the board’s discretion.”
The Amherst IDA already had approved a $1.07 million package of tax breaks from the IDA in December 2012 for its original $9.9 million plan to renovate the Lord Amherst into a midrange hotel and restaurant. But Iskalo returned to the IDA to seek additional tax breaks after the cost of the renovation and environmental work at the property exceeded initial estimates, forcing the developer to drop its plan to open a mid-range hotel and restaurant at the site in favor a 92-room upscale boutique hotel and restaurant.
That pushed the price of the project up to $19.9 million, and prompted Iskalo to turn to the IDA for $1.1 million in additional tax breaks.
The IDA, in turning down the tax breaks, said Iskalo had failed to show that the hotel would be a tourism destination. Michalski ruled that it had.