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Iskalo makes new appeal for extra tax breaks for former Lord Amherst hotel

A developer wants the Amherst Industrial Development Agency to reconsider its request for $1.1 million in additional tax breaks for its rehabilitation of the former Lord Amherst hotel, but the agency won't do that as long as the developer continues its suit against the agency.

Iskalo Development Corp. contends the hotel qualifies for the extra tax breaks because it is a tourist destination. And it submitted an application with new information about the hotel, which will operate as the Reikart House within Marriott International's "upper-upscale" Tribute Portfolio.

David Chiazza, an Iskalo executive vice president, has explained his argument in writing to the agency, tried arguing his case to the IDA's executive director by phone and email and appeared at last month's agency board meeting in person.

"I can't seem to get anybody to talk to me," Chiazza said.

David S. Mingoia, executive director of the IDA, said the agency's litigation counsel has advised the board not to take up Iskalo's tax-break request as long as the company's litigation is pending.

[PHOTO GALLERY: Former Lord Amherst becomes Reikart House]

Iskalo sued the IDA one year ago after the IDA rejected the company's request for the additional tax breaks. A State Supreme Court justice decided in Iskalo's favor, but the Appellate Division Fourth Department in February overturned that ruling.

"We're not sure what the decision is going to be on Iskalo's appeal," Mingoia said.

Iskalo acquired the Lord Amherst Hotel, located at 5000 Main St. at the Youngmann Memorial Highway exit, in 2011. The company initially planned $9.9 million in renovations to the Lord Amherst to turn the 1960s-era building into a mid-range hotel and restaurant.

The IDA in 2012 approved $1.07 million in tax breaks to support the project, which is part of a hospitality campus that includes Iskalo's Hyatt Place Hotel.

However, after workers began asbestos abatement and demolition on the Lord Amherst, they discovered “rampant mold infestation” that required replacing every interior wall, according to court documents. This prompted Iskalo to abandon the mid-range project in favor of a 93-room boutique hotel and restaurant, and doubled the cost to $19.9 million.

So Iskalo returned to the IDA in March 2016 to seek $1.1 million in additional tax breaks. But in between the two rounds of incentives, state lawmakers modified the code to bar financing for retail projects unless the applicant proves it qualifies as a “tourist destination.”

The IDA staff supported Iskalo's application for additional tax breaks, but the board rejected it in a 4-3 vote.

Iskalo executives in their suit argued the IDA “acted arbitrarily and capriciously.” State Supreme Court Justice John Michalski agreed, citing no evidence or explanation to support the IDA vote. But the Appellate Division judges reversed that ruling earlier this year.

Amherst IDA wins appeal of Iskalo tax-break for Lord Amherst project

Iskalo has filed a motion seeking to re-argue the case before the Appellate Division, or for leave to appeal the decision to the state Court of Appeals.

But that's up to the court's discretion, Chiazza said. And, he added, he doesn't believe the company's pursuit of the court case has anything to do with the IDA's review of the new application.

In the new application, Chiazza said, Iskalo officials thought they could convince IDA officials that the project qualifies as a tourist destination. Since the original filing, the project has come into clearer focus, with its Reikart House identity, its connection to Marriott's Tribute Portfolio and with more details about the remodeling and operation of the boutique hotel and its restaurant.

Chiazza went to the IDA board meeting April 21 and addressed the board during the public comment period. No board member responded to Chiazza's remarks, and Chiazza said no one from the agency has talked to him since the meeting.

Sean W. Hopkins, Iskalo's attorney, also sent a letter to the board emphasizing the new application replaces the 2016 application that the board rejected, and arguing that approval of the additional tax breaks would resolve the ongoing litigation.

A Hurwitz & Fine attorney wrote back to Hopkins saying any future correspondence should go to the law firm, and not to the IDA board.

Chiazza said Iskalo won't drop its legal motion.

"I think I need to keep my options open," he said.

The litigation has proven costly to the IDA. The agency spent $100,000 in 2016 and budgeted $50,000 for this year on litigation costs, with much of the expense devoted to this case.

"I think the board felt it was important enough to spend the money," Mingoia said.

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