HADLEY — The town is in line to get a payment of around $60,000 a year as compensation for the conversion of a Route 9 hotel into extended-stay lodging.
The Hadley Select Board Wednesday, March 11, authorized Stephen Chaplin, an attorney with town counsel Mead, Talerman & Costa of Newburyport, to finalize an agreement with Amherst developer Barry Roberts. This will allow the town to continue receiving money, on top of taxes, from the use of the former Howard Johnson motel at 401 Russell St.
“The current annual amount on the table from the owner is $60,000 a year,” Chaplin said, adding that this is somewhat higher than the average occupancy and rooms tax provided to the town from Howard Johnson over the past five years.
Chaplin explained that he has been in conversation with an attorney for Roberts about the operation of the property, which since last summer has been The Residences extended stay, following its $6.5 million acquisition from J. Curtis Shumway of Hampshire Hospitality Group. Young professionals, college students and others have been among those using the rooms.
While there have been questions about the legality of turning the property into what could be considered an apartment building, which is generally prohibited under Hadley zoning, the question for Chaplin, and town officials, is how to bring Hadley revenue on top of the real estate taxes. As Chaplin explained, the loss of lodging taxes means the revenue from the property might no longer be commensurate with the demands it places on the town.
The current use, in which people living at The Residences have leases that run more than 30 days, doesn’t trigger payment of the lodging tax. Part of the deal between Shumway, operating as Amherst Development Associates, and Roberts, as Lewray LLC, is that the property can no longer be operated as a hotel.
Chaplin said officials could see this as an impact payment.
The Select Board vote means Chaplin can continue that process to formalize an agreement.
“On balance, I think this is a deal that is appropriate given all the different circumstances and factors at play,” Chaplin said.
While he had been planning a 10-year agreement, which would stay in place as long as the extended stay lodging remained, with a likely escalator clause, Select Board member Jane Nevinsmith suggested it be a shorter duration.
Select Board member David J. Fill II suggested the concept is similar to a payment in lieu of taxes agreement.
Chaplin agreed, noting that this payment will be an add-on to the real estate taxes, for Roberts’ tax purposes.