Editor’s note: this story has been corrected to reflect the fact that the Mahidas sold the Hilton Garden in 2018.
GREAT BARRINGTON — The town has entered into an agreement with the developers of the former Searles Middle School that would lower their tax burden substantially as the long-delayed project moves forward.
The tax increment financing agreement (TIF) was approved by the selectboard in executive session at its July 26 meeting. The agreement will also have to be approved and certified by the state Economic Assistance Coordinating Council.
The project was first made public in February 2015 when prominent hotelier Vijay Mahida appeared before the town Historical Commission to begin the process of designating the school building, the annex, and the adjacent gymnasium as a historic structure.
The Searles project, which will be known as the Berkshire Hotel, is a project of 79 Bridge Street Realty LLC, which is owned by Mahida’s wife, Chrisoula D. “Chrystal” Mahida, and Vijay Mahida’s brother Pravin, who also owns the Days Inn in downtown Great Barrington. Though the project has been somewhat scaled back in size, it will still be a major addition to the Bridge Street commercial corridor.
Neither Vijay Mahida, Chrystal Mahida, nor Dave Carpenter, director of administration for Mahida Hospitality, returned messages seeking comment for this story. The Mahidas’ holdings include the Fairfield Inn on Stockbridge Road, the nearby Monument Mountain Motel in Great Barrington and they owned the $14-million Hilton Garden Inn in Pittsfield, which opened in 2015. The Mahidas sold the Hilton property in 2018 for $7.7 million
Initial plans called for demolishing the school, but some preservationists and zoning sticklers objected, so Mahida finally agreed to retain the main brick structure of the 65,000-square-foot, turn-of-the-century-era school. After much controversy and debate, the project was initially granted a special permit at a special meeting of the selectboard in February 2016.
The permit has since been revised to eliminate a proposed restaurant and reduce the size of a meeting room. Carpenter told The Edge in 2019 that construction was slated to begin in the spring of 2020, which is when the COVID-19 pandemic brought the economy to a crawl.
At their August 9 meeting, members of the selectboard did not elaborate on what they had discussed two weeks earlier behind closed doors. Of the agreement and executive summary that was released on Aug. 9, town planner and assistant town manager Chris Rembold would say only that, “It’s really just an announcement to the public of what the board accomplished in its last executive meeting, so it’s a disclosure that the board did approve a TIF agreement for the hotel project at 79 Bridge Street.”
An exemption from state Open Meetings Law had been declared because holding the deliberations in public session “may have a detrimental effect on the town’s negotiating position,” according to the agenda. To read the TIF agreement and executive summary, click here.
The summary of the agreement, which was signed by Chrystal Mahida and all five members of the selectboard, says the redevelopment of the school will include an 88-room hotel, the same number of rooms as allowed by the first special permit.
A tax increment financing agreement is allowable by state law and provides an exemption on property taxes on the value added to the property by the participating business. The exemption can be from 5% to 100% on added assessed value for a period of 5 to 20 years, according to an explainer on the town of South Hadley website.
The town has negotiated TIFs with at least two other projects in the last 10 years: Thomas Borshoff, the former owner of the Castle Street firehouse; and the Community Development Corporation of South Berkshire, which developed an affordable housing complex at 100 Bridge Street.
Rembold told the board that in a TIF agreement, the developer agrees to invest an agreed-upon amount (in this case $15 million) that will result in a building that ultimately “increases the tax base and supports the downtown economy.”
“The town agrees to discount the taxes paid on the incremental assessed value of the property after the improvements are made,” Rembold said.
In order to remain qualified as a participant in the TIF, 79 Bridge Street must commit to building and maintaining the project “for lodging uses at least for the duration of the TIF agreement.”
The deal is expected to save 79 Bridge Street approximately $2.2 million in property taxes over the course of the 15-year agreement, whose duration was determined after consultations with Ross Vivori, Great Barrington’s principal assessor.
The agreement also says that, to the extent possible, the company will hire qualified Great Barrington residents for available job openings, hire local subcontractors and consult with local schools and youth organizations. If 79 Bridge Street sells the property, then the TIF agreement “offered by the town for the certified property runs with the facility.”
In return, the town will grant a real estate tax exemption on the incremental assessed value of the property as redevelopment proceeds. Incremental assessed value is defined as the difference in the assessed value of a property during the base year and the assessed value, including improvements, following the development of that property.
For the first of the 15 years of the agreement, the exemption on the incremental assessed value of the property is 100% and is reduced in increments of either 5 or 10 percentage points. By year 15, it will have decreased to 10%.
If 79 Bridge Street fails to live up to its end of the bargain, then the town can file a notice of default with the aforementioned state Economic Assistance Coordinating Council (EACC). If the project is decertified by the EACC, then benefits already awarded to the company “may be reclaimed or recovered by the town.”
In 2015, Vijay Mahida also acquired the old Magnuson Hotel on Route 7 in Lenox, which he demolished and intended to replace with a 100-room Residence Inn By Marriott and a conference center. That property remains unimproved. Mahida has been at the center, along with competing developer Joseph Toole, of what has been dubbed the “hotel wars” in Lenox and Pittsfield.
After the delays and scaling back of the project, there were persistent rumors that the Mahidas were spread too thin and had run out of money for expansion. Nothing could be further from the truth, Carpenter insisted in an Edge interview two years ago.
First, there was the matter of the hazardous material that had to be removed from some old buildings: the Searles School, built in 1898, and the annex, built in 1956. Both contained tiling with asbestos under them and surfaces coated in lead paint. It was a very expensive process that took several months. Even if a building is going to be demolished, as is the case with the annex, hazardous material must be removed and disposed of separately.
In addition, historical artifacts had to be removed, catalogued and given to town bodies that have an interest in preserving them, such as the historical commission and its chairman Paul Ivory. The school itself closed in 2004 when the Berkshire Hills Regional School District opened regional elementary and middle schools on Monument Valley Road.
The development cost is now estimated to be $15 million and construction is expected to begin in 2023 and last between 18 and 24 months. The Mahidas had originally indicated they expected to spend between $20 million and $25 million on the Berkshire Hotel project.
When the new special permit was issued in 2019, that number was reduced to between $17 million and $19 million. According to the TIF agreement, when the hotel becomes fully operational, the Mahidas expect to hire between 15 and 20 full-time equivalent employees.
