Glens Falls Chronicle Serving the Glens Falls/Lake George region; Warren, Washington and northern Saratoga counties since 1980
By Cathy DeDe, Chronicle Managing Editor
Larry Novik, Bonacio Construction spokesperson and Director of Business Development, rejects depictions that their $36-million Spring City Development project on South Street has stalled.
“Nothing could be further from the truth,” Mr. Novik told The Chronicle.
“We are facing the same economic challenges that almost every construction project has, of rising inflation and interest rates…
“With those challenges, what has changed, a key element from my company’s strategy, is to consolidate Phases 1 and 2 of the project.”
Mayor Bill Collins told The Chronicle the City wants to see Phase 1 go ahead separately. The original plan was for Bonacio/Spring City to begin work on Phase 1 as early as last summer.
Phase 1 — called “Market Square” — would develop as mixed use residential, office and retail the former Hotshots bar on South Street, the so-called Incubator building on Elm Street and the former Sandy’s Clam Bar on South Street.
Mr. Bonacio already owns Sandy’s. The City’s Local Development Corporation owns Hotshots and the Incubator.
Market Square has DRI (Downtown Revitalization Initiative) funding, through New York State’s $10-million grant.
Combined with the City’s separate $5 million Market Center project, it’s included in a $6.2 million DRI grant leveraging $16 million in development, City Economic Development Director Jeff Flagg said.
Phase 2 of Bonacio’s South Street project is the two-building, 70-unit apartment complex in the current parking lots surrounding Sandy’s. It plans townhouse-style units facing Elm Street and mixed retail and apartments on South.
Phase 2 does not have DRI funding.
Mr. Novik said they plan to apply for the next round of New York State Home and Community Renewal (HCR) tax credits. The company was not successful this year in its first application for the credits.
The next round of credits won’t be announced until as late as next January or even February, all the parties said.
“Essentially,” Mr. Flagg said, “what Bonacio is waiting on is a 9% tax credit, and possibly other support from HCR, to enable them to afford to build the housing project.”
Mr. Novik said they’re “optimistic” that the next application will be successful.
Phase 2 is eligible as “affordable” housing (formerly “workforce housing”), in that it combines full market rental units and middle and low income units, in roughly equal parts, Mr. Flagg said.
“I think our project checks the boxes the state is looking for,” Mr. Novik said.
Mr. Flagg said, “If they wait and make it all one, the application looks better combined with the DRI phase of the project….It shows them leveraging existing public funding and private investment.”
Mr. Novik said, if the next application succeeds, construction could start “within months…we hope in spring.”
“This is our currrent strategy,” he said. “It is by no means our only strategy. We have no intent, if not the HCR, that we would give up. This is an excellent partnership with the City. We are trying to find solutions in tough conditions.”
Mayor Collins said, “Bonacio is not saying, ‘We want out of this.’ They prefer to wait until they hear about the tax credits. We say no. Our position is, we prefer you not wait. So, we are working with them to find ways to start Phase 1.”
He said, “It’s not an adversarial thing.”
“It’s not where we started,” when the project was awarded, Mayor Collins said, “but the world is a different place.”
Mr. Flagg said, “Federal interest rates have gone up 10 times” since Bonacio signed on for the project in April 2022.
Contract deadline extended to Oct.
“There is an expiration date,” for Bonacio to move forward, Mr. Flagg said.
The City just extended the original April 2022 development agreement for the second time, moving the deadline to negotiate an actual contract to October, Mayor Collins said.
Is there an “out?”
“The city has the opportunity in October to assess whether they want to continue the agreement with us,” Mr. Novik said. “My right is to buy the properties (Hotshots, Incubator and the South Street parking lot). I can’t buy them unless I can show the bank and investors that it is financially feasible.
“We would face significant losses if we were to go on and begin the project now,” without tax credits or other support, Mr. Novik said. Given current inflation and interest rates, “It’s that simple,” he said.
Mr. Novik said, “We have invested an enormous amount of money and resources in this project already” — he estimated “about half a million dollars…I don’t walk away from a half-million investment. We’re anxious to get going.”
He said, “Conditions have stabilized. Construction material costs are stubborn, but not going up.”
He said, “Economies of scale” would help if consolidating the Phases.
“If the HCR does not come through, we would look for other solutions,” Mr. Novik said. “We have loved our projects in Glens Falls,” referring to 14 Hudson that was supported in part with $600,000 in DRI funds.
Mr. Novik said, “We have loved the process with the City. We’ve worked hard and spent resources on this, and to watch it hit these challenges, it’s been tough…
“To those naysayers I’d say, I understand it’s frustrating. I ask, look at our track record in Glens Falls. These are teams committed to each other.”
Insist the state remains supportive
City officials and Mr. Novik said they expect the new application for HCR credits will be successful. “Affordable housing is a current state priority,” Mr. Flagg said.
“They want Glens Falls to complete this project and continue to be the showcase that they see us as,” Mayor Collins says.
He said the Department of State, which oversees DRI projects, “is working with us. They are anxious to see progress, but they understand the unique challenges. The money is not going away.”
The mayor said other state DRI projects “are falling apart,” but in Glens Falls, “we can show them, everything here is ready to go. We’re hitting milestones. We have Planning Board approvals on Phases 1 and 2. We will be breaking ground on the Market Center.”
He added, “The Elm Street ‘streetscape’ project is about to begin” — now combined with water and sewer infrastructure upgrades.
Have they considered dropping the ambitious two-phase plan and starting over, even with another developer, on the Hotshots and Incubator buildings only?
The mayor said the Department of State told him “Do not stop” when he raised that thought himself. “It’s too horrible to consider.”
“We’re not going back to any drawing boards,” Mayor Collins said.
“The smaller projects are the more costly,” Mr. Novik said.
The mayor said, “These are just the negotiations needed as part of a big $36 million project. We are working on the details but still moving forward. We believe we will be able to fairly quickly move forward,” once those details are worked out.
The bidders to work on GF Market Center
Six general contractors submitted bids to construct the City of Glens Falls $5-million Market Center project on South Street.
- Bunkoff General Contractor of Latham
- Murnane Building Contractors of Clifton Park
- VMJR Companies of Glens Falls
- MLB Construction Services of Malta
- LeChase of Schenectady
- O’Connor Company of Aberdeen, North Carolina
Bids ranged from a high of $5,300,090 (VMJR) to a low of $4,549,000 (Bunkoff).
The four subcontractor bids for Electrical are:
- Harold R. Clune Inc of Ballston Spa
- Stilsing Electric Inc. of Rensselaer
- O’Collell Electric Company of Victor
- Kasselman Electric of Menands
Bids amounts ranged fom $448,995 (O’Connell) to $559,239 (Stilsing).
“The Mechanical and Plumbing portions of the bid did not receive any responses,” City Purchasing Agent Deborah Vaughn said.
“Additional bidding will need to be addressed for the Mechanical and Plumbing contracts but should not hold up movement on the General Contractor or Electrical work is my understanding.”
— Cathy DeDe
Copyright © 2023 Lone Oak Publishing Co., Inc. All Rights Reserved
