Work is underway on the South Street hotel with a target opening of spring 2025. A tax exemption was first requested in 2021.

PITTSFIELD, Mass.— The COVID-19 pandemic's effect on construction costs continues to delay an upcoming Holiday Inn Express.

On Tuesday's City Council agenda is a request to amend a tax increment financing agreement between the city and Somnath LLC, initially approved in 2021. The company is seeking a second two-year extension because of higher construction costs, supply chain disruptions, and the need to secure additional financing.

"Remember, all these businesses that get a TIF pay taxes and in the case of this hotel, once they're open there will be hotel, motel taxes that the city will be receiving as well," Mayor Peter Marchetti said on his biweekly television show One Pittsfield on Monday.

"So it's important to help businesses out as we go along to be able to help the city out too."

The new hotel is expected to create between 25-30 jobs, 15 of them full-time positions.

In 2022, the city approved a two-year extension for the TIF that would will forgive about $755,000 in real estate taxes while generating more than $1.27 million in tax revenue. The original build was estimated at $10 million and has been inflated to over $13 million.

Still, representatives Mauer and Dilip Desai expect for the hotel to open in the spring. Located behind the former Dakota Steakhouse, construction is well underway.

Marchetti said the family is well established in the community, having successfully owned and operated several hotels in Pittsfield and the surrounding area including the Best Western Plus on West Housatonic Street.

"We are requesting this extension as our original groundbreaking date and hotel opening date have been pushed back due to the COVID-19 pandemic,"  Mauer Desai wrote to the city.

"Increased construction cost and issues with the supply chain for delivery of materials pushed the start of the construction back. We were forced to seek additional financing to begin construction which resulted in a delayed groundbreaking. The construction is now underway, and we are confident in a spring of 2025 opening."

Also on the agenda is a proposed amendment to the city code's chapter on tax title agreements and an order of permanent taking by eminent domain of two parcels on Wahconah Street in connection with the Bel Air Dam.

Marchetti explained that the ordinance change is due to recent changes to the foreclosure and tax title process made by the state Legislature and signed by Gov. Maura Healey.

"The down payment requirement will now change from having to have a 25 percent down payment to a 10 percent down payment," he said.

"The maximum length of the agreement is increasing to 10 years from 5 and the percentage of interest allowed to be waived increases from 50 percent to 100 percent as determined by the municipality."

The requests for permanent taking on Wahconah Street is for the demolition of the Bel Air Dam.

Last year, $20 million in American Rescue Plan Act dollars were allocated to remove the deteriorating, potentially deadly dam on Wahconah Street. It has been an area of concern for more than a decade, with the city and the state Department of Conservation and Recreation conducting inspections, maintenance, and repairs. In 2020, it was identified as a high-priority project.

"For nearly 20 years, city staff have been concerned about the deteriorating state of the Bel Air Pond dam after local owner withdrew from their responsibility for maintenance and upkeep. Working closely with the Mass Office of Dam Safety, the city has been monitoring the structure and providing local support as needed," Marchetti explained.

"In 2019 an assessment of options was performed and it was determined that the best course of action was to seek wholesale removal of the structure."

Design engineering has been occurring since last year and environmental permits are nearly secured for removal of the dam and about 35,000 cubic yards of contaminated materials.

"For this project to proceed into construction the two parcels that make up the project site must be in local control," the mayor said.

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