PITTSFIELD, Mass. — The Finance subcommittee on Monday recognized the pandemic's impact on business and the benefits of a new hotel.

The panel supported a second two-year extension of a tax increment financing agreement with Somnath LLC, initially approved in 2021. The Desai family, who are well established in the local sector, plan to build a Holiday Inn Express at 1055 South St.

Councilor at Large Earl Persip III said this is a perfect example of what the council does.

"We support a local family that has multiple businesses in the city, that has done multiple things, and we're just helping them recreate something that they had had there at that spot once before, too," he said.

"So this should be celebrated, in my opinion, and I thank you for everything you do within the city because I know this is not your only business. You have many businesses and I know you support the community in other ways too."

Higher construction costs and supply chain disruptions reportedly inflated the 77-room hotel from $10 million to $13 million. Principal Mauer Desai said the cost per room key has even increased significantly.

"Each and every item probably went up individually," he said.

In 2022, the city approved a two-year extension for a 10-year TIF that would will forgive about $755,000 in real estate taxes while generating more than $1.27 million in tax revenue.  

The contract begins with 100 percent of the increments forgiven in the first four years, 80 percent in the fifth year, 60 percent in the sixth year, 40 percent in the seventh year, 20 percent in the eight year, and 10 percent in the ninth and tenth years.

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

"Supply chain issues have hit the project along with almost every other construction project nationwide," Community Development Director Justine Dodds explained.

"That has really delayed this project starting, and the appraised value remains exactly the same because the project has not been completed."

Desai said the project was started out of pocket in January of 2023, with about $1.5 million in funding initially.

"Our goal was to kind of put our money up, get the project so we can meet the TIF's timeline and our own timeline and we got to about July, we were funding the project, all site work, out of pocket and the loan closed," he said.

"But then we ran into this shortfall, and that was from an increase in almost each item and then because the price is now over $10 million, our [general contractor] also needed to be bonded."

He said they funded the project as much as possible and paused so that the GC could get the bond. It was secured in January and work picked back up with an expected grand opening next spring.

Ward 1 Councilor Kenneth Warren supported the extension but said the continued requests were "a little nerve-wracking." He asked for a breakdown of the increases.

Warren said this extension has nothing to do with COVID-19 but Persip disagreed.

"We're still feeling the effects of COVID. Lumber prices are still affected by COVID, supply chains are affected by COVID so I do disagree there," Persip said.

"We're in a completely different world than we were then but in the building world, we are still feeling the effects of COVID."

Desai emphasized that this will be in his family for many years. This is not the first hotel they have operated on the property.

Principal Dilip Desai was thankful for the extension and detailed his experience coming to the Berkshires as a 28-year-old and running what was then The Golden Key.

While giving a first-quarter review of fiscal 2025, Finance Director Matthew Kerwood said the new rooms coming online "clearly has an economic benefit to the city from a hotel-motel tax standpoint, which I think we all would want to see and encourage."

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