Melville hotel project wins $4 million in IDA tax breaks
Hotel developer George Tsunis is proposing to build a 143-room Marriott Residence Inn at 500 Broad Hollow Rd., south of the LIE in Melville. Credit: Courtesy of Stephen Berry Architectural Design Inc.
The extended-stay hotel being proposed for Broad Hollow Road in Melville won $4 million in tax breaks from Suffolk County on Thursday.
The county’s Industrial Development Agency, in a 4-1 vote, gave preliminary approval for the 15-year incentive package for the Residence Inn by Marriott, to be located south of the LIE.
The hotel is being built by hotel operator George Tsunis, who recently began serving as the U.S. ambassador to Greece, and Rosario C. Cassata, who develops and owns apartment buildings.
The $39.4 million project follows the recent opening of the pair’s Hampton Inn & Suites by Hilton in Huntington village. That project incorporates the historic Huntington Town Hall and was awarded $3.2 million in IDA tax breaks over 15 years in 2020, according to IDA executive director Anthony J. Catapano.
The four-story, 143-room Residence Inn would replace a vacant, one-story office building. Amenities would include an outdoor pool, fitness room, dining area and meeting room.
In return for the tax aid, the developers have pledged to create 32 jobs after the hotel opens in July 2024. Records show the workers would earn, on average, $36,500 per year.
“Because of the tremendous challenges presented by inflation, supply chain issues and the difficulties in finding a lender that will underwrite a project of this size in the hospitality industry,” the developers’ attorney Mark A. Cuthbertson said, “a project such as this is not financially feasible without the economic benefits that will be provided by the IDA.”
The Residence Inn would provide needed lodging for business travelers and tourists, said Kevin Gremse, a senior director at the National Development Council in Brooklyn, who analyzed the project for the IDA.
He said the nearest extended-stay hotels are the TownePlace Suites by Marriott near Republic Airport in Farmingdale and the Homewood Suites by Hilton in Melville. A Residence Inn in Plainview closed in 2018 and was converted to senior housing with help from the Nassau County IDA.
The incentive package for the new hotel consists of a sales-tax exemption of up to $1.7 million on the purchase of construction materials and equipment, up to $195,000 off the mortgage recording tax and $2.1 million in property-tax savings over 15 years, or a 34% savings.
Even with the assistance, the new hotel would provide $271,000 per year, on average, in Payments-In-Lieu-of-Taxes to local governments compared with the $26,000 in taxes that the property generates now.
IDA board member Joshua Slaughter, in opposing the tax aid, said, “I don’t totally get that this is needed” by consumers.
The Residence Inn is the second hotel project to be proposed for the site, which is surrounded by office buildings. In 2015, opposition from the neighboring buildings’ owners scuttled a zone change needed for a Hyatt Place hotel.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
