WALLINGFORD — Area hotel managers are concerned that the town is considering special tax abatements for a local developer looking to complete a partially built Route 68 hotel.
During a special March 18 meeting, the Town Council will discuss and possibly act on a tax-fixing proposal from Robert Winston, owner of Winston Hospitality Inc. The proposal would allow assessment increases to be phased in over a seven-year period once the hotel is completed, leaving Winston paying higher taxes near the end of the deal. Winston has said this would allow him to receive more favorable financing. Through the deal, Winston said, he would be paying the same taxes — about $670,000 over seven years — as would be required through the town’s 25 percent tax abatement program offered in the I-5 zoning district. The Town Council made hotels eligible for the 25-percent abatement in December.
“It’s disappointing to think they’re going to have the support of the town to make it easier for them to open,” Yvonne deAngeli-Fontanez, general manager of Four Points by Sheraton in Meriden, said Thursday.
The Four Points hotel, which underwent a $2.5 million renovation in 2013, is three miles from the Interstate 91 interchange at Exit 15, where Winston’s proposed hotel would be completed. Just across the interchange are three other hotels: Courtyard by Marriott, Fairfield Inn, and Homewood Suites by Hilton.
Increased competition is a concern, according to deAngeli-Fontanez, who said she already competes with the three hotels in the area along with Meriden’s Hampton Inn on Bee Street.
“We’ve been concerned about the Hilton Garden Inn being completed since it was first supposed to be built in 2007 and we’ve celebrated each delay,” she said.
But Meriden is a different community, so “it’s really the Wallingford hotels who you would think are most concerned,” deAngeli-Fontanez said.
Last week, deAngeli-Fontanez said, she spoke to other area hotel general managers who “are all in agreement” that there are going to be too many rooms and not enough travelers with the addition of another hotel.
“It’s not only our hotels, but the whole hotel industry,” she said.
Winston’s proposal indicates that his hotel would have 139 rooms and a 4,000-square-foot banquet hall.
While some business might disappear with the completion of a new hotel, “I think we can handle it,” the manager for a competing Wallingford hotel said Thursday. The area is very attractive to business and their hotel has a niche customer base, said the manager, who was not authorized to comment publicly and spoke on condition of anonymity.
But the “length and quantity” of what’s being offered to Winston is “absurd,” the manager said. While incentives aren’t unusual when large hotels are built, Winston is asking for a lot, the manager said.
Taxes on Winston’s property are now $73,843, according to Wallingford’s tax office. In an agreement Winston first offered to the town’s Economic Development Commission late last year, those taxes would be reduced to about $45,000 per year for seven years after the hotel is completed.
Winston offered an altered agreement to the Town Council last month that would have him pay just over $45,000 in property taxes for the first two years after the hotel’s completion. That number would be increased to about $72,500 in year three, $77,000 in year four, $81,500 in year five and $174,000 in years six and seven.
Town Councilor Craig Fishbein, a Republican, said Wednesday he doesn’t understand why Winston should get a tax break when other hotels were built in Wallingford “and they never came to us and said we can’t do it.”
By providing Winston with tax abatements, “You’re going to give them a leg up on their competition,” Fishbein said. “It’s government picking winners and losers.”
Other area hotels had the opportunity to ask for tax breaks, Democratic Town Councilor John Sullivan said Thursday, “but no one did.”
While the added competition might not be ideal for existing hotels, “that’s capitalism,” Sullivan said. “That’s the way the country operates.”
Area hotels can say there aren’t enough travelers to fill rooms, but Winston thinks otherwise, Sullivan said, and he probably wouldn’t decide to build a hotel if he didn’t think there was opportunity.
“Competition is a good thing,” Sullivan added.
Town Councilor John LeTourneau, a Republican, agreed with Sullivan.
“Competition makes you sharpen up a little,” he said. “There’s always competition. That’s the American way.”
LeTourneau said he wouldn’t support tax abatements for the business, but for the town’s best interest.
“I want that blighted eyesore to disappear,” he said. “I want taxable property. And people in town can be employed there.”
Winston told the council in February that he would employ locally whenever possible and that his annual payroll would be about $1.2 million. But the notion that locals would benefit from through payroll is a “fallacy,” said the competing Wallingford hotel manager. The majority of that hotel’s employees are not from Wallingford because locals don’t want low-paying hotel jobs.
While he hasn’t made up his mind, Republican Town Council Chairman Vincent Cervoni said the council’s obligation to the people of Wallingford “is to maximize businesses on the tax roll.”
Besides tax revenue, Cervoni agreed with Letourneau’s point that finishing the hotel would rid the town of an eyesore.
“While I sympathize with other properties in the area, many business competitors look at competition as healthy,” Cervoni said.
But deAngeli-Fontanez said she would rather see “someone be creative and come up with another use for the property, such as long-term housing.”