Analysis of Amsterdam’s Chalmers Mill Lofts Project. Part Two – Why Workforce Housing?

“My first thought was to put a hotel at Chalmers,” Mayor Michael Villa told me in a sit down interview on July 17, 2018. I had interviewed Bill Teator of DEW Ventures, a partner with KCG Development in the Chalmers Mill Lofts project, the day before. On July 18, I sat down with Montgomery County Executive Matt Ossenfort and Ken Rose, CEO of the Montgomery County Business Development Center to discuss the Chalmers project. The purpose in conducting these interviews and in reaching out to other people by phone and email was to try to determine how decisions were made and who made them in the process that took a six story eyesore on Bridge Street on Amsterdam’s South Side to an empty lot with a plan for a multiple story workforce housing development with a separate restaurant and banquet facility.

In order to understand the process, I found I had to go back to 2008 and before, to look at every attempt to develop the property and to examine as many studies and reports as I could find. I looked at Amsterdam’s Comprehensive Plan, the Amsterdam Opportunity Analysis report, the 2012 Invitation to Qualified Bidders Requests for Proposals for the Development of the Former Chalmers Mill Site, the Waterfront Heritage Area BOA report, REVPAR International’s analysis of a proposed hotel on the Chalmers site, the Culinary Incubator Study, the District Revitalization Strategy and the Mohawk Valley REDC 2018 Downtown Revitalization Initiative. DEW Ventures and KCG Development also provided me with a number of documents.

Under the Thane administration, an attempt to rehab the Chalmers Mill building into luxury apartments failed. After the mill was demolished, an effort was made to interest developers in the site by inviting the major developers in the Capital Region to submit proposals. The request for proposals resulted in only one proposed project, a senior housing complex, which was rejected by the city because it was not seen as a catalyst for economic development, one of the city’s primary requirements for any proposed project.

When Mike Villa took office, the development of a hotel on the site was his first priority. According to Villa, “BBL and one other guy did a study to see if there was enough traffic to do a hotel. They looked at three locations—Exit 27, Chalmers and Route 30 across from the Recovery Room. The Chalmers site came in a distant third both times.” The study commissioned by BBL, a nationally recognized hospitality and construction company, and carried out by REVPAR International, a hospitality advisory and asset management company, ranked the Route 30 site the highest with a score of 35, Exit 27 with a score of 30 and Chalmers with a score of 25. However, if you remove from REVPAR’s matrix the items they ranked as being of the least importance—Surrounding Ambiance, Proximity to Future Growth and Proximity to Train Station—the Exit 27 site is number one, while the Chalmers site remains at the bottom. “Now we had to look in another direction,” said Villa.

Chalmers 01

Early in his first term, Villa said he had met Bill Teator of DEW Ventures, one of the partners in the Chalmers Mill Lofts project, at a conference. In an interview, Teator, who is based in Saratoga Springs, said he was well aware of Amsterdam for a long time, drives through here regularly, was familiar with Uri Kaufman’s attempt to rehab the Chalmers factory and was also aware of other economic development efforts and studies in Amsterdam. Villa gave Teator a tour of Amsterdam’s downtown and south side. Shortly after taking office, Villa also said he reached out to Montgomery County Executive Matt Ossenfort and Ken Rose of the Montgomery County Business Development Center to help Amsterdam with community development. The county agreed to do the economic development work for the city, which previously was the job of the City’s Economic and Community Development director, a job the Villa administration abolished.

One problem the city faced, according to Rose, was the perception by developers that “Amsterdam may not be the most welcoming and may not have the resources to make the [economic development] process easy. We are trying to build the perception that you can get projects done here.” Rose also said of the Chalmers Mill site what Nick Zabawsky of the Amsterdam Urban Renewal Agency echoed later, “Conversations were held with half a dozen of the biggest developers in the Capital District over the years. They did not want to take the risk.”

Late in 2016, Villa reconnected with Teator. Teator brought the [Chalmers] project to KCG’s attention. According to a recently released five page FAQ from the developers, “KCG and its co-development partner, DEW Ventures, LLC, approached the City to evaluate options for re-development based on familiarity with prior attempts…” Now that a hotel was no longer an option for the Chalmers site, they “banged around ideas of a mixed use facility.” Eventually, these discussions would lead to the current proposed five story apartment complex with a standalone one story restaurant and banquet facility. The City and KCG Developers signed a letter of intent to purchase and develop the property on April 12, 2017.

KCG and DEW Ventures also claim to have looked at luxury apartments. In a July 2018 FAQ sheet, provided by the developers, they state, “We triangulated area household income data with New York State labor data, and real time real estate market data to evaluate average rents, market absorption, market capture, existing multifamily inventory conditions, and historic operating data. We concluded that the market would not currently support the development of high-end luxury rental housing. Rather, our findings indicated a significant need for high quality, modern rental housing that would serve the area’s regional workforce.”

One of Congressman Paul Tonko’s visions for the Bridge Street site was a restaurant incubator program. The food incubator concept was incorporated into the letter of intent and subsequent purchase contract. The MCBDC commissioned Karen Karp & Partners, a NYC food business consultancy, to study the issue and create a report, which they did in conjunction with BJH Advisors, an economic development advisory firm, and Elan Planning & Design, a company that provides land planning and design services.

Their findings, released in a May 2017 report, found that a culinary incubator could sustain itself “in an over-performing scenario.” However, more conservative scenarios showed that an incubator could only succeed if it held fundraisers or was subsidized with an additional $22,000-$79,000 per year. According to Mayor Villa, the study “didn’t see a culinary incubator being able to be supported to the extent desired.” Further evaluation by KCG of a shared kitchen facility revealed “the challenges of a responsible, capable party programming its use, and compliance with state Department of Health licensing for others to utilize.” KCG also noted that Schenectady Community College had a successful culinary program and “Mutiple similar sites planned or under development in adjoining counties seemed to create more uncertainty around its sustainable operation.”

Following the release of the culinary incubator study, according to Villa, “We came to the point in our discussion—what if we give space to a banquet facility?” He noted that all of Montgomery County’s large events have to be held in Fulton or Schenectady counties because of the lack of a large banquet facility in Montgomery County. “The need,” said Villa, “was to find a restaurateur who could be stable and operate at a level that people would want to go to it.”

According to Villa, discussions were held earlier with the Mallozi Family, restaurateurs in Schenectady, for a standalone restaurant on the Chalmers site but the Mallozis ended up building a restaurant at the new casino site in Schenectady instead. Ken Rose emphasized that the pool of restaurateurs capable of successfully managing a large restaurant and 300 seat banquet facility was small. Villa pointed out several restaurants in Amsterdam that were behind in their taxes, in bankruptcy or who were to small to successfully lease and operate a banquet facility.

Villa, who has had a long relationship with the Lanzi family, a family that has been in the restaurant business for a century and operates multiple restaurants in the area, said, “On a whim I reached out and called Luigi and said I want to talk to you about the project.” Lanzi, whose grandfather started the family’s first restaurant just a few doors up Bridge Street from the Chalmers site, wouldn’t commit to the idea at first. It took eight months of back and forth conversations before the Lanzi family committed to operating the restaurant and banquet facility. According to Villa, “It took quite awhile to really get Lou comfortable about how the banquet facility would be set up and operate.” “I told him your grandfather is up there watching. You better make the right decision.”

Chalmers 04

The process of going from an abandoned factory to a proposed housing and restaurant facility on the former Chalmers site, appears to have been a trial-and-error process which over time has winnowed out ideas that were either not viable or not catalysts for economic change. The Chalmers Mill Lofts project, which is the biggest proposed economic development project in the city since the construction of the Amsterdam Mall in the 1970s “is a key component to the Downtown Revitalization Initiative,” according to Villa. “If you kill this project, you have basically signed Amsterdam’s death sentence,” he said.

When asked what could possibly kill the project now that the city has signed an agreement with KCG Development, Nick Zabawsky said “the biggest challenge facing KCG is getting the low income housing tax credits.” Mayor Villa responded without elaborating, “Back door politics.”

Part one of this two part article can be found here.

An earlier version of this article appeared in the Recorder when owned by Mcleary Media LLC.

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