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Frink hotel deal in Clayton falters

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CLAYTON — Officials in Clayton unanimously agreed Wednesday that they were done dealing with Krog Corp. exclusively on the sale and development of the Frink site.

Effective immediately, negotiations between Clayton and the Buffalo-based Krog Corp. on a 106-room luxury hotel proposed on the edge of the village peninsula are suspended and the site will be opened up to other potential developers.

Not a single member on three separate boards — town, village and Clayton Local Development Corp. — cast a “nay” vote on the resolution offered at the emergency joint meeting.

“It’s time to force a decision and move forward,” said Paul E. Heckmann, chairman of CLDC’s Frink Redevelopment Committee.

From a legal standpoint, the resolution was not necessary because Clayton’s memorandum of understanding with the developer, which gave Krog the exclusive right to enter into a negotiation regarding Frink’s development, expired July 31, 2011.

Clayton had continued the talks with Krog for more than a year simply out of good faith, officials said.

However, they said, Krog and its partner in the project — Hart Hotels, also based in Buffalo — failed to meet several deadlines; insisted that Clayton sell the prime 8.4-acre waterfront property for $1.5 million, and maintains that a 27-year payment-in-lieu-of-taxes agreement is needed to make the project feasible.

Town Supervisor Justin A. Taylor said that Clayton’s asking price for the Frink site is set at $2.1 million because it needs to recoup its expenses and that Krog has been advised several times that Jefferson County is unlikely to approve a PILOT for such an extended period.

Clayton has debts and back taxes owed to different entities from the government-funded, multimillion-dollar cleanup of the former brownfield property.

In 2005, Clayton’s LDC and town government purchased and remediated the abandoned snowplow factory site, removing 20,000 tons of contaminated soil to make it development-ready again.

“All we want to do is break even,” Mr. Heckmann said.

Town Councilman George E. Kittle said Clayton is essentially paying the developers to take the land, as Clayton has secured $2.25 million in grants for the proposed hotel’s construction alone — more than its asking price for the land.

“I say we bag ’em,” Mr. Kittle said Wednesday night.

Officials said Krog and Hart Hotels also have missed more than one deadline.

Most recently, upon learning in June of a labor peace agreement requirement attached to an Empire State Development grant, which could render the proposed $22.5 million project unfeasible, Clayton had advised Krog that it had a 90-day window to ask for a waiver.

Under the Public Authorities Reform Act, hotels or convention centers built with state funds are required to sign an agreement with hotel unions in the state indicating they would not contest unionization efforts — which most likely would drive up labor costs — in exchange for the union members agreeing to “refrain from engaging in labor activity that will disrupt the hotel’s operations,” such as strikes.

No such waiver has been requested by Krog to date, Mr. Taylor said Wednesday.

Developers — including Krog, if it so chooses — now have until Oct. 15 to indicate that they are willing to sign a land disposition agreement without delay and put up $210,000, which is 10 percent of Clayton’s asking price for Frink, to demonstrate their commitment.

Clayton officials then will determine which proposed project would be most beneficial to the community, based on its size, aesthetics, method of financing and the suggested terms of a PILOT agreement.

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