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LOCKPORT - Ultimate Physique, whose $65,000 purchase of the former Washington Hunt Elementary School was approved by Lockport voters July 29, is seeking a five-year, 100 percent property tax exemption on the building from Niagara County Industrial Development Agency.
Health club owner Robert Muscarella said Friday he is also seeking an exemption from paying sales tax on building materials and equipment to be installed in the former school.
He said Friday that such a tax break "is better than a sharp stick in the eye," but he was peeved that the City of Lockport's development agency denied him a deal that he said could have brought him a $200,000 grant to pay for asbestos abatement in the school.
"That shoots a $200,000 hole in our project before it even starts," said Muscarella, who said he expects to invest $1 million to $1.3 million in renovating the 85-year-old, 33,200-square-foot building into a new location for his gym, which he intends to move from Ann Street.
The IDA board will receive Muscarella's application Wednesday for a tax abatement under the special rules of the IDA's Opportunity Zone program for cities.
"It's in one of the distressed areas, so it's a legal project," IDA attorney Mark J. Gabriele said.
Normal IDA tax breaks offer reduced annual payments on a sliding scale and apply only to the increased assessed valuation of the property.
But under the Opportunity Zone program, Gabriele said, the agency may grant a complete tax exemption for five years on the existing $195,000 assessed value of the building as well as any assessment increase that results from Muscarella's project.
"We try to take the lead from the municipality on that," Gabriele said.
"I don't have enough information to make a decision yet," Mayor Anne E. McCaffrey said.
Muscarella said he had to pay the IDA a $1,000 application fee and will have to pay the agency 1 percent of his project cost if the abatement is approved.
Under normal IDA procedures, if the application is accepted, the agency would hold a public hearing in Lockport sometime in the ensuing month, and then vote on the tax break at its following meeting, which in this case would be Sept. 10.
Muscarella said he had been talking with the city for about eight months about possible assistance, and Corporation Counsel John J. Ottaviano suggested a transaction in which the Greater Lockport Development Corp., the city's development agency, would temporarily take title to the building in order to apply for a $200,000 state asbestos grant available only to municipalities.
Muscarella said he met Wednesday with R. Charles Bell, the city's planning and development director, who told him that move wasn't going to be made.
Bell said the GLDC board discussed the matter in May and decided against participating in the asbestos transaction. "The general feedback was, it's a tough precedent to set," Bell said.
McCaffrey said she didn't attend that GLDC meeting. "That was not a decision I was involved in," she said.
Bell said Ottaviano told Muscarella's lawyer about it at some point. "I was actually shocked when Bobby indicated he didn't know about it," Bell said in his account of Wednesday's meeting with the health club owner.
Bell commented, "There's a lot of cost in that project, and it's unfortunate. I know he's taking a big leap there."
"I'm risking everything I have," Muscarella said. "Bob Muscarella is doing the right thing, and nobody else is. We're not going to cry about it and go home. We're going to buckle up our chin straps and make this thing happen."