Construction on turning the former Oval Wood Dish factory into an affordable housing complex is expected to begin late this summer. (Enterprise photo — Aaron Marbone)

TUPPER LAKE — Plans to turn the abandoned Oval Wood Dish factory on Demars Boulevard into an 80-unit affordable apartment complex with commercial business space may soon be advancing as developers go out to bid for subcontractors and are “pushing hard” to get shovels in the ground by late summer.

Joe Gehm, developer with the Syracuse-based Lahinch Group, said construction is projected to last around 18 months, potentially through the end of 2025.

Lahinch Group bought the former Oval Wood Dish factory on Demars Boulevard in 2021 with plans to redevelop 126,000-square-feet of vacant space in nine buildings as workforce housing, co-working and commercial space.

The developers are currently looking to hire a construction manager. Gehm said they want someone local, someone with knowledge about how things work to get the job done in a timely manner and on a low budget.

Developers have also added two more phases to the project, which would start after the main OWD project ends — the additional “Oval Lofts” development on land and buildings behind the factory, formerly used by Fletcher and Son Recycling and Energy, and a potential 90-bed hotel on an empty plot of land on the other side of the town hall from the OWD.

Oval Lofts would involve redeveloping the former lumber mill buildings and junkyard into around 70 market rate, or full-price, units and 2,500-square-feet of commercial space. It would potentially start around when the main OWD project ends.

With a shortage of affordable housing in Tupper Lake and the entire Tri-Lakes region, Gehm said he’s excited to bring dozens of new housing units into town. The affordable units are to support the local workforce and he said the market rate apartments could encourage elderly people to put their homes on the market.

Gehm feels the project is a unique one for the area. He said there’s a “barrier to entry” to building housing in the Adirondacks — it’s the cost and rarity of buying usable land or buildings, as well as having existing water, sewer and electric infrastructure.

“There’s not many OWDs around,” he said. “A project this size and scope is very rare in the Adirondacks, let alone Tupper Lake.”

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PILOT rejected, 581 program expected

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A proposed payment in lieu of taxes agreement, which was proposed between the developers and the town, has been held off after Gehm said it didn’t sound like it had community support.

A PILOT is a negotiated local tax break where developers pay the government a base dollar amount of taxes for a number of years, which increases gradually, instead of having their new developed property taxed at its full assessed value right off the bat.

The proposed OWD PILOT would have lasted 30 years and would have started with the developers paying the equivalent taxes on the current $677,400 assessment of the property — around $50,000 in payment in lieu of taxes in the first year — and increasing 2% every year after that to end up at around $100,000 annually.

Gehm said this would have had them paying around double what they pay in taxes now.

The neighboring town of Harrietstown approved a PILOT agreement in 2022 for the 70-unit Saranac Lofts project, which is currently being built.

But there was opposition to such an agreement in Tupper Lake.

“We heard loud and clear the community’s reaction,” Gehm said.

He felt there were “misconceptions” about the project being “low-income housing.” He said it will be affordable housing for people who are earning between $35,000 and $70,000 per year.

“It’s to support the people at Sunmount. It’s to support the local businesses who can’t hire people to staff because there’s nowhere to live,” Gehm said. “This project will have a tremendous impact on the community.”

Gehm said he wants people to know they will be limited on what they can charge for rent — this is what makes them affordable to the working class.

To get the benefit of the project — that is, workforce housing for Tupper Lake — Gehm said it’s necessary that they pay less in taxes to make that feasible.

“The benefit is passed along to the renters, not to us,” he said. “It’s not like it’s increasing the amount of money we make on the project. It’s passed to the tenant.”

Whether the project works hinges on whether they can afford to rent at reasonable prices, he said. It’s not likely the PILOT will happen, though.

“Usually PILOTs are not done after you start a project,” Gehm said.

But though the PILOT program route is likely not happening, he is still confident the project will still happen.

He said the developers are instead pursuing the state’s 581 tax program. This is similar to a PILOT, but in this case, the land is assessed at the income it generates, instead of the maximum potential income it could generate. The state started this program to promote affordable family housing. The assessment would be predetermined by New York state.

Gehm said the town has approved this agreement in the past, but the agreement needs to be updated.

A chief difference between the 581 and the PILOT programs are that developers will have to apply annually to the 581 program, and the tax assessments will change each year instead of being steady. If occupancy of the building fluctuates and has a low year, the town would collect less in taxes.

Gehm said the estimated price of the project is up around 30% from the initial $30 million expectation — to around $40 million — because constructions costs and interest rates are up. Gehm said this means it is critical to start soon, and that time is money with prices rising.

Other funding

The project has been awarded a total of $2.95 million from the state through two rounds of Restore New York grant awards.

The project got $1.95 million through the state’s Downtown Revitalization Initiative last year as part of a broader $10 million DRI grant awarded to Tupper Lake.

It also received $2.5 million in Regional Economic Development Council awards and $500,000 from the Northern Border Regional Commission in 2021.

This secondary Oval Lofts project was also awarded $2.5 million through Tupper Lake’s $10 million DRI award and is estimated at costing an additional $20 million.

Gehm said all grant proceeds are taxed, though, so they lose around a third of it off the top.

When the state Office of Homes and Community Renewal approved the project for a 9% affordable housing tax credit last year, Gehm said these tax credits were the “linchpin” in the project he had been waiting on. Without the backing of the state, he said it wouldn’t happen.