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New York Awards $4 million in Economic Development Funding for
Transformation of DeWitt Clinton Building in Albany into Hotel Despite
Developer Owing Over $600K in Back Taxes and Bills



By Chris Churchill, Albany Times Union, N.Y.McClatchy-Tribune Regional News

Oct. 14, 2009--Correction: Thomas Nicchi's name was misspelled in an earlier version of this story.

ALBANY -- The state has awarded $4 million in economic development funding to a Brooklyn-based investor and diamond merchant who owes $615,000 in back Albany taxes and bills.

The money awarded by Empire State Development, the state's economic development arm, is for the planned transformation of the historic DeWitt Clinton building in downtown Albany into an Embassy Suites Hotel.

The mostly vacant building is owned by Chaim Ausch, who purchased it in 2006 for $5.3 million. Ausch has since paid few of his tax, sewer and water bills.

Ausch's attorney on Tuesday said his client intends to quickly settle his outstanding debt, despite what he described as unsettled issues with how the bills were applied and charged.

"They'll be fully paid by the end of next week," Henry Nahal, the attorney, said.

The state announced the money for DeWitt Clinton redevelopment on Tuesday, as part of $17.5 million in Upstate Regional Blueprint funding. The money is targeted at projects expected to create jobs and spur additional development.

State and city officials touted DeWitt Clinton plans at a City Hall news conference, describing the $4 million as a loan that would become a grant when development conditions established by the state are met.

Dennis Mullen, chairman and chief executive of Empire State Development, said the decision to award money to Ausch, doing business as C & Y Albany Hotel LLC, came only after a highly competitive and "very arduous process" of review.

Mullen and other officials, including Mayor Jerry Jennings, described a revived DeWitt Clinton as an important piece of downtown development.

The hotel redevelopment, first announced in August, is described as a $25 million project that will turn the DeWitt Clinton into a 198-room hotel.

Indeed, downtown boosters have long hoped to see the building at State and Eagle streets, which opened as a glamorous hotel in the 1920s but fell into disrepair in the 1970s, restored to its glory -- especially as it occupies a prominent spot across from the state Capitol.

Ausch, operating then as See Why Gerard LLC, told city officials of plans to renovate the building at the time of his purchase. He quickly moved to evict the low-income tenants who then occupied the building.

But Ausch's redevelopment plans stalled as See Why Gerard became entangled in a long legal dispute with the building's last remaining tenant, Thomas Nicchi, who operates the The State Room Banquet Hall and The Original Comedy Works.

Nicchi has survived several eviction attempts by See Why Gerard, which even filed for Chapter 11 bankruptcy protection in an unsuccessful attempt to have Nicci's lease nullified.

Nicchi in September moved the comedy club to Colonie. But he continues to operate the banquet hall. On Tuesday, he said he has no plans to move, despite the redevelopment plans.

"We're here for another nine years," he said, citing a lease that expires in 2018. "I have a lot of events on the books."

Nahal said the redevelopment would proceed around Nicchi's business, if necessary.

Chaim Ausch's son, Yakov Ausch, attended Tuesday's press conference but referred questions on unpaid bills and the dispute with Nicchi to Nahal.

Nahal said sewer and water bills were unpaid because of a dispute on the initial estimate. The attorney said the unpaid bills resulted from what was essentially a "clerical error."

Nahal said the taxes were unpaid because of a disagreement over the building's assessment. He said Ausch now would pay all of the unpaid bills in total, with the expectation of an eventual refund upon the resolution of the disagreements.

The Times Union was provided an itemized Albany County statement on the taxes and other bills owed by Ausch. Yakov Ausch and Nahal on Tuesday agreed that the statement was accurate.

Other officials at Tuesday's announcement were also aware of the issue of Ausch's unpaid bills.

County Executive Mike Breslin said he had learned of Ausch's tax debt earlier in the day and had received an assurance the debts would be paid.

"I'm confident it's going to be paid off immediately," Breslin said. "I'm sure this money is not going to go through without these taxes being paid."

The itemized statement includes bills going back to 2006. It says Ausch and See Why Gerard owe $248,743 in school taxes; $132,255 in city taxes; $187,451 in sewer and water bills; and more than $46,000 in fees and penalties.

A spokesperson for ESD had no immediate comment. Jennings did not return a request for comment.

Chris Churchill can be reached at 454-5442 or by e-mail at cchurchill@timesunion.com.

State grants in region

The state awarded $17.5 million in economic development grants funded by the Upstate Regional Blueprint Fund. A plan to turn the DeWitt Clinton building in downtown Albany into an upscale hotel received $4 million. Other projects receiving funds include:

$145,000 for the Aeon Nexus Corp. plans to renovate 174 Glen St. in Glens Falls.

$975,000 for the development of an 81-room resort in Schroon Lake.

$2.5 million for the construction of a natural gas pipeline from St. Lawrence County to Franklin County.

$1.7 million to help expand Richardson Brands in Canajoharie, Montgomery County.

Source: Empire State Development

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To see more of the Albany Times Union, or to subscribe to the newspaper, go to http://www.timesunion.com.

Copyright (c) 2009, Albany Times Union, N.Y.

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