The now-former Kenwood Commons owner Jacob Frydman had big plans for the Doane Stuart School and the nearly 75 acres of property around it.
(We left a message with Frydman for this report, but did not get a response at this point.)
It started in 2017, when two companies, both operated by Frydman, purchased the property... and then purchased it again, on the same day.
"Two corporate entities that are under control by Mr. Frydman both bought and sold the property on the same day," Albany City Treasurer Darius Shahinfar says. "Three million dollars in the morning, 18 million dollars in the afternoon."
The city then taxed the property at the $18 million valuation. Former Historic Albany Foundation president Bill Brandow is a former student of Doane Stuart, and says he believes the city could've done more to aid the developer.
"If you're trying to be a partner to make a development like that work...a historic renovation of that building work, that's not the levy you would put on it if you're in earnest trying to be a partner," Brandow says.
The state standard says the property assessment needs to be based on reconstruction cost. Because it was used as a school from the 1840s to 2017, the Kenwood Commons property had been tax exempt, but when bought by Kenwood Commons LLC., a non 501c organization, tax law applied for the first time. Because of the uniqueness of the property and situation, Albany Commissioner of Assessment Trey Kingston says he looked to a recent Court of Appeals case to arrive at a valuation.
"It reads, 'It's well established that a recent sale of property is a highly reliable measure of value'," Kingston says.
City officials say Frydman challenged, then withdrew his challenge to the assessment of $18 million dollars. City officials believe he made the transaction to be able to borrow more money.
After purchasing, Frydman, promoted that they spent $15 million in improvements over the course of a year, with 4.2 million square feet of "mixed development" buildings in the works. Frydman abandoned the property in 2019. While the building deteriorated year after year, Albany City officials say the valuation could've actually increased.
"There would actually be reason to increase the assessment," Kingston says. "Because he purchased it for 18 million dollars...that's the market...this advertised $15 million in improvements, that would be put on top of that 18 million dollars."
They say they can only be on the property when given permission, so this practice of looking at advertisements and self-assessments is standard when evaluating properties.
While Kenwood Commons LLC. said they were undertaking major upgrades to the property, they never were able to secure a tax abatement from the state or the city. The City of Albany Industrial Development Agency works with developers to provide tax abatements, the old Playdium bowling alley as one example. It now sits as a mixed use apartment complex in Albany's Pine Hills neighborhood.
"This is the way to get a project done in the city, the taxes are so high," Shahinfar, also the Albany IDA Treasurer, says. "It's a tax abatement, until you develop the property, this doesn't become available. When you apply to the IDA you go through an intense evaluation of the project where finances are thoroughly evaluated, and sales puffery is no longer an issue, we look at the hard numbers."
The IDA was approached by Frydman sporadically for a tax abatement up until 2019, and Shahinfar says the plan from Kenwood Commons LLC. for Doane Stuart School never materialized.
"Sure, there were discussions," Shahinfar says. "He went public with some plans. He had initial discussions with the IDA. Nothing was ever presented to the IDA to be finalized."
As a part of their promotional campaign, Kenwood Commons LLC. advertised that their property was "subject to a 12 year Real Estate Tax Abatement under NY 485-a", which is a way to get a tax break from the state. Around the same time, the city says the ownership group appealed to the Attorney General to set up 154 condos at the Doane Stuart property. At that point, it would not have been considered a mixed use property.
"If it were setup as an apartment building, they possibly could qualify because they would be set up with a residential and commercial component," Kingston says. "But, when he was going to plan to have them designated as condos, in my mind we're looking into a bunch of single family homes that just happened to be contained within four walls, therefore it wouldn't qualify."
Kingston adds due to it being a state law, they were not able to make an exception for the property.
They say they won't be changing either path for tax abatement, IDA or NY 485-a, at this point. Following years of issues with the Central Warehouse, along with more abandoned buildings needing redevelopment, Brandow says more of an emphasis needs to be placed on supporting developers for such historic properties.
"Some cities have a structure where if you take on an abandoned building, it's 2 years tax free as long as you're operating in good faith and showing you're making a progress," Brandow says. "Albany could do something like that, and Albany desperately needs to have a plan like that."
He, along with others who were heartbroken after the Doane Stuart school fire, now want to see the city or future developer take a step forward in the property's investment. In a story first reported in the Albany Times Union, court papers show that Guild Investment Group purchased the property for $100,000 at the bankruptcy auction...which took place before the devastating fire. The transaction is supposed to be finalized on April 21st.
But, with the unfortunate loss of the school, the valuation for the property will change, becoming more than $10 million less than prior to the fire.
"The vacant land, it's 74 and a half acres. It's going to be closer to $4 million because of the uniqueness," Kingston says. "I haven't made anything official, and it won't appear on an assessment until next year, but the value would be between $3.5 to 4 million."