Steelbound Brewery is expected to be open by September 2022 in the city hotel.

Dunkirk’s Clarion Hotel has a new 15-year Payment In Lieu Of Taxes (PILOT) agreement with the city Industrial Development Agency.

Approved at the city IDA’s April meeting, the hotel’s owner, Dunkirk Resort Properties, LLC, promises to renovate about 3,000 square feet of the site into a brewery and distillery as part of the agreement. “They’re going to build out a microbrewery into the restaurant,” said the IDA’s attorney, Richard Morrisroe. “They’re going to rejigger the bar to put in the tanks.”

Morrisroe said Steelbound Brewery, which currently has sites in Ellicottville and Springville, will help build the new facility. Steelbound wants to start work at the Clarion by September, with the facility fully operational by September 2022, he added.

Funds from the new PILOT will be split evenly between the city, county and Dunkirk school district, Morrisroe said. The previous PILOT sent money only to the city, which irritated many Chautauqua County legislators.

Under the new PILOT, Dunkirk Resort Properties must make a payment of 30 percent of assessed value of land and buildings for the first five years. That rate goes to 50 percent for years six through 10 and to 70 percent for the final five years of the agreement.

Morrisroe said Dunkirk Resort Properties “must keep it a full restaurant, so it isn’t just beer and pub food.” The Clarion’s existing bar and restaurant have been closed for over a year due to the COVID-19 pandemic.

The attorney said the pandemic hit hotels hard. “The Clarion’s staff levels are way down,” he said. “It’s a two-step (process). They want to get back to where they were, then add jobs.”

The hotel must stay at Clarion-level service or above, Morrisroe added, noting that Dunkirk Resort Properties’ agreement with the hotel chain mandates room improvements every five years.