The Alexander at Patroon Creek comes with all the amenities of modern living — central air conditioning, sun decks and access to a fitness center and indoor and outdoor pools.

No less than Lt. Gov. Bob Duffy makes his Albany home at the 2-year-old luxury complex off Washington Avenue, where the largest three-bedroom units rent for around $2,300 a month.

In November, about a year after opening, management announced that all 300 units had been rented, most by newcomers to the city, silencing those who doubted the market for such high-end living in Albany.

But despite the project’s success, A.G. Spanos Cos., the California-based developer, is asking the city to take the 6.5-acre property off the tax rolls for the next 23 years, a deal that would result in an infusion of cash for the city, county and city school district but would come at the expense of millions of dollars in taxes on the back end of the deal.

The city’s development chief contends such agreements are necessary for Albany to compete for development with neighboring suburban communities.

“Our taxes are, in some cases, twice as high as surrounding municipalities,” Michael Yevoli said. “We have to be adaptable here to make things happen … It’s diversifying our population. That doesn’t mean we’re ignoring or selling out the future.”

At its core, the philosophy may seem counterintuitive: In order to improve the health of the city’s tax base, certain large projects may need to come off the rolls.

Critics, however, pan such arrangements — known as payments in lieu of taxes, or PILOT, agreements — as illusory economic development that subsidizes new projects at the expense of homeowners whose wallets never see the benefit.

The Alexander proposal has an additional wrinkle in that it plays on Albany’s short-term need for cash. With its pleas for more state aid so far unheard, the city is facing an estimated 2012 budget deficit of at least $15 million.

Spanos’ request — which Yevoli acknowledges is a “big ask” — is complicated by the fact that The Alexander already has a 10-year tax abatement requiring its owners to pay taxes on only the value of its land, not the full $30 million assessment.

That deal, arranged through the state’s since-reformed Empire Zone Program, is scheduled to expire after 2019, meaning Spanos would see its tax payments balloon from $76,230 to an estimated $1.2 million by 2020.

To avoid that spike — and, according the developer, preserve the profitability of the project — Spanos has asked the city’s Industrial Development Agency to grant it a PILOT that would spare it from paying taxes on its full value at least until 2035.

At current tax rates, that could save the owner about $7 million in taxes over the final 15 years of the agreement — a conservative estimate that assumes taxes would not rise over the next 23 years.

In return, Spanos would renounce its existing Empire Zone tax break and pay the city, county and school district $3.7 million more over the next eight years than is scheduled with the Empire Zone pact.

Spanos also would be required to pay $330,000 in fees that the IDA could use for other development projects as well as a $400,000 community-benefits agreement.

Extending the deal would also almost certainly make the complex more attractive to potential buyers. Spanos is a national builder, but The Alexander was its first project in New York.

In a statement, Spanos Vice President Nick Faklis called the proposal “a win-win.”

“The city, county and school district receive more than $3.7 million in additional revenue over the next eight years — much sooner than the revenue would otherwise come in,” Faklis said. “And our company receives the certainty of a long-term commitment to do business in Albany.”….

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