Eaton Center buyer offered tax deal
NORWICH – County business leaders approved a payment in lieu of taxes agreement with the buyer of the Eaton Center despite attempts from City of Norwich officials to acquire property taxes over a shorter time period.
Industrial Development Agency directors voted unanimously to offer Pennsylvania businessman Randal Hadeed a 95 percent tax break for the first year to be increased by 10 percent in each of the following nine years. It represents at 50 percent tax savings over the 10-year period. At a rate of around $60 per $1,000 of assessed value, that would garner Hadeed a savings of about $450,000.
The purchase price was set at $1 million. Proceeds from the sale go to the Area Corp., official owners of the building. As PILOT agent, the IDA will receive a one time project fee of about $4,500 and 1 percent of the tax benefit annually.
The 200,000 square foot office building is valued at $1.7 million. (During discussions of the building’s pending sale last month, Chenango County’s economic development leader Maureen Carpenter said the value was $2.3 million. The adjacent Norwich campus of SUNY Morrisville purchased a parking lot since then.)
Procter & Gamble Pharmaceuticals gave the historical headquarters of the Norwich Eaton Pharmaceutical Company to the Chenango Area Corp, a tax exempt entity, back in 1996. The gift included a trust fund to maintain the building and to cover taxes. The Area Corp. proceeded to pay $56,000 a year in county, city and school taxes. Carpenter said payments were halted, however, in 2004 because the Eaton Center had not been profitable. No jurisdictions have been receiving tax revenues on the building since then.
During the IDA’s public hearing Wednesday, city officials presented alternative PILOT agreements that have been used in other counties for consideration. The first would net the city closer to what it used to receive in property taxes sooner, or $15,529 after three years versus $7,764 after three years with the IDA’s plan.
“I don’t want to interrupt the idea of the sale, but with this plan, it’s 4 or 5 years down the road before we are back to receiving close to the $19,000 in taxes we used to. It puts the city, revenue wise, by not having this... It’s irresponsible to the taxpayers,” Mayor Joseph P. Maiurano said.
“If this is negotiable. Let’s put it out there. We don’t want to be an obstacle, we definitely want this. But, thinking of what the city’s needs are, is this the way it has to go?” the Mayor asked.
IDA members requested counsel from consulting attorney James Downey, who explained that the policy on issuing PILOT agreements had not changed since the mid 1970s. He said there is “no uniform tax exemption,” but that “nothing by law says the current policy couldn’t be changed.”
Downey said the policy was amended only once in 1994 when it provided for PILOT extension renegotiations.
IDA Chairman Hugh Kearney said, “I appreciate where you (Maiurano) are coming from, but the Eaton Center’s been off the rolls for a long time. We are just glad to see it get back on. This way we are giving the buyer the opportunity to make improvements and the building profitable with jobs.”
Hadeed told county officials that he plans to make $500,000 in capital improvements to the Eaton Center’s offices and to continue marketing it to businesses. He plans to move in his company, eAuction Solutions, and create 40 jobs over the first five years and 35 more over the next five.
eAuctions is an online auction management company that liquidates stock for large clothing stores.
IDA Board members Peter Kwasnik and Wayne Outwater said they didn’t want to make an exemption for this PILOT project. “Why make an exemption for this for the first time in 35 years?” Kwasnik said.
“I think the benefits of this sale, jobs and capital improvements, outweigh the tax losses at this point,” Outwater said.
The Eaton Center currently houses offices for over 55 entities that employ approximately 350 people. Roughly 70 percent of the building is renovated. The Area Corp. extensively marketed the office space as a business incubator in central New York. However, a majority of the space has been rented to the Chenango County Chamber of Commerce, The Norwich City Schools and the Chenango County Mental Health Department.
Industrial Development Agency directors voted unanimously to offer Pennsylvania businessman Randal Hadeed a 95 percent tax break for the first year to be increased by 10 percent in each of the following nine years. It represents at 50 percent tax savings over the 10-year period. At a rate of around $60 per $1,000 of assessed value, that would garner Hadeed a savings of about $450,000.
The purchase price was set at $1 million. Proceeds from the sale go to the Area Corp., official owners of the building. As PILOT agent, the IDA will receive a one time project fee of about $4,500 and 1 percent of the tax benefit annually.
The 200,000 square foot office building is valued at $1.7 million. (During discussions of the building’s pending sale last month, Chenango County’s economic development leader Maureen Carpenter said the value was $2.3 million. The adjacent Norwich campus of SUNY Morrisville purchased a parking lot since then.)
Procter & Gamble Pharmaceuticals gave the historical headquarters of the Norwich Eaton Pharmaceutical Company to the Chenango Area Corp, a tax exempt entity, back in 1996. The gift included a trust fund to maintain the building and to cover taxes. The Area Corp. proceeded to pay $56,000 a year in county, city and school taxes. Carpenter said payments were halted, however, in 2004 because the Eaton Center had not been profitable. No jurisdictions have been receiving tax revenues on the building since then.
During the IDA’s public hearing Wednesday, city officials presented alternative PILOT agreements that have been used in other counties for consideration. The first would net the city closer to what it used to receive in property taxes sooner, or $15,529 after three years versus $7,764 after three years with the IDA’s plan.
“I don’t want to interrupt the idea of the sale, but with this plan, it’s 4 or 5 years down the road before we are back to receiving close to the $19,000 in taxes we used to. It puts the city, revenue wise, by not having this... It’s irresponsible to the taxpayers,” Mayor Joseph P. Maiurano said.
“If this is negotiable. Let’s put it out there. We don’t want to be an obstacle, we definitely want this. But, thinking of what the city’s needs are, is this the way it has to go?” the Mayor asked.
IDA members requested counsel from consulting attorney James Downey, who explained that the policy on issuing PILOT agreements had not changed since the mid 1970s. He said there is “no uniform tax exemption,” but that “nothing by law says the current policy couldn’t be changed.”
Downey said the policy was amended only once in 1994 when it provided for PILOT extension renegotiations.
IDA Chairman Hugh Kearney said, “I appreciate where you (Maiurano) are coming from, but the Eaton Center’s been off the rolls for a long time. We are just glad to see it get back on. This way we are giving the buyer the opportunity to make improvements and the building profitable with jobs.”
Hadeed told county officials that he plans to make $500,000 in capital improvements to the Eaton Center’s offices and to continue marketing it to businesses. He plans to move in his company, eAuction Solutions, and create 40 jobs over the first five years and 35 more over the next five.
eAuctions is an online auction management company that liquidates stock for large clothing stores.
IDA Board members Peter Kwasnik and Wayne Outwater said they didn’t want to make an exemption for this PILOT project. “Why make an exemption for this for the first time in 35 years?” Kwasnik said.
“I think the benefits of this sale, jobs and capital improvements, outweigh the tax losses at this point,” Outwater said.
The Eaton Center currently houses offices for over 55 entities that employ approximately 350 people. Roughly 70 percent of the building is renovated. The Area Corp. extensively marketed the office space as a business incubator in central New York. However, a majority of the space has been rented to the Chenango County Chamber of Commerce, The Norwich City Schools and the Chenango County Mental Health Department.
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