NORWICH – The Norwich City Council is considering new avenues that incentivize developers to rehabilitate some of the most blighted properties in the downtown area through a tax exemption program aimed at assisting in the rehabilitation process.
Under New York State real property tax law, the council is authorized to opt into a property tax exemption program for the rehabilitation of multiple family structures, which would allow the city to market vacant dilapidated buildings within the city, including the former Unguentine building on Hubbard Ave. and city-owned properties at 42 and 44-46 North Broad Street.
The program requires that the designated structure include three or more apartments, and at least 20 percent of those apartments must be affordable to individuals or families of low to moderate income. Commercial buildings with space for residences are not off limits.
“This is a good incentive for private developers to develop a building and put it back on the tax roles,” explained City Mayor Joseph Maiurano, “and the building itself will be progressive for obtaining other ways of creating revenue for the city.”
The tax exemption program would allow developers to purchase a dilapidated property within a district that is designated by the city and restore it, but they would be exempt from any additional property taxes incurred as a result of their work. For example, if a developer purchased a building for $30,000 and restored it to be worth $50,000, that developer would pay property taxes based on the original $30,000 assessment.
Developers would still pay property taxes based the assessed value of the property before rehabilitation. The exemption allows that buildings in the designated districts would not be reassessed after construction or renovation for twenty years.
According to the mayor, the program - which has been pondered by city officials since last fall - would be an excellent opportunity that might lead to fewer decaying properties as well as more attractive commercial space for incoming businesses, which may subsequently lead to increased sales taxes for the city to bank on.
The key, Maiurano clarified, is that the tax exemption would not instantly pertain to residences city-wide, but city officials would instead be able to “pick and choose” a district that is eligible. That district can consist of any number of buildings, although the focus for now is solely on buildings capable of serving commercial purposes as well as residences, he said.
“We can always change our focus as time goes on,” he added. “If those downtown buildings sit vacant and empty, we make nothing anyway ... This (exemption) has more advantages than not. If we don’t do anything, we end up with rotting properties, but if we do something, we can have productive properties. It’s better to have productive properties that can bring in sales tax than have a rotting property, but it won’t happen without some sort of incentive.”
Maiurano said he anticipates the council will continue to pursue the program at the next council meeting on Tuesday. A public hearing regarding the tax exemption must be scheduled and Maiurano noted that city officials must also work with other property taxing entities (Chenango County and the Norwich City School District) in the process.