City denies contested commercial property tax exemption
By Shawn Magrath
Sun Staff Writer
smagrath@evesun.com
NORWICH – A proposed tax exemption to incentivize private investors to rehabilitate run-down properties on the city’s main drag was narrowly shot down at a meeting of the Norwich Common Council on Tuesday.
While city officials agreed an incentive would help better market vacant buildings located in the downtown area, the proposal was denied in a 4-2 vote due to what some councilmen say are ambiguous terms of the law.
“I believe it is not in the best interest for the city at this time,” said Ward Three Alderman John Deierlein, citing the proposal’s unproven track record and requirement for a long-term commitment. “Therefore, I can’t support this.”
The law, permitted under Section 421-m of the New York real property tax law, would allow city officials to adopt an ordinance excusing developers from taxation of increased property taxes that result from building renovations. The law stipulates developers who rehabilitate a structure with commercial space and room for at least three apartments – 20 percent of which must be made available to persons of low to moderate income – would be taxed according to assessments of the property prior to repairs for a minimum of 12 years.
Moreover, the law would allow city officials to designate specific areas that would be eligible. After the 12-year benchmark, property owners taking part in the program would be taxed according to the new property assessment, which is bound to increase due to repairs to the property. For example, if a developer purchases a building assessed at $10,000 and restores it to be assessed at $100,000, said developer would pay property taxes based on the original $10,000 assessment for the first 12 years.
Under the law, a tax exemption would be in place for a total 20 years, then decline in increments from 100 percent the first year to just 20 percent by year 20. After the 20th year, the property would be fully taxed.
City Mayor Joseph Maiurano said although the law isn’t ideal, the issue is a matter of weighing pros and cons.
“We’re not losing anything and we would be gaining a downtown that’s fixed up a bit,” Maiurano said, adding that government incentives typically play a key role in marketing abandoned city-owned properties, including the three-story building at 42 and 44-46 N. Broad St. and the former Ungentine building on Hubbard Avenue. “If you don’t prime the pump, what happens? The water does not come out.”
“What happens if we don’t pass this law?” asked Ward Two Alderman Terry Bresina, a proponent of the 421-m legislation. “Most people in this room would probably say nothing and sadly, that’s probably true ... Abandoned buildings generally end up in the city’s hands and they are not an asset in any way. They are a liability.”
Bresina also cited the expense to demolish dilapidated buildings and predicted demolition of larger structures such as that at 42, 44-46 N. Broad may near $100,000. “That’s money out of our treasury that’s not being replaced by anything.”
Longtime Norwich resident and proprietor Scott Sutton, head of the Norwich based Hercules Properties property management firm, spoke in favor of the proposal during a public forum preceeding the council’s vote. Hercules Properties currently manages four separate parcels on North Broad and is looking to invest in the vacant property at 42, 44-46 N. Broad – a tremendous investment buoyed up by the 421-m property tax exemption.
“We aren’t some rich investors who’ve come in here to throw money around,” Sutton said, pointing out structures on North Broad Street as well as 20 Cortland Street that have been or in the process of being rehabilitated by Hercules Properties. His hope with 42, 44-46 N. Broad is to attract the professional working class. As far as the low-income mandate goes, Sutton said intent is to attract students or entry level employees.
Despite benefits the law would have toward community revitalization, the proposal was met with opposition from some property owners who argued certain investors should not be given preferential treatment.
“All buildings with three or more (apartments) should be a part of this,” said Richard Barnes, owner of a commercial property currently being renovated on South Broad Street. Barnes cited expenses born by himself as well as those of other developers who have not received grant funding or tax breaks. The 421-m property tax exemption, he added, gives an unfair advantage to certain private investors.
The issue of adding low-income housing to the downtown area also raised red flags for some opponents who feared it would draw unfavorable tenants to live in downtown apartments. For others, the long-term exemption is reason enough for concern.
“The issue I have is it’s a 20-year program,” said city resident Ed Morano, adding that a long-term exemption is likely to put future council members in a bad position. What’s more, he noted past private developers who have successfully rehabilitated properties without government assistance. “If you’re a serious investor, you’ll put your money into it and you won’t need a lot fo help from government and other taxpayers,” he said.
Though the proposal failed to pass, city law makers have expressed interest in pursuing a similar local law in the future.
Sun Staff Writer
smagrath@evesun.com
NORWICH – A proposed tax exemption to incentivize private investors to rehabilitate run-down properties on the city’s main drag was narrowly shot down at a meeting of the Norwich Common Council on Tuesday.
While city officials agreed an incentive would help better market vacant buildings located in the downtown area, the proposal was denied in a 4-2 vote due to what some councilmen say are ambiguous terms of the law.
“I believe it is not in the best interest for the city at this time,” said Ward Three Alderman John Deierlein, citing the proposal’s unproven track record and requirement for a long-term commitment. “Therefore, I can’t support this.”
The law, permitted under Section 421-m of the New York real property tax law, would allow city officials to adopt an ordinance excusing developers from taxation of increased property taxes that result from building renovations. The law stipulates developers who rehabilitate a structure with commercial space and room for at least three apartments – 20 percent of which must be made available to persons of low to moderate income – would be taxed according to assessments of the property prior to repairs for a minimum of 12 years.
Moreover, the law would allow city officials to designate specific areas that would be eligible. After the 12-year benchmark, property owners taking part in the program would be taxed according to the new property assessment, which is bound to increase due to repairs to the property. For example, if a developer purchases a building assessed at $10,000 and restores it to be assessed at $100,000, said developer would pay property taxes based on the original $10,000 assessment for the first 12 years.
Under the law, a tax exemption would be in place for a total 20 years, then decline in increments from 100 percent the first year to just 20 percent by year 20. After the 20th year, the property would be fully taxed.
City Mayor Joseph Maiurano said although the law isn’t ideal, the issue is a matter of weighing pros and cons.
“We’re not losing anything and we would be gaining a downtown that’s fixed up a bit,” Maiurano said, adding that government incentives typically play a key role in marketing abandoned city-owned properties, including the three-story building at 42 and 44-46 N. Broad St. and the former Ungentine building on Hubbard Avenue. “If you don’t prime the pump, what happens? The water does not come out.”
“What happens if we don’t pass this law?” asked Ward Two Alderman Terry Bresina, a proponent of the 421-m legislation. “Most people in this room would probably say nothing and sadly, that’s probably true ... Abandoned buildings generally end up in the city’s hands and they are not an asset in any way. They are a liability.”
Bresina also cited the expense to demolish dilapidated buildings and predicted demolition of larger structures such as that at 42, 44-46 N. Broad may near $100,000. “That’s money out of our treasury that’s not being replaced by anything.”
Longtime Norwich resident and proprietor Scott Sutton, head of the Norwich based Hercules Properties property management firm, spoke in favor of the proposal during a public forum preceeding the council’s vote. Hercules Properties currently manages four separate parcels on North Broad and is looking to invest in the vacant property at 42, 44-46 N. Broad – a tremendous investment buoyed up by the 421-m property tax exemption.
“We aren’t some rich investors who’ve come in here to throw money around,” Sutton said, pointing out structures on North Broad Street as well as 20 Cortland Street that have been or in the process of being rehabilitated by Hercules Properties. His hope with 42, 44-46 N. Broad is to attract the professional working class. As far as the low-income mandate goes, Sutton said intent is to attract students or entry level employees.
Despite benefits the law would have toward community revitalization, the proposal was met with opposition from some property owners who argued certain investors should not be given preferential treatment.
“All buildings with three or more (apartments) should be a part of this,” said Richard Barnes, owner of a commercial property currently being renovated on South Broad Street. Barnes cited expenses born by himself as well as those of other developers who have not received grant funding or tax breaks. The 421-m property tax exemption, he added, gives an unfair advantage to certain private investors.
The issue of adding low-income housing to the downtown area also raised red flags for some opponents who feared it would draw unfavorable tenants to live in downtown apartments. For others, the long-term exemption is reason enough for concern.
“The issue I have is it’s a 20-year program,” said city resident Ed Morano, adding that a long-term exemption is likely to put future council members in a bad position. What’s more, he noted past private developers who have successfully rehabilitated properties without government assistance. “If you’re a serious investor, you’ll put your money into it and you won’t need a lot fo help from government and other taxpayers,” he said.
Though the proposal failed to pass, city law makers have expressed interest in pursuing a similar local law in the future.
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