NORWICH – The Chenango County Industrial Development Agency (IDA) is defending its acceptance of a private developer’s tax break application that would hasten the $14 million redevelopment of a landmark commercial building in downtown Norwich.

In June, the IDA accepted an application for a 20-year payment in lieu of taxes (PILOT) agreement for 20 American Ave., known locally as the Unguentine building. The agreement would expedite ongoing efforts by private developers to construct up to 30 executive apartments in the four-story building, along with renovated space for commercial units on the ground floor.

20 American Ave. LLC, the company behind the proposed project, anticipates work on the building will begin by the fall and aims to have it completed within two years. If the IDA board agrees to a PILOT, the increase in assessment would be phased in over 20 years.

The Unguentine building generated $12,000 in tax revenue for the city, county, and Norwich City School District in 2026, according to city tax rolls. It holds a $150,000 taxable value. If investors follow through with development, tax revenues would jump significantly by the end of the PILOT agreement, said Sal Testani, president and CEO of Commerce Chenango, the umbrella organization for the Chenango IDA. And while it’s true that more tax revenue would be generated if the building were taxed fully, he added, a PILOT ensures higher tax revenues overall versus having the building sit dormant for another 20 years.

“The PILOT is one lever that the state expects you to utilize for developers to be incentivized to fix these buildings up,” Testani said.

Now facing public criticism over the proposed PILOT, including from other private developers and members of the Norwich City Council, the IDA argues that the temporary tax abatement is a necessary incentive for developers to overhaul the battered Unguentine building and would actually lead to tremendous gains for the city.

“If we do this PILOT, which means he can get it developed, it’s $1.45 million in tax revenue and 30 people living downtown and all the residual impacts of that,” said Testani. “If the city collects more taxes over a period of time than it could imaginably do so over that same period of time, this is considered a good financial investment. It is economic development.”

The Unguentine building has been vacant for half a century and has seen several failed attempts by private investors over the years to have it restored. The current proposal from 20 American Ave. LLC received a financial boost in 2022 when it was named on a list of redevelopment projects in the City of Norwich earmarked for funding through the $10 million Downtown Revitalization Initiative (DRI) awarded by New York State. The company garnered $3 million in DRI grants for the Unguentine building project and intends to use private loans to finance the remainder.

Real estate records show the company purchased the 67,000-square-foot building for $112,000 in 2017 with the hope of developing it into residential space. Adam Spence, a Norwich resident and co-owner of 20 American Ave. LLC, said he and Garth Coviello, his co-proprietor, have since been working under the direction of state and federal officials to obtain additional historic tax credits, which adhere to strict guidelines regarding work done to the exterior of the building. He said they are still awaiting final approval.

The IDA Board accepted the PILOT application in June, citing a need for more quality housing in the city. The agreement is a first for the Chenango IDA, which has never struck a PILOT deal for a residential project.

“There are areas of the state where housing projects are a certain book of business for IDAs,” said Chenango IDA Chairman RC Woodford, pointing to areas like Tompkins County that have offered tax breaks for housing projects around colleges and universities.

The Chenango IDA has yet to work out the exact details of a PILOT agreement, or even vote to implement one. Should the IDA board agree to terms of a tax break, it must set a public hearing before one goes into effect. The IDA board is also weighing the possibility of holding an informational presentation for the public prior to any public hearing.

“The question we get from other developers is, ‘Why don’t we get those tax breaks?’” said Testani. “We would do this for anyone. If somebody wanted to put $14 million into a building that’s worth $150,000, we would really have to contemplate why we wouldn’t want to do that.”