The Jefferson County Industrial Development Agency board on Thursday approved a 15-year tax break for a restoration project to build 50 apartments on the upper floors of the Woolworth building on Public Square.
Developers David Gallo and Erich H. Seber are expected to close on the financing for the $15.4 million project in the next two months, it was reported at the board meeting. Along with one- and two-bedroom affordable apartments, the project will include 11,000 square feet of mixed-use commercial space on the ground floor.
To be made final, the payment-in-lieu-of-taxes agreement, or PILOT, will have to be approved Tuesday by the Jefferson County Board of Legislators; it was approved last month by the city of Watertown and the Watertown City School District.
The city asked the JCIDA to lead negotiations with the taxing jurisdictions to approve the tax break, said Donald C. Alexander, CEO of the development agency. He said the entities cooperated to get the project approved because they all recognized the importance of restoring the historic downtown building.
The Woolworth project, in my view, is one of the best things that have happened in the community because we all understood the need to work together to get this done, Mr. Alexander said. Projects like these cannot occur without the support of this tax-incentive program. If we were not using it, that building would be demolished and the citys taxpayers would have to pay the bill. And if the downtown looks like a derelict Detroit, no one wants to be a part of it.
In April, the JCIDA board agreed it would stop shepherding tax breaks for housing developers. But in the case of the Woolworth project, city officials reached out for the agencys assistance to negotiate the PILOT, said board Chairman David J. Converse.
Thats the big thing, that the city came to us to say they wanted this project, because weve been on the record saying wed offer no more tax breaks unless a municipality comes to us first, he said. This is a historical building in downtown Watertown, and it goes to show that the IDA is doing its best to help out the city.
I think we should send Mayor Graham a thank-you letter, quipped board member W. Edward Walldroff.
Although state law prohibits IDAs from providing tax incentives for retail projects, the Woolworth building is an exception because its located within a distressed economic area, JCIDA attorney W. James Heary said. The county administrator will be required to approve the PILOT as an exception under state law.
The PILOT would start at a fixed rate of $9,000; in year five, it would increase to $12,000, then climb to $15,000 in the 10th year. The full payment of $24,578 will be required in the 16th year.
The Woolworth restoration project also will be funded by $1.073 million in housing tax credits and $750,000 in Housing Trust Fund money that was awarded in May. Developers also acquired a $2.5 million Restore New York grant.
The Woolworth project is just one of a handful of downtown restoration plans introduced by developers this year that the JCIDA is expected to play a role in moving forward with tax incentives. Developer Brian H. Murray is restoring the ground floor of the City Center Plaza and has crafted a plan to renovate the Lincoln Building into apartments and commercial space. COR Development Co., Fayetteville, will demolish the former Mercy Hospital on Stone Street to build residential, retail and commercial space on the property.
The negotiation between municipal leaders to approve 15-year tax break for the Woolworth building is a blueprint that will enable us to move forward with other projects downtown, Mr. Alexander said. And a collective approach is the only way to do that.
On Thursday the JCIDA board also approved an amended loan for Stream Internationals capital improvement project that will increase Jefferson County Local Development Corp.s contribution from $400,000 to $500,000. The adjustment was needed because the agency discovered that North Country Alliances bylaws prevent it from making the $100,000 loan it previously approved. Also contributing loans toward the $4.2 million expansion of the Arsenal Street call center will be the Development Authority of the North Country, in the amount of $250,000, and Watertown Local Development Corp., also in the amount of $250,000.