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Watertown officials discuss new tax-exemption program for developers

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City of Watertown officials are considering a sweeping new tax exemption program for mixed-use developments that would avoid developers’ having to go through the sometimes turbulent payment-in-lieu-of-taxes process.

On Monday night, the City Council discussed the proposal first brought up a few months ago by Councilman Jeffrey M. Smith and now supported by Mayor Jeffrey E. Graham. No action was taken.

Although the mayor insisted it is too early to know whether COR Development Co. would take advantage of the program, the Syracuse-area developer’s $65 million to $70 million project probably would qualify, other council members said.

COR has announced plans to demolish the former Mercy Hospital and replace it with 168 residential upper-floor units and 42,000 square feet of commercial space on the ground floor.

If the city eventually adopts the tax exemption program, developers of mixed-use projects no longer would have to approach the other two taxing jurisdictions, Jefferson County and the Watertown City School District, to negotiate tax deals.

Instead, the program, called 485-a of the state’s Real Property Law, would allow qualified mixed commercial and residential projects to receive 100 percent exemption for the first eight years and then partial exemptions phasing out over the next four years. Developers still would have to apply for the program, but eligibility would be based on established criteria.

The program would have to be approved before demolition, which COR is expected to begin this fall.

Under the existing program, terms of a PILOT can change from project to project, depending on the whims of council members and the economic times.

The tax deals also have caused angst and confusion for the Board of Education in recent years, especially in regard to a pair of large apartment complexes now under construction in the town of Watertown.

Even though it was their first discussion, council members Monday debated the merits of the tax exemption program for about 30 minutes. A majority of the council appeared to support the idea, but Councilwoman Roxanne M. Burns cautioned that the city still needs to persuade the school board and county to allow it. The Jefferson County Legislature and the city school board must agree to it before the city can implement it, she noted.

But the mayor said he told the two other taxing jurisdictions that the subject would be coming up at Monday night’s council meeting.

“I don’t believe every developer has to get something to invest in our area,” Ms. Burns said.

The program would not only help big developers, but people who want to make investments in smaller projects, said Councilwoman Teresa R. Macaluso.

“I think it’s a step in the right direction, for sure,” Ms. Macaluso said.

Council members mentioned specific downtown buildings — the planned Lincoln Building restoration project on Public Square and the vacant Empsall Plaza and Berow & Monroe Shoes building on Court Street — that could benefit from such an exemption program.

In other business, the City Council:

n Tabled a plan to establish a $50 vending fee to sell goods at Thompson Park, Kostyk Fields, Marble Fields and the North Side Athletic Fields. Council members told the Parks and Recreation Department to work out some kinks in the proposal and bring it back next year.

n Tabled approving a $69,905 state Division of Homeland Security grant for the Watertown Fire Department to purchase a large four-passenger pickup truck with towing capabilities. Council members objected that the vehicle would not only be used for the city Fire Department but also for Jefferson County.

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