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April 18, 2013

 

Developers cheer tax abatements

City considering program to encourage downtown building development

TaxBob Ellis/staff photographer
A pair of downtown building owners voiced support for a city program that would defer tax increases from property improvements in an attempt to foster renovations of upper floors in downtown buildings. The city will vote on the program May 7.

By CATHERINE WILDE
Staff Reporter
cwilde@cortlandstandard.net

The Common Council Tuesday heard from several supporters of a tax abatement program that would encourage landlords to renovate buildings at a public hearing on the law.
The proposed law would defer for 12 years any property tax increase landlords would experience by improving their buildings. Years 13 through 20 of the program would start to phase in 20 percent increases in the assessment until finally the assessment reaches full-market value.
Landlords Emmanuel Pothos and Phil Simon said after the hearing that such a program would finally make it feasible to do renovation projects that would otherwise be too costly.
Pothos and his family own the vacant building on the northeast corner of Court and Main streets. It has stood empty since a 2005 fire damaged it.
Pothos said the goal has always been to restore the building to “pre-fire condition” but that it is too costly to renovate without a program like this.
“These types of programs are very necessary to bring projects to fruition,” Pothos said.
Simon, who owns with his brother the building on the corner of Groton and Main Street which houses Sheridan’s Jewelers, and the building across from the Post Office, which houses Action Sports, agrees.
Simon said he has had developers look at both buildings to purchase to develop the upper floors but in both cases the numbers did not work.
“I can’t make it work with the dollars it takes to do a project of that magnitude today to today’s codes,” Simon said.
Converting the old buildings to current standards would be so costly that even with grant funds it does not work, he said.
But a tax abatement program makes sense on many levels, he said. Without renovations the buildings will sit there vacant but with improvements they will draw people downtown and increase sales tax generated.
At the same time, it will be feasible for landlords to embark on costly renovations because they can use money that would otherwise have to go to paying an increase in tax assessment on the building, he said.
Over time, when the abatement runs out, the benefits the downtown has seen by increased business will have offset any lack of surplus tax dollars and those taxes are gradually phased in, he said.
Two detractors also spoke at the meeting, Elsie Ferro and Helen Ackroyd.
Ackroyd said Wednesday she thinks there are too many unanswered questions.
She questions how parking issues would be handled and whether the buildings would be in good enough shape to be renovated.
“And the type of people that would live there, what would happen if one building is done and another is not,” said Ackroyd.
Mayor Brian Tobin says there is a misunderstanding about the program. It is not a “tax break” program, said Tobin, since landlords still have to pay the full assessed value of taxes on their property. It merely delays the new assessment on the property for 12 years, giving the property owner time to recoup the value of their investments.
Tobin said the Common Council will vote on the program May 7.

 

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