April 19, 2013
County skeptical of abatement plan
Many questions about city program to encourage rehab of downtown buildings
Cortland County officials Thursday met with skepticism plans for a tax abatement program in the city downtown business district, questioning the need for residential dwellings in that area as well as the merits of the program.
Thoma Development Consultants program manager Richard Cunningham presented the plans for the program to the county Budget and Finance Committee. The city Common Council held a public hearing on the matter Tuesday and will vote on it May 7.
Cunningham is looking for all three taxing entities, the county, school districts and city, to opt into the program.
Having all of three would offer the fullest tax abatement for any developer that chose to partake in the program. Not all three need to opt in, if the city is the only participating entity then only city taxes would be abated for the time period. But the city must opt in for any other entity to partake.
The idea of the program is to encourage rehabilitation of downtown buildings. Taxes on improvements would be delayed for 12 years.
Landowners would instead pay taxes on the property at pre-construction rates until year 12, when the new assessed value would gradually be phased in until year 20 when they would be paying full market value.
The program is offered until 2015. It was signed into law by the state in 2011 and county Real Property Tax Director Randy Deal said that as of today he was told by the state no-one in the state has taken advantage of the program.
County legislators said Thursday there are still many unanswered questions about the program.
Ray Parker (D-2nd Ward) wants a feasibility study showing the need for housing in the price ranges Cunningham provided. Those range from $960 for an efficiency to about $1,400 for a three bedroom, rates which Cunningham said would be geared toward “young professionals,” employees of SUNY Cortland or Cortland Regional Medical Center, for example.
Parker is also concerned that a landlord might make a profit off the backs of taxpayers by rehabilitating a building at no cost and then selling it for the new value, without staying around to pay the higher property taxes later on down the road.
Parker wants to see more information on the program.
“I would like to see other cities that have benefited from this and I’d like to see how it works,” Parker said.
County Administrator Martin Murphy was also skeptical of the plans.
“Any redevelopment project in the downtown upper floors has got to have three components to ensure success,” Murphy said. Those are grant funds and low-interest loans in addition to an exemption program.
He said offering only an exemption program is essentially funding a redevelopment project on the backs of taxpayers.
Another concern Murphy has is stalling property tax assessments at the preconstruction rate for so long. He says the county is not in the position to take any less in taxes than full market value dictates.
Before signing onto the program, Murphy said he would urge a feasibility study be done to ensure there is market demand for the housing.
Legislator Dave Fuller (R-Cincinnatus, Taylor, Freetown and Willet) was concerned about accommodating parking for the new units. He pointed out that tenants would need parking lots for their vehicles and there is already a shortage of parking downtown.
But Legislator Kathie Arnold (D-Cuyler, Solon and Truxton) favors the proposal.
She pointed to the upper floors of buildings in downtown Cortland that have been empty for years and may otherwise remain empty and ultimately deteriorate because they are costly for the owner to renovate.
“If they are rehabilitated they’re going to be there in good condition for decades so even if we have to not realize an increase in tax revenue for 12 years ... in the long haul we will be way further ahead,” Arnold said.
Arnold said “downtown living is the place to be” and that it makes sense to rehabilitate buildings that already exist instead of converting green space for that use.
The county would have to adopt the law by March 2014. The city has to adopt it by August and the school districts can opt in anytime after that, Deal said.
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