By LIZ SKOCZYLAS
OBSERVER Mayville Bureau
A tax break granted to a private for-profit developer by the Chautauqua County IDA has Jamestown Mayor Sam Teresi enraged.
Thursday morning, the CCIDA board unanimously approved a decision to deviate from typical negotiations with the potential buyer of Covenant Manor - a privately owned subsidized housing building - instead granting a payment in lieu of taxes. This decision, however, is leaving Teresi fuming.
"We welcome the developer to Jamestown. We are actually looking forward to working with them on what we still believe to be a very good thing for downtown Jamestown and the senior citizens who live in that building. We think the project can be a good addition to the community," Teresi said. "But, this is local corporate welfare at its worst."
Covenant Manor, which is located at 23 W. Third St., provides low-income housing to seniors. The eight-story building is a former hotel which was renovated in the 1970s as senior housing. The building is under a purchase agreement with Millennia Housing Management, LTD in Cleveland, but is currently owned by the Chicago-based Evangelical Covenant Church.
"Millenia, the company that will own Covenant Manor, LLC, is a very large operator of Section 8 housing. They are award-winning, they're great professionals," said Bill Daly, CCIDA director.
According to Daly, Millennia intends to purchase the building for $2.5 million, following a decade of no one wanting to purchase it. Additionally, the company plans to put another $3 million into building renovations.
Currently, no tax payments are being made on the building. The plan the CCIDA approved, however, would have Millennia paying taxes in full in 11 years.
"They wanted a very low PILOT. And we said, 'If you had a decent assessment, not the $2.5 (million selling price) but $1.5 (million), you'd be paying $75,000 a year in property tax on that building," Daly said. "So, they wanted $20,000 a year for one year and we said, no, you're going to pay more than a standard IDA PILOT."
Daly continued that typically, businesses save 70 percent on tax payments over 10 years. However, with this agreement, Millennia would be saving less than 50 percent.
On the other hand, though, Teresi calls the deal unfair to other companies in the same line of residential business and who have to pay taxes in full and on time each year.
"There are other ways in which we could have worked together to help with this project just as we have in other recent cases, like the Bradmar Village redevelopment, in which that project stayed on the tax rolls and continues to pay its full tax obligation to the city, county and school district," Teresi said.
Teresi questioned why the for-profit developer needed a taxpayer subsidy, as well as why the IDA - whose goals include attracting and retaining business - is working on a project that entails existing subsidized housing.
"The local taxpayer subsidy that the IDA approved (Thursday) for a private for-profit subsidized housing project is not needed, it's not appropriate, it's unfair to the other local subsidized housing providers, who are already paying their fair and full share of taxes," he said. "This project does nothing, zero, zilch from an economic development and a job creation standpoint."
Daly, however, said that in addition to the money that the developer will be putting into the building, the project will also bring more people downtown.
"They say that they can get 100 percent occupancy. It's not anywhere near 100 percent occupancy now. Plus, they're willing to spend $3 million to remodel the place. So, it's a wonderful deal, really," Daly said.
With the tax breaks, Teresi said it will be the taxpayers in the city of Jamestown who will ultimately suffer through the granting of this PILOT agreement.
"There is really no such thing as a 'tax break.' One person's tax break is the next guy's increased tax bill," Teresi said. "In the end, someone is always on the hook for the bill. Today, it looks like the taxpayers of Jamestown in Chautauqua County took it in the end yet again. This is outrageous. This type of thing needs to stop."
The way the PILOT program works, Daly explained, is that the developer will make the payments directly to the CCIDA. The CCIDA then will break up the payments between the city, county and school district in the same proportions each would receive if being paid in full.
Millennia will, at the end of 10 years, begin making payments in full directly to each entity, rather than through the CCIDA. And, beginning in year 11, it will be making those payments based on whatever assessment it negotiated with the city.
The CCIDA is able to make PILOT and other taxing agreements on its own, without consulting the city in which a project is taking place. However, Daly said, if it were to attempt to change the percentage of what each governing body would receive, it would need to pass through the County Legislature, City Council and school board.
Additionally, the CCIDA receives 1 percent of the total of each project it works with, as a fee. Daly said he believed this year, the CCIDA collected "a couple hundred thousand dollars" in its revenue stream.
"I think we probably budgeted for $250,000 and we'll probably close out the year somewhere near there. We've had other years where we've gone way, way, over and we've had other years where we've been under. This year, we're pretty on track with that," Daly said.
Despite the CCIDA board unanimously approving the PILOT agreement, Teresi still feels that the entire process should have gone differently.
"(The CCIDA) have done and continue to play an invaluable role in all types of legitimate projects," Teresi said. "This was an improper role to play in a project that shouldn't be assisted by an industrial development agency."
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