JAMESTOWN – A tax abatement extension for a housing property owner in downtown Jamestown would lead to the city missing out on more than $300,000 in anticipated tax revenue. That was the message from Jamestown City Development Director Vince DeJoy, who spoke during a public hearing Tuesday morning, held by the Chautauqua County Industrial Development Agency.
The IDA is considering a seven-year extension of a current 10-year Payment in Lieu of Tax (PILOT) agreement with the owners of Covenant Manor Apartments in downtown Jamestown, which has an assessed value of $3,065,000. The extension is being requested by Millennia Housing Development of Cleveland on behalf of Prairie Covenant NY, L.P., which owns the 88-apartment, eight-story building at 23 W. Third St that provides housing for low to moderate income seniors. The group is asking for the extension because of financial challenges it’s faced while delivering on its promise of making $3 million in renovations to the building.
The PILOT that is currently in place was first approved in 2012 and provides an abatement schedule for the years 2013 through 2022. The first year of the agreement allowed Millennia Housing Development to pay 50 percent on its property taxes to Jamestown, Chautauqua County, and the Jamestown School District, with a 2 percent increase for each subsequent year. Millennia would then be required to pay full tax value by 2023. But if the latest extension request is approved by the IDA, the property tax abatement period would be extended to 2030, with 7 percent increases scheduled, starting in 2023.
FINANCIAL IMPACT ON CITY
According to DeJoy, the existing 10-year PILOT agreement has already resulted in Millennia Housing Development saving over $1,132,000 in property tax payments between 2013 and 2023. Of that amount, more than $460,000 will be lost by the city during those 10 years. In addition, Millennia was also given exemptions during the 10-year time period on sales tax, real estate tax, and mortgage tax. If approved by the IDA, the PILOT extension would result in an additional total property tax savings for the property owner of $769,500 between 2023 and 2030. Of that, more than $316,000 would be lost by the city over the seven-year period.
DeJoy said the city is opposed to the extension for a couple of reasons.
“This proposed benefit is ultimately place upon the shoulders of an already burdened local, school, and county property taxpayers,” DeJoy said.
“Moreover, the city doesn’t believe that the reasons and rational provided are warranted to receive this additional benefit at this time,” DeJoy added. “It is our understanding, as provided by Millenia Housing Development, that unforeseen additional costs for renovation to the exterior facade of the building, as well as the investors’ and lenders’ project financing requirements to meet financial thresholds is the reason for the request to extend the property tax PILOT. Those project challenges should not be the responsibility of local property taxpayers, whom is already providing a substantial benefit. Those burdens should be born by the private developer, not the citizens of Jamestown and Chautauqua County.”
According to DeJoy, Millennia has done a total of $2.3 million in renovation work on Covenant Manor. DeJoy said the city is obviously thankful for the upgrades done to the building, although he also said there was some disappointment the commercial space on the first floor has yet to be filled. However, the residential portion of the building is at full occupancy.
Although both Jamestown School District and Chautauqua County would also be affected by the PILOT extension, only the city had a representative attend the hearing to address the impact the abatement would have on property tax revenue.
Also speaking during the hearing was city resident and downtown property owner Peter Miraglia, who said the owners should be requesting a lower assessment on the value of their property, rather than requesting an extension on their current PILOT agreement.
The IDA board will act on the extension request during it’s monthly meeting next Tuesday, Jan. 24 at 10 a.m. If the extension were granted, the average savings in property tax payments for the building owner would amount to about $112,000 per year, over the full 17-year period of the PILOT.
The meeting will be held in the conference room of the BWB Building in downtown Jamestown and is open to the public.
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