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Jefferson County board again refuses sales tax break for developer

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Refuse me once, shame on you. Refuse me twice...

The Jefferson County Industrial Development Agency declined to give a hotel developer a sales and mortgage recording tax break for a second time in three years because, in both cases, the projects were under way when the request was made.

Hemisphere Management, Rochester, is building a 106-room Fairfield Inn on Commerce Park Drive. The developer started site work in the summer of 2010, then stopped late in the year. The developer submitted an application for tax breaks to the agency in May, CEO Donald C. Alexander said.

But site work and construction started again before then, board Treasurer Michelle D. Pfaff said.

“This is similar to Candlewood,” she said. “They don’t need the assistance because they’ve already started on their own.”

Hemisphere also built Candlewood Suites Hotel on Herrick Road off Route 11 in LeRay. That hotel was denied a sale-leaseback in May 2009 because it was nearly complete when the tax breaks were requested. At that time, the board called for a policy not to extend benefits for projects already under way.

On the Fairfield, JCIDA attorney W. James Heary said the developer has not yet secured outside financing but said it would proceed regardless.

“The developer has taken an extreme risk by proceeding without financing,” he said. “Our entire fee for the application, which is $95,000 — the developer wanted to wait until they got financing.”

Board member Kent D. Burto didn’t think that changed the situation.

“I don’t know how we can turn around and say no to Candlewood before and turn around and say yes now,” he said.

In other business, the board agreed to give a $40,000 microenterprise loan to Richard Lagano to buy merchandise and have working capital for his garage and auto sales business on Route 37, north of Route 342.

Mr. Alexander also updated the board on negotiations between two apartment developers planning the projects in the town of Watertown and the town of Watertown, Jefferson County and Watertown City School District for property tax breaks.

The projects will help alleviate the severe shortage in market-rate housing, which is predicted to become a very tight market as more soldiers return to Fort Drum from Afghanistan.

“We have two meetings with the taxing jurisdiction and we have a skeleton of an agreement,” he said. “We are resolving several minor issues to make it acceptable to all parties, so we need to have another meeting to work out the details.”

Board members asked about the length of the potential payment-in-lieu-of-taxes deal and the terms.

“I don’t know where we’re going to end up,” Mr. Alexander said. “It’s been all over the map.”

Board President David J. Converse said the groups need to pay attention to outside factors that may deter investors from supporting the housing construction.

“The biggest thing we need to keep an eye on is every time there is an article on the push to reduce military spending or cutting soldiers,” he said. “The financial people are the ones hitting the developers and raising red flags on the projects.”

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