Morgan Management claims 202 project dead; local leaders not ready to give up

The failure of local taxing jurisdictions to come to terms with Morgan Management on a property tax break agreement will kill construction of the 394-unit project off County Route 202, the developer said Thursday.

Robert C. Morgan, owner of Morgan Management LLC, Pittsford, said he needs a 15- or 20-year payment-in-lieu-of-taxes agreement to build the project, which could fill a large chunk in the need for housing as more Fort Drum soldiers return from deployments.

“It is not going well; we had envisioned a 15-year PILOT off a 20-year PILOT we originally proposed and we went back and revised it a couple of different times and now they’ve come back with a 10-year PILOT at 50 percent,” he said. “If I can’t get a PILOT that’s reasonable, I’m not going to build a project. I will not be able to make a mortgage payment without a PILOT.”

But local officials said Mr. Morgan’s statements are coming in the middle of the negotiation process. Donald C. Alexander, CEO of the Jefferson County Industrial Development Agency; Joel R. Bartlett, supervisor of the town of Watertown; and Scott A. Gray, county legislator, all say negotiations are at a critical juncture.

“It is not over,” Mr. Alexander said. “We cannot afford to let it be over and whoever is suggesting that has a different agenda.”

But Mr. Morgan said he’s already faced many delays and can’t wait indefinitely for the taxing jurisdictions — the town, county and Watertown City School District — to come around.

“I bought the property and assumed there was sewer there, because there was at Sam’s and Walmart, but they didn’t put the capacity in so now I’m faced with a $1.8 million sewer project,” he said. “There are no water districts on 202, so it’s not like the project across the street. My water will be $800 to $1,000 per unit per year, but theirs is $300 per unit per year.”

Morgan Management was awarded a $3.74 million low-interest loan for its project and “the project across the street,” Beaver Meadows Apartments, a 305-unit project south of Target in COR’s Towne Center, Route 3, was awarded a $3 million loan for its project. The loans came from a $7 million pot built up by the county, JCIDA and Development Authority of the North Country. The public funding is trying to spur construction of 1,035 units.

But the loans aren’t enough, Mr. Morgan said.

“In today’s world, I need a PILOT of some sort,” he said. “They’ve brought up the issue of DANC money, but I’m borrowing it at 3 percent and using it to cover the infrastructure costs.”

A PILOT would help Mr. Morgan secure commercial lending, which is notoriously difficult for apartment projects.

“If they could guarantee 95 percent occupancy for the next 20 years, I wouldn’t need a PILOT,” he said.

But with deployments, occupancy falls to 75 percent at some times, while rising to 99.6 percent in recent weeks.

Mr. Alexander said the parties are still working toward an agreement with Mr. Morgan.

“Right now is an absolutely critical period to resolving all that,” he said. “We’re right in the middle of the discussion.”

The loan funding announcement was made on Oct. 5, only days after the two projects began PILOT discussions.

“The county, school and town have come together very well on this issue,” Mr. Alexander said. “They’re not there yet, but there has been significant movement on all of their parts.”

The town has no property tax, so it wouldn’t lose out on potential revenue by a PILOT. Many county legislators have voiced opposition to PILOTs that would last longer than 10 years for housing; many want the previous status quo of a 3-year PILOT to be applied across the board.

Mr. Bartlett said the town continues to push for an agreement.

“We’re willing to continue to do our part to continue the negotiation process,” he said. “We certainly recognize the need and importance of both housing projects — all parties recognize that.”

Mr. Gray, chairman of the Finance and Rules Committee, said the county is willing to move and has moved.

“I am not hung up on the terms of a PILOT, the length of a PILOT, as much as I am the financial exposure of the taxpayers; that’s where I’m coming from,” he said. “Anybody who wants to step up and say, ‘We’ll put more money on the table,’ I’d welcome them. Right now, we have got the greatest value in the abatement deal and tax break deal out there.”

Mr. Gray ascribed Mr. Morgan’s statements as a tactical move by current landowner Philip J. Simao, who has other conflicts with the county.

“It’s the way Mr. Simao negotiates; I expect nothing less from him,” he said. “If he wants us to discuss this publicly, I have nothing to hide with what we’re putting on the table and I think it is generous.”

Mr. Simao deflected the accusation that he’s involved.

“I am flattered that Scott Gray thinks so highly of my negotiating skills that I could talk Bob Morgan, who owns over 15,000 housing units, medical complexes, amusement parks, marinas and mobile home parks all over the country, into how he should negotiate.”

Mr. Morgan said simply that he can’t wait for an agreement that may never happen.

“I wanted to start in the fall and have some units ready in the spring, but I couldn’t start because of these issues,” Mr. Morgan said. “And now I’m delayed to the spring, but really, without a PILOT, I’m getting delayed forever. In my mind, the deal’s dead.”