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Watertown City School District puts brakes on PILOT

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Watertown City School District postponed consideration of a property tax break that will help a 305-unit apartment project be built off Route 3 in the town of Watertown.

The Board of Education tabled the PILOT for COR Development Co., Fayetteville, and its Beaver Meadow Apartments at its meeting on Tuesday night because it did not have a final document outlining the terms of the agreement.

But discussion by board members indicated there were more against the PILOT than for it.

“The biggest issue of this is I would like to see some sort of explanation as to why they need such a huge tax break,” said Deltra B. Willis, board member. “I honestly don't think that Fort Drum will close down if we don't give them this tax break.”

Other taxing jurisdictions — the town of Watertown and Jefferson County — indicated Monday they wouldn't consider the PILOT until they had a written version from Jefferson County Industrial Development Agency. That is expected to be in hand by Friday.

The Town Council meets Thursday and county Board of Legislators meets Tuesday. A special Board of Education meeting will be announced for next week to take up the PILOT again.

Information, supposedly from the district's consultant on the payment-in-lieu-of-taxes agreement, was leaked to WWNY-TV7 on Tuesday that showed a “worst-case scenario” for the district of a $9 million gap between the $1 million the district would receive over the 10 years of the PILOT, and the expected $1 million-per-year cost to educate expected pupils living in the new housing.

A meeting of representatives from the taxing jurisdictions and JCIDA occurred as planned on Tuesday afternoon. JCIDA CEO Donald C. Alexander said district officials did not bring the report to the meeting.

“We met, talked and agreed not to say much about anything until we get this thing straightened out in a variety of different ways,” he said. “All of them felt that we should sit on this and not say anything.”

Channel 7 reported that the school district would receive $873,000 over 10 years from COR and $150,000 for additional bus routes, one of the district's primary concerns.

“We refined the terms of the PILOT agreement during the discussions, making sure that all of the jurisdictions understood the terms for the PILOT with COR and the distribution terms with the taxing jurisdictions,” he said. “And they were absolutely all singing the same tune.”

According to Channel 7, the district could have as many as 296 students per year from Beaver Meadows and would need to come up with $9.3 million to educate those students.

District business manager Dale M. Morrow roughly verified those numbers. If the maximum number of 296 students entered the school district because of the COR Development housing project, she predicted total cost for the district to reach $10 million over the next 10 years. This number does not include the $90,000 per additional bus run that would need to be budgeted for the additional students.

Her calculations included state aid and federal impact aid. Last year, the district received approximately $331,000 in federal impact aid, money given to help educate military-dependent students. Federal impact aid calculations are based on the number of eligible students that enroll in a district and how many days they attended class.

But 296 may be a high estimate. Superintendent Terry N. Fralick reported to the school board in February 2010 that the district added 25 to 30 students from the 200-unit Summit Wood project after Norstar Development USA began renting apartments in March 2009.

Yvonne E. Gebo, board member, pointed out that although the Army formula allows one child per room, families might opt to put multiple children in a room.

“296 as the worst case scenario is not actually the worst case scenario,” she said. “It is possible that the number can be more than that.”

Board President Michael R. Flick defended the reasoning behind the high expectation after the meeting.

“It's just a working number. That's the expectation that's given based on the Army's formula saying every kid gets a room,” said Mr. Flick.

Board member Patrick J. Powers said that the likelihood of having to shell out $9.3 million was slim.

“Obviously, that number you're using and the final number you are arriving at has to be the absolute worst case scenario,” he said. “I'm afraid the community at large is just hearing this figure. We just need to be sure we don't scare the living bejesus out of them with the $9 million number.”

Other members of the board were not as optimistic as Mr. Powers.

“We can't afford to lose a single staff member at the school,” Mrs. Gebo said. “I don't want to look at someone's name and have to tell them they won't have a job because of something I voted on.”

The school district has several other housing complexes under tax exemption programs. Starwood and Summit Wood, built by Norstar Development USA, are using a state-allowed 485-e exemption under the now-defunct Empire Zone. The developer's third project, Creek Wood, will receive a similarly-structured PILOT, but used a different state law and corporation to get that PILOT, approved by City Council.

That developer is receiving tax exemptions that tax only the vacant land value for the first seven years, followed by adding 25 percent, 50 percent, 75 percent and 100 percent of the taxable value in years eight through 11.

For example, Summit Wood, which started the exemption program in 2009, paid $11,561.06 in taxes in 2011 — $4,747.16 to the school district, which equates to $23.74 per unit. If tax rates held, the school district would receive $18,026 in year 8 of Summit Wood's exemption, $31,402 in year 9, $44,779 in year 10 and a full taxation amount of $58,155 in year 11.

Over the exemption's 10-year term, the district averages $92.80 per unit per year. The proposed COR PILOT, at $873,000, would average $286.22 per unit per year.

But the district didn't press for more from Norstar, at least publicly at the time.

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