The Watertown City Council is expected to consider Tuesday a request from New York Air Brake Co. to amend the companys 18-year-old tax-abatement package.
Council members last week took no action on changing the payment-in-lieu-of-taxes package, which actually will cost New York Air Brake more than it would have paid in property taxes without the agreement. For the past seven years, Air Brake paid $183,726 more than if the deal had not been in place.
At their last meeting, council members agreed to wait for a vote until City Attorney Robert J. Slye had the proposal from the Jefferson County Industrial Development Agency in his hands to look at it. The JCIDA had wanted the City Council to decide the matter before Friday.
The proposed amendment to the deal will mean Jefferson County, the city of Watertown and the Watertown City School District will receive less money than they have relied on from the company.
The tax problem, which Air Brake discovered last year, is blamed on an outdated formula for the PILOT approved in 1995 by the three taxing jurisdictions to help the company complete a $9.7 million capital project at the facility at 748 Starbuck Ave.
Since 2006, the county, city and school district have collected more from Air Brake than they would have if the property were on the tax roll. The county has received an extra $54,411, the city $56,516 and the school district $72,799.
To fix the problem, JCIDA is asking localities that approved the 20-year PILOT to amend its language. If approved, Air Brake would make payments based on the 2013 property value of $2,876,000 a little more than half of what it was when the PILOT was approved.
With lower payments from Air Brake, the three taxing units could be forced to make up the drop in revenue by raising taxes or cutting expenses. And even if the municipal boards reject the amendment, the company still can cancel the PILOT and payments will drop the same amount.
Assuming 2012 tax rates stay the same, in 2013 Air Brakes payment to the county would decrease $11,044, from $31,796 to $20,752, the citys payment would decrease $11,036, from $31,775 to $20,739 and the school districts would decrease $15,240, from $43,878 to $28,638.
The council will meet Tuesday because today is Presidents Day. The meeting will be at 7 p.m. in the third-floor council chambers at City Hall, 245 Washington St.