WATERTOWN — A state Supreme Court judge has ruled in favor of the COR Development Co.’s assessment challenge on the old Mercy Hospital site, setting an appraisal much lower than the city’s figure.
On Friday, Judge James P. McClusky concluded that the nearly 6-acre site at 217 Stone St. has a market value of $531,000, while the city assessed the property at $1.4 million in both 2019 and 2020.
Before it went to court, COR had requested a $238,000 assessment on the property, located between Stone and Arsenal streets and South Massey and Sherman streets.
The judge’s decision also sets the assessment of $531,000 for 2020 and 2021.
City Assessor Brian S. Phelps was surprised by the ruling.
“Obviously, I’m disappointed with the decision,” Mr. Phelps said.
In his ruling, Judge McClusky didn’t buy the city’s argument that the property is worth more since COR has listed the site and three other nearby smaller parcels for a total of $2.5 million.
The judge also disagreed with the city on several other points in its legal argument.
In 2013, COR purchased the 5.59-acre parcel, demolished Mercy Hospital and planned to build a mixed development of apartments and retail space.
According to its website, the Syracuse development company describes the site of the hospital as “prime investment opportunity.”
In his ruling, Judge McClusky noted COR didn’t proceed with its plans because the local market became saturated with 3,900 new units between 2008 and 2015.
The judge also ruled that a property of its size should be compared to sales in the local market. Out of six properties that the city compared to the COR site, the others were in the cities of Oswego, Syracuse, Rome and Utica.
The judge wrote that the city ignored the fact “the property has been listed for many years without any viable purchase offers.”
The judge agreed with COR that the property will likely be sold in pieces and not a single parcel.
In its legal argument, the city described COR as “sophisticated businessmen” who obtained $4 million in state money to demolish the hospital to make room for the redevelopment.
The city also argued that COR representatives got into legal problems for the way they conducted their business practices.
Responding to the judge’s decision, Mr. Phelps pointed out that the recent sale of Watertown commercial property is valued more than what the judge dictated.
About 1.1 acres owned by Prime LLC since 2003, that formerly held the Dealmaker Auto Group and then Morrison’s Furniture across from Burger King, sold recently for $1.35 million.
Three parcels on State Street, owned by Route 57 Development LLC, sold on Feb. 23 for $1,075,000, according to city records. Tall Timber Holdings LLC, purchased the properties, which includes the Little Caesars pizza property.
For more than a year, the city and the company wrangled over the assessment for the hospital site before it ended up in court.
The city and the company agreed on the assessment amounts for five other COR nearby properties.
Those properties are along Sherman Street, where three houses were demolished, and property adjacent to two former parking lots.
COR originally planned to invest $70 million to transform the site into 40,000 square feet of retail and office space and 160 to 200 apartments.