POTSDAM — Village Board members on Monday night acted as the third and final taxing jurisdiction to approve the payment-in-lieu-of-taxes consent certificates for a 32-year, $2.1 million PILOT agreement being sought by Vecino Group, the Missouri housing development company renovating Clarkson University’s Old Snell Hall.
But the approval did not come without resistance from a local business owner and landlord.
Town and school board officials on Jan. 14 approved the consent certificate after the Vecino group commissioned a professional market study that indicated that there was sufficient demand for the 58 units. The 59th unit will house a building superintendent.
During the public comment period of Monday night’s meeting, Nicholas Zirn, owner of McDuff’s Tavern, 59 Market St., and a local landlord, told the board he was there representing himself and other area landlords who own a total of 200 units in the village.
“Tonight I ask you to vote no to the proposed PILOT program that will be brought before you. Not only is it an insult to all local landlords, but an injustice to any tax-paying individual or entity in Potsdam,” Mr. Zirn said. “Vencino Group’s proposed project will eclipse $15 million and to assess that in fair market value this would equate to roughly $750,000 in tax revenue annually ... $50,000 is less than 10 percent.“
Mr. Zirn told the board he was in the process of purchasing North Country Manor, 100 Market St., and that he was not receiving any tax breaks and would be assessed fair-market values, which he said is typically the purchase price if they reassess him.
“And on top of that I will be doing improvements as well, which will further garner the increase in assessment and taxes levied on me. So I’m not receiving a break, myself, and I believe that shouldn’t be getting such a deep discount,” he said. “Come up with something else, maybe, I don’t know, maybe $200,000 or $250,000, perhaps, but $50,000 is an insult to myself and everyone else.”
According to the PILOT Consent Certificate, the request will assist Vecino Group, identified as Quarry Potsdam LLC, in the acquisition of the building at 41 Elm St. and the 3.3 acres of land it sits upon.
The St. Lawrence County Industrial Development Agency submitted the application for a PILOT agreement sought by the Vecino Group for the renovation of Old Snell Hall and conversion to a state and federally assisted low-income housing project.
In May, Vecino Group was awarded $5.6 million in grant funding from the state for the renovation of Old Snell Hall into 59 affordable housing apartments.
And while the three taxing jurisdictions have approved the consents, Planning and Development Director Frederick J. Hanss told village board members that the attorney representing the three taxing jurisdictions said there had been a technical error with the resolutions that were passed by the town and the school board. No additional information was immediately available about the error in those resolutions; however, it was believed that the language represented a standard PILOT program.
Trustee Alexandra M. Jacobs-Wilke asked why the PILOT was running for 32 years as opposed to 20 years.
“Typically an IDA PILOT has a 10-year term. Those are typically industrial PILOTS, where the first five years there is a zero pay to the locality and then there is a 50 percent exemption that is in place for the last five years,” Mr. Hanss said.
The Vecino project is a nontypical project that would allow a PILOT beyond the 10-year term with the authorization of each of the taxing jurisdictions, Mr. Hanss said.
The 32-year agreement, as opposed to 20 years, has to do with the way the Quarry Project is structured financially, he said.
Village Trustee Maggie M. McKenna, who is also the St. Lawrence Arts Council director, has kept an office in Old Snell for almost a year and said, “It was good that it was going to be ripped apart from the inside and fixed up,” calling it an eye sore in the village and will increase the values.
Trustee Abby Lee said it was “too bad that building was left to go that long without any remediation ...”
“And the reality is Clarkson abandoned it when they moved to the hill campus,” Deputy Mayor Stephen J. Warr said. “And this is, I think, the third or fourth attempt to refurbish it and some had to do with market rate stuff and could not get financing and the only way they could get financing was for low to moderate income housing ... so this is the only way it is ever going to get done.“
St. Lawrence County Industrial Development Agency Chief Executive Officer Patrick J. Kelly said the next step in the process is to hold a public hearing, which will likely take place in the multipurpose room, located in the civic center at 2 Park St.
A date for that hearing has not yet been determined.
“Once we have the input from the public hearing, we’ll bring that back to the IDA Board, so I expect the IDA will vote on it in February,” Mr. Kelly said.
After passing the IDA Board, the IDA would be ready to do the closing paperwork for the PILOT documentation itself, Mr. Kelly said.
“The transition with us is we have a few different property documents that are part of the process,” Mr. Kelly said. “We have a lease and a lease back agreement, where we lease the property from the developer, then lease it back to them and then the PILOT agreement is part of that transaction.”
Once the IDA approves the PILOT agreement, it is a matter of setting up the legal documentation to effectuate the transaction, he said.
Vecino Group is looking to close on the lease with Clarkson University by the end of February and Mr. Kelly said the IDA will be working as quick as possible to meet that time frame.
Following that, the work would begin.
“The project will refurbish an aging and partially vacant building located along the village of Potsdam’s main corridor and creating space for commercial and residential use and provide affordable housing in the village of Potsdam; entail a capital investment of approximately $15,000,000; create 50 construction jobs; and create two full time jobs,” the certificate states. The certificate and resolution passed the school board unanimously while it passed the Town Board in a 4-1 vote, with Councilwoman Judith Rich the lone no vote.
In the attached schedule of 32 payments, the IDA will bill amounts beginning in 2020-2021 in the amount of $119,774.01.
Vecino agreed to pay the first and second year installment of real property taxes in the amount of $119,774.01 as a closing cost from the proceeds of the investor equity they receive as part of a long-term lease with Clarkson University, a tax exempt, non-profit agency.
That will cover the first two years and on year three, the 2022-2023 year, the PILOT kicks in with a payment of $50,000 and it will escalate in payment cost every year until the final payment of $88,792 in 2051-2052, for a total of $2,148,176.01.
The IDA will divide each payment between the village, the town, the school district and the county.
Moreover, in the event the total residential income, the operating income for the apartments, exceeds more than 10 percent of the amounts projected, Vecino will be required to pay 20 percent of the amount of the total residential income in excess of the projected amounts.