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Potsdam board tables tax breaks for housing developers

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POTSDAM - Unclear language and other concerns led the Potsdam Town Board to table an agreement Tuesday that would give tax breaks for a proposed student-focused housing development.

Developers Affinity Potsdam Cottages plan to build 100 apartments over two years at a 20-acre property near 206 Main St., a $20 million investment. However, they say they cannot raise the necessary capital without tax breaks. A payment in lieu of taxes agreement has been created after six months of negotiations. The agreement must be approved by the town and village of Potsdam, the Potsdam school board, and St. Lawrence County to take effect.

If the deal is approved, Affinity will pay only 65 percent of the assessed tax rate for the development for five years after finishing a unit on the property. While the rate paid for the land may vary based on the annual assessment, the rate paid for the buildings themselves will be fixed until the end of the agreement. After the five years are up, the rate will increase by 5 percent per year.

At the start of the 12th year, the company will revert to paying full tax rates.

Board members expressed concern the agreement may not be necessary and that the development is likely to continue, with or without the tax breaks.

“I don’t like the idea,” Councilwoman Judith R. Rich said. “I bet you these people would build anyway.”

Others worried that giving tax breaks to a private business might discourage other rental owners in the area who have not received similar benefits.

“This business is going to make money, They’re going to have no problem filling those units,” Councilwoman Rosemaria Rivezzi predicted.

Thomas A. Plastino, deputy director of the St. Lawrence County Industrial Development Agency, helped negotiate the agreement and was present at Tuesday’s meeting to help explain it to the board. The trouble with negotiating these agreements is that is impossible to tell what developers are willing to settle for, Mr. Plastino said.

“They know what their number is; we don’t,” he said.

Affinity has stated that they will not move forward with the project unless the deal is passed quickly, so that they can begin construction this summer, according to Mr. Plastino.

Board members also expressed concern over language in the agreement that made it unclear when the reduced rate begins and ends.

The board unanimously agreed to table the vote until a special board meeting on June 25.

In the meantime, board members agreed to express their concerns when the village of Potsdam’s Board of Trustees votes on the deal on June 18. Mr. Plastino said he would work to change the unclear language within the next few days.

In other business, the board approved a stormwater management and maintenance agreement with Aldi. This will allow the discount grocery chain to begin construction on a new store on Route 11, across from Walmart.

The board also approved a payment in lieu of taxes agreement with Canton-Potsdam Hospital. In the past, doctors not associated with the hospital could use space in the NATCo building on Main Street without having to pay taxes.

“I don’t think that’s fair, and (the hospital) agreed with that,” Town Supervisor Marie C. Regan said.

Under the new agreement, groups not affiliated with the hospital that use space in the building would have to pay normal tax rates, while those linked to the hospital would retain their tax-exempt status.

This agreement will not result in any immediate revenue for the town, as all groups currently using the NATCo building are tax-exempt.

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