By Shawn Magrath
Sun Staff Writer
NORWICH – A proposed tax exemption to incentivize private investors to rehabilitate run-down properties on the city’s main drag was narrowly shot down at a meeting of the Norwich Common Council on Tuesday.
While city officials agreed an incentive would help better market vacant buildings located in the downtown area, the proposal was denied in a 4-2 vote due to what some councilmen say are ambiguous terms of the law.
“I believe it is not in the best interest for the city at this time,” said Ward Three Alderman John Deierlein, citing the proposal’s unproven track record and requirement for a long-term commitment. “Therefore, I can’t support this.”
The law, permitted under Section 421-m of the New York real property tax law, would allow city officials to adopt an ordinance excusing developers from taxation of increased property taxes that result from building renovations. The law stipulates developers who rehabilitate a structure with commercial space and room for at least three apartments – 20 percent of which must be made available to persons of low to moderate income – would be taxed according to assessments of the property prior to repairs for a minimum of 12 years.
Moreover, the law would allow city officials to designate specific areas that would be eligible. After the 12-year benchmark, property owners taking part in the program would be taxed according to the new property assessment, which is bound to increase due to repairs to the property. For example, if a developer purchases a building assessed at $10,000 and restores it to be assessed at $100,000, said developer would pay property taxes based on the original $10,000 assessment for the first 12 years.