Agency reluctant to finance project
The Jefferson County Local Development Corp. appears unwilling to make a $500,000 loan for a housing project in Watertown because of its own fund balance and the developer's reputation among local contractors.
"I'm of the idea that we don't have that money to give away," board Vice Chairman David J. Converse said. "The money is to support projects to create jobs, and we have the airport property to develop, and this dramatically reduces our ability to do economic development that this money was meant for."
The Development Authority of the North Country already approved a $500,000, 30-year loan to the developer, Norstar Development USA, Buffalo. The authority has asked the Watertown Local Development Corp. and the Jefferson County corporation to contribute like amounts to the Creek Wood Apartments project.
The board tabled the request, but held a fairly extensive discussion anyway. All six members present were opposed, based on the information available.
"We're still learning information about the income tax credit piece, but also about Norstar and the development," said Donald C. Alexander, chief executive officer of the corporation. "Let me be very clear — this is not a position for or against supporting Fort Drum or for or against addressing the housing situation coming up."
If the corporation were to contribute money, it would come from the community development fund, which now has $541,000, or the community development revolving loan fund, which has $920,000.
That money comes from a payment-in-lieu-of-taxes deal for the Residential Communities Initiative at Fort Drum. In 2005, the county and the Jefferson County Industrial Development Agency agreed JCLDC would receive about $4.2 million, some of which would be used for development at the airport.
"We aren't supposed to be involved in housing," board Treasurer Michelle D. Pfaff said. "DANC has the ability to go back to the state and replenish its housing funds. I do have a problem with going above our $200,000 limit approved for loans from the community development fund."
She said there might be other developers willing to build in the area.
"There is so much ill will to even using this developer," member W. Edward Walldroff said. "They've lost the support of the business community in the area. And if we became a player in that, we would have the wrath of God on us."
In 2007, Norstar fired Hull Contracting, Theresa, during construction of Summit Woods off outer Washington Street, leaving 11 subcontractors, including two local companies, unpaid for services they provided for the site. In October 2008, an Erie County judge ruled that Hull Contracting owes Norstar $1.3 million for work it failed to perform, according to clerk's records.
The development is the second completed by Norstar in the city since 2005. Norstar's other creation, Starwood Apartments on Starbuck Avenue, opened to tenants in 2007.
Creek Wood's first phase would include 96 units built between Mill Street and Plaza Drive at a cost of $17.9 million. Fully built, the project will consist of 200 units in 27 buildings, a community center and seven four-stall garages for a final price tag of $35.8 million.
In 2007, Norstar was awarded $1.24 million in housing tax credits by the state Division of Housing and Community Renewal to build the apartments. Then, that was expected to generate about $13 million in up-front revenue for the project because tax credits are bought by companies expecting to use them for 10 years. Now, that's down to about $9.6 million.
That is where DANC is trying to fill the gap for the project.
Bank financing is expected to contribute $2.25 million to the $18 million project. The authority also is contributing $1.75 million in low-interest loans and $250,000 from its affordable housing program. The additional funding from local sources will help the authority in a request for $2.4 million from the state's Housing Trust Fund.
DANC is trying to spur housing development in preparation for all of Fort Drum's brigades being stationed at the post in 2012. Estimates for the housing market show it will need 1,200 to 1,700 additional units when that happens.
"I'm not prepared to say yes or no," Chairman Urban C. Hirschey said. "I think we need more information."
