Gov. David A. Paterson has vetoed a bill that would have denied Empire Zone benefits for future housing projects, including a few projects that are expected to provide more than 600 units in the city and town of Watertown.
"I am constrained to veto this bill because it unfairly eliminates an important piece of financing, and would impact residential projects currently under development," the governor wrote in a prepared statement. "If this tax exception is eliminated, the tax savings that developers have assumed in their financial models could be passed on to buyers or force the projects into default."
The bill was passed by the state Legislature in June with little fanfare but has since become a topic of discussion among north country officials.
"I'm pleased that the governor took the time to listen to local officials concerning this bill that, although well-intentioned, has some unintended consequences," Watertown Mayor Jeffrey E. Graham said.
The mayor, along with other municipal leaders and housing advocates, wrote letters to the governor late last month asking that he veto the bill.
The Empire Zones are used to lure businesses to economically depressed areas using tax breaks.
The benefits are considered more advantageous than payment-in-lieu-of-taxes agreements because the local municipality receives its full share of property taxes and, under the program, the company is repaid for those taxes by the state.
Companies that enter into PILOT agreements still make annual payments to the local municipality, which in turn does not receive property taxes.
Projects in Watertown that are within Empire Zones include:
■ Summit Woods, Route 11, 400 units.
■ Creek Wood, Mill Street, 200 units.
■ Starwood, Starbuck Avenue, 91 units.
■ Franklin Building, Public Square, 16 units.
■ Riverview Plaza, Newell Street, 31 units.
Starwood is the only project that would likely have kept its benefits if the bill had been signed, because it is complete. The others would have been stripped of future benefits because they are still in either the construction or the planning phase.
Norstar Development USA, Buffalo, would have been the hardest hit, losing the benefits for Summit Woods and Creek Wood.
A call to Linda L. Goodman, Norstar director of project development, was not returned Thursday.
Both Assemblywoman Dierdre K. Scozzafava, R-Gouverneur, and state Sen. Darrel J. Aubertine, D-Cape Vincent, voted in favor of the bill when it passed through their respective houses in June. The lone dissenting vote from Legislature came from Sen. Ruth Hassell-Thompson, D-Bronx.
"My administration is working with elected officials and communities across the state to address New York's shortage of affordable housing and to revitalize downtown areas," the governor said. "This bill would impede those efforts, by jeopardizing housing projects that are under way throughout the state."
The Legislature has tried to reform the Empire Zone program since consulting firm A.T. Kearney issued a report last year calling it "good economic intentions gone wrong."
"At the very least, it can be said that Empire Zones may have done some good, but has failed to create the depth and breadth of solution needed to eradicate poverty and replace it with a more viable, more sustainable model of economic development," the report said.
The state program was created to stimulate growth through incentives designed to "attract new businesses to New York State and to enable existing businesses to expand and create more jobs," according to the state Empire Zone Web site.
The state advertises that more than 9,800 businesses that use the program employ about 380,000 people in 82 zones.
