Council approves tax exemption for property owners who add apartments to downtown buildings

UPDATED 2:55 p.m. with a little more information about the grant program.

People living downtown is a great complement to commerce downtown and bringing that mixed use to the city's primary commercial district is part of the city's strategic goals.

To help move that process along, on Monday night the Batavia City Council unanimously approved a change to the city's tax code that would provide a tax break to any building owner who converts a commercial property to one that includes second- and third-floor apartments.

"They (the Main Street Grant consultants) said they have a lot of experience with this," City Manager Jason Molino said. "A lot of communities use this. It’s a great exemption to get on the books to encourage, or at least lighten some of the tax burden, as they (developers) go to change and approve some of these mixed-use developments."

The tax abatement -- much like a PILOT -- provides tax relief on the increased assessment that is likely to occur with the redevelopment of the property. The property owner still pays taxes on the original assessment.

For example, if the assessed value goes from $200,000 to $300,000 because of the property improvements, the abatement applies to the extra $100,000 in assessed value.

In years one through eight, the property owner gets a 100-percent abatement, and the tax relief decreases 20 percent a year over the next four years and is eliminated by year 13.

"This promotes the types of uses we want downtown," Molino said. "We want commercial on the first floor, residential on the second and third floor. We want to promote that livable-community concept. You get the grocery store downtown, so it’s got a great complement. We’ve got the available space. It just needs to be developed."

There are currently 10 properties that have applied for grants through the Main Street grant program and Molino said four of those properties would be potentially eligible for this new tax exemption (the others are already mixed use).

Last year, the City was awarded a $450,000 grant from the state's Main Street Grant program. Of that, $400,000 is earmarked for improvements to existing structures downtown. Three projects have been funded by the BDC, which administers the program.

Ideally, Molino said, both the county and the school district will pass the same exemption.