The $10.4 million project to restore the deteriorating Woolworth building has cleared its first hurdle.
The city Planning Department was notified late Friday afternoon that Empire State Development has agreed to increase a Restore New York grant to its original amount of $2.5 million from $1.82 million.
The state economic development agency lowered the amount last year after the previous developer changed the focus of the project from a boutique hotel to rental housing and decreased its budget from $10 million to about $8 million.
But new developers David Gallo and Erich H. Seber recently requested the original amount be reinstated because the projects budget is back at that $10 million level.
Getting the news of the additional $700,000 is a big step, said Kenneth A. Mix, the citys planning and community development coordinator.
Its a substantial amount of money, much needed by the project, Mr. Mix said after the Watertown City Council heard the news Monday night.
The developers want to convert the vacant Public Square landmark into about 50 apartments on the upper floors and commercial space on the ground floor. Recently, they took over the project from Long Island developer Michael A. Treanor, who agreed to sell the building to them for $400,000.
Another hurdle will come at the Dec. 17 City Council meeting when council members decide whether to waive an $18,422 building permit fee to the developers, sell some green space across the street for tenant parking and agree in principle for the developers to receive tax breaks.
On Monday night, council members seem to have agreed on the land sale and understood the need for a reasonable tax abatement. If the city agrees to it, the developers will take their tax break request to the Jefferson County Industrial Development Agency.
The City Council, the Jefferson County Board of Legislators and the Watertown City School District all would have to agree to the payment in lieu of taxes.
While they said they have not ruled them out, Councilmen Joseph M. Butler Jr. and Jeffrey M. Smith had some reservations about the citys financial concessions.
Mr. Smith said he would like to see the developers financial numbers before committing the city; Mr. Butler asked whether the developers could agree that the city waive just half of the building permit fees.
Why do we have to give up all of it all the time? he said.
But it could be the difference in getting the state to approve tax credits for the project if the city demonstrated it is fully committed to moving it forward, Mr. Mix said.
Mayor Jeffrey E. Graham and Councilwomen Roxanne M. Burns and Teresa R. Macaluso pointed out the importance of rehabilitating such a crucial historic downtown building. They said it may be the citys final opportunity to save the six-story building in the heart of the downtown business district.
Last week, Mr. Gallo, owner of Georgica Green Ventures on Long Island, and Mr. Seber, who owns a Maryland construction consulting company, said they intend to seek about $8 million in state tax credits to help finance the major renovations.
To take advantage of state tax credits, the two men have decided that all 50 units would be affordable housing. The application is due in January.
In other action, the council:
■ Took no action on City Manager Sharon A. Addisons proposal to add a position to oversee hiring and handle other human resources activities. Council members agreed to discuss the confidential management position at a future work session.
■ Set 6 p.m. Jan. 8 for a public auction to sell the former Fort Drum Vehicle Storage warehouse at 753 W. Main St. after a deal fell through with Ruby Charlene Williams last week. Ms. Williams, the companys chief financial officer, failed to go to the closing for the building last Tuesday.