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Air Brake PILOT amendment is precursor to new product line planned for facility


New York Air Brake has decided to amend — not cancel — a payment-in-lieu-of-taxes agreement that has ended up costing the company extra money, as the manufacturer gets ready to launch a new product line for which it might try to negotiate another tax break.

President Michael J. Hawthorne said Wednesday that Air Brake will make public its decision whether to add a new product line at the 748 Starbuck Ave. facility “in a couple of weeks.”

“The company is actively considering putting in more products,” he said.

Air Brake manufactures a wide range of parts and brake systems to serve the railroad industry.

Mr. Hawthorne said the company would seek financing from the Jefferson County Industrial Development Agency “if we found a need, the opportunity exists and all of the elements fall into place. There are some advantages for us to stay in our relationship with the JCIDA.”

After paying $183,726 more than it would have paid in property taxes without the PILOT, Air Brake has requested the city of Watertown, Watertown City School District and Jefferson County to amend the tax deal so the company pays the amount it would have if the facility were on the tax roll through 2015.

Paul J. Warneck, director of Jefferson County Real Property Tax Services, said Air Brake probably determined there would be advantages to amending its PILOT in view of its plans to add a product line. Doing so could mean the company will expand the facility, in which case it could seek another PILOT deal with JCIDA.

“The IDA may finance a retooling of Air Brake so they can do a new product line,” he said. “If they build a new facility to do so, they’re going to be looking for an expansion of another 15 to 20 years” on the PILOT.

If that’s the case, Mr. Warneck said, altering the PILOT agreement to accommodate the expansion could make more sense than starting from scratch.

“Maybe the legal side of this could be easier for the company,” he said. “I can’t think of anything other than legal or bonding issues to take on a new agreement that takes on an expanded product line and structures.”

Donald C. Alexander, CEO of the development agency, declined to comment on the company’s expansion plans Thursday.

Getting the amended tax deal approved by the jurisdictions involved is taking longer than Air Brake wished. The company had pushed to get the amended PILOT in place by Feb. 15, the deadline for making its 2013 payment to Jefferson County without a late fee. But the jurisdictions, which were notified about a week before that date, have all requested more time to ensure they fully understand the amendment before approving it.

As a result, Air Brake paid Jefferson County $31,796 — $11,044 more than it otherwise would have had to pay.

“That was the pressure to get this approved,” Mr. Hawthorne said.

On Tuesday night, the Watertown City Council decided not to take any action on the proposal to amend the PILOT. Council members said they felt as if they were being pressured; they wanted questions answered before taking up the matter again at their March 4 meeting.

Mayor Jeffrey E. Graham wondered why the office of JCIDA attorney W. James Heary asked the City Council to act before the city had time to consider the matter. He said he received an email asking that he sign seven copies of the documents by Feb. 15.

“I felt like a beleaguered spouse being badgered by a nasty divorce lawyer,” he said at Tuesday night’s council meeting.

City Attorney Robert J. Slye did not even have an opportunity to look at the amended PILOT plan before Feb. 15, the mayor said.

“Somebody’s crisis is not my crisis,” the mayor said Wednesday, adding that he just had a lot of questions about why New York Air Brake did not just pull out of the PILOT and why the company instead wanted to change it.

Councilwoman Roxanne M. Burns also wants some questions answered. She wondered whether Air Brake could pursue a refund for the amount it has paid under the agreement.

The mistake with the PILOT, approved in 1995, occurred because the assessed value of Air Brake’s property dropped in 2006 from $5.2 million to $2.7 million, but the original agreement did not contemplate such a decrease. It has taken seven years for the company to identify and attempt to fix the problem.

Municipalities reaped the benefit during that time, collecting more from Air Brake than they would have if the property had been on the tax rolls. The county has received an extra $54,411, the city $56,516 and the school district $72,799.

Times staff writer Craig Fox contributed to this report.

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