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An agreement has been reached that would allow the City of Tonawanda to part ways with a developer who had planned to buy 17 acres of city-owned land for the construction of 56 single-family homes.

The city would refund $4,000 in fees that Natale Builders paid in 2012, when it was designated developer of the Little League Drive project, according to a resolution the Common Council will consider Tuesday.

The agreement would allow the city to proceed with another developer and also explore swapping four of the acres with the Tonawanda School District – an idea that also will be discussed Tuesday.

“It allows us to move forward on both accounts without the fear of litigation being held over us,” Mayor Rick Davis said.

Davis wrote in a March letter to Natale that the city is “going in a different direction” and Natale responded with a threat of legal action unless the deal negotiated by Davis’ predecessor went forward.

Davis and some council members mainly objected to lifetime condominium tax status for the new homes, which means they would be taxed at roughly 65 percent of their assessed value.

A new request for proposals has been issued with the city still intent on the development of housing on the wooded land between Two Mile Creek Road and Rogers Avenue. Natale would have paid $192,000 for the land.

“The houses will pay 100 percent of what the full assessment is,” Davis said. The developer also would be responsible for building infrastructure, including roads and water and sewer lines, and meeting monthly with a committee of residents to discuss issues arising during construction. Proposals are due in early September.

In a related matter, the Council on Tuesday will consider a resolution that would direct the city and school district attorneys to draw up an agreement on the land swap. The school district would receive the four acres of Little League Drive land adjacent to its property and the city would receive 4.3 acres at the former Clinton H. Small Stadium on Main Street, which closed when a new stadium opened last year.

School officials have said they would use the land as practice athletic fields.

“I’m optimistic this resolution will pass,” said Fourth Ward Alderwoman Jenna N. Koch, noting the Council would still have to vote on the final agreement. “It’s in the best interest of the city and the school district. It’s a win-win for both, and it’s an even bigger win for the taxpayers.”

email: jpopiolkowski@buffnews.com