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The City Council Thursday Thursday reauthorized Mayor Michael C. O'Laughlin to withdraw from county sales tax distribution system, but the mayor said he will continue to negotiate with the county before doing so.

City Administrator Mark R. Palesh told the Council that figures just obtained this week indicate that the city stands to lose far less than had previously been expected -- and may lose nothing -- if it withdraws from the system.

O'Laughlin and the Council have said the city may withdraw from the county sales tax system if the county doesn't help finance $30 million in public improvements related to the development of the proposed $115 million Benderson Niagara Associates factory-outlet mega-mall.

O'Laughlin said negotiations with the county can continue because the city doesn't have to make the decision to withdraw until it is ready to sell the bonds for the mall. The earliest the city would sell the bonds would be at the end of this year, he said.

Previous estimates of the loss the city could expect in the first year ranged from $1.5 million to $3 million. But, Palesh said, actual figures for the period from July 1988 to June 1989 indicate that if the city withdrew this year, it would probably come out even.

O'Laughlin said the figures were obtained this week from the state and from County Treasurer David S. Broderick. If the city withdraws, it must settle for 1.5 percent of the sales tax collected in the city rather than sharing a portion of all the sales tax collected in the county. On the other hand, since the county distribution formula is based on population, the city could lose part its share after 1990 U.S. Census results are released.

O'Laughlin said the sales tax figures were good news for the city. While population is going down, at least sales tax is going up.

The sales tax figures have been difficult to come by because the state doesn't keep track of individual cities within a county system. And, the state will not release the names of businesses and how much sales tax they collect so the city couldn't make its own calculations except on some very general information that was available.

O'Laughlin said he doesn't expect the figures to bring the county to its knees, "but these figures do help us very much."

He said talks were held with unnamed county officials as recently as Wednesday night. But, he would not say what led to the reopening of talks. Last week, O'Laughlin had called negotiations with the county dead after the County Legislature had adopted a resolution that it would not help finance the public improvements for the mall unless the city promised not to force any churches to move against their will.

Members of two Ninth Street churches, St. Sarkis and St. Hagop Armenian Apostolic churches are opposing the city's plan to buy their churches and relocate them. As a number of Armenians who were attending the meeting looked on, O'Laughlin reminded the Council that it was elected to represent all of the residents of the city.

"We take into consideration the feelings of all our constituents, but you and I have to remember that we were elected to serve all of the people of Niagara Falls," he said.

O'Laughlin said negotiations with the Armenian churches will continue.

David H. Baldauf, senior vice president and attorney for Benderson, said the company and the city have an agreement in principle that Benderson "will be paying $4 million toward the project . . . assuming all of the details are worked out." But, Baldauf would not say that the $4 million would be spent to purchase the 100 acres of East Side land for the mall.

"Those are the details that have to be worked out," he said.

Earlier statements indicated Benderson would lease the land from the city for $1 a year for 99 years. The county had insisted, as one of 15 contingencies, that Benderson buy the land for $4 million.

Also at Thursday's special meeting, the Council agreed to pledge a portion of the sales tax generated by the mall to repay the bonds and authorized the mayor to deliver all documents needed to secure a guarantee of repayment by the state Job Development Authority. Norstar Bank has tentatively agreed to issue the bonds if the JDA guarantees them, which the city expects it to do.

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