Schenectady County, public need more details about in-lieu-of-tax deals
A Dec. 30 Gazette story, “PILOT payments top $14M,” lists 44 companies in Schenectady now paying no local, county or school tax on their property because they are tax-exempt.
Their tax-exempt status comes from their property being listed in one of the towns’ or the city’s assessor’s office as owned by either the city or county IDA (Industrial Development Authority) or Metroplex.
Metroplex and the two IDAs are themselves tax-exempt by state law and everything they own is therefore also tax-exempt.
Rather than paying the taxes that would be required on the 44 properties based on current assessed value, these firms pay whatever amount each has negotiated with Metroplex or an IDA. These negotiated payments are called “payments in lieu [instead] of taxes” (PILOTs).
The thrust of the Gazette story was to show how these 44 properties were used and taxed in years gone by. Knowing that is a lot less important than knowing the current assessed value of each property, the taxes that would be due were they not tax-exempt, and what percentage of their current assessed value is being paid under each firm’s PILOT in 2014.
Ray Gillen, chairman of Metroplex and county planning commissioner, has a comprehensive view of all PILOTs given by the three local authorities, since the Metroplex staff also directs and manages the resources of both the city and county IDA. Gillen gives an annual report to the county Legislature (usually early in the year).
Missing from report
This annual report should, but does not, include a written account of all PILOT agreements now in place through Metroplex or either the city or county IDA. It should state: 1) the full assessed value of each PILOT property; 2) the 2014 taxes that would be paid were there no PILOT; 3) the number of 2014 PILOTs; and 4) the total number of years for each PILOT.
The MVP building on State Street is one property mentioned in the Gazette story. A more detailed look at this PILOT can help make the case for the written report to the county Legislature, and the public, suggested here.
The city assessor shows the MVP building has a current total assessed value of $16.75 million. The “real” building owners are now in the 13th year of a 20-year PILOT. In the first year of their PILOT (2002), the owner (Schenectady Development, LLC) paid $37,137 to the county IDA and the 2014 payment is set at $335,270. Without this PILOT, their city taxes would be $361,002.66 and their school taxes $370,137.71.
Changes over time
This PILOT is saving the MVP building owners about $395,000 in 2014 alone. As often happens, the agreement has been changed and extended over the years. That could happen again before the PILOT is to end in 2021.
Were the MVP building owners paying taxes on this property, they certainly would not know their 2021 taxes in 2014. Knowing their 2021 PILOT is $700,000 is an obvious business advantage which firms without PILOTs and local residents paying property tax don’t have. In addition, the $700,000 amount of the 2021 PILOT is less than this year’s taxes would be on this property.
Monitoring PILOTs for the public’s benefit falls to our elected officials and our elected legislatures.
Having legislators and politically appointed government employees serving on any of these authorities calls into question their ability to be the public’s watchdog with the same vigor they might show otherwise.
Through December, county legislators Gary Hughes, Catherine Gatta and Martin Finn served on the county IDA. Jeffrey McDonald served on the city IDA. The politically appointed county attorney, Christopher Gardner, the former chairman of the county Democratic Party, has recently joined the county IDA.
The boards of directors’ minutes of our two local IDAs are available online. They show that the IDA boards meet for about one-half hour four or five times a year, with all needed work for the meeting done in advance by staff. Simply, these elected and politically appointed board members don’t seem to need or use any special skills or knowledge.
At the same time, these “political” board members certainly make it known to local businesses through their campaign literature that they are on an authority board able to make decisions impacting businesses’ bottom line. Political appointees to these boards regularly deny that serving on them is a conflict of interest — their need to get voluntary political contributions from the same businesses for whom they may be voting PILOTs notwithstanding.
Even if there is no conflict of interest, there is certainly the appearance of one.
Elmer Bertsch lives in Niskayuna. The Gazette encourages readers to submit material on local issues for the Sunday Opinion section.