Municipalities are receiving $9.2 million in tax revenue through payment in lieu of tax agreements pioneered by the Schenectady Metroplex Development Authority, but the necessity of the tax incentives are debated.
Metroplex recently released a breakdown of the 51 PILOT agreements it administers throughout the county. This year, there are 27 PILOTS within the City of Schenectady totaling more than $5.13 million. The remaining 24 agreements fall within towns outside the city and account for around $4.1 million. The majority of PILOT projects, 42, were built on sites with empty buildings, vacant land, or formerly tax-exempt property.
Metroplex officials touted the revenues as a boon to taxpayers, and Metroplex Chairman Ray Gillen said such revenues have doubled since the last PILOT update released in February 2011.
“We do good projects and they create jobs, they bring investment to the county and they create tax base where there was none before in most cases,” Gillen said. “Next year these numbers will be even better than they are this year. We are adding buildings that have been off the tax roll for a long, long time … and putting them in to new tax paying, job creating projects ins our community.”
The agreements bring guaranteed revenue to municipalities, but typically at levels below a full assessment. A typical PILOT in the county lasts for 10 years and starts at a reduced portion of the full tax bill, and increases every year. It is a commonly used mechanism for attracting development, but also leaves tax revenue lagging behind.
That makes PILOTs a target of criticism from some corners. Republican Glenville Town Supervisor Christopher Koetzle has bemoaned the agreements as robbing revenues from localities. He is the only town supervisor in the county to express reservations about the agreements publicly.
“We haven’t really received much in additional revenue because of the PILOTs,” Koetzle said. “Generally speaking, the PILOTs are worth less than what the income tax bill would have been. … Without the PILOTs you would probably double that revenue.”
Koetzle pointed to Target, which recently opened its doors in Glenville. The PILOT doesn’t kick in until next year, and Koetzle argued the town is “getting no more revenue in the short run” on the project. He acknowledged the town would realize more revenue in the future but said in the meantime, residents are left to bear the burden.
“That is one example where you wonder what positive impact that is having on the community,” Koetzle said. “Is it worth shifting that burden to the residents to get that commercial project in your community?”
Previously, Koetzle said a benefit of Target opening is making the town center more attractive for other businesses to move into the area. He also said Metroplex has done a “good job” attracting businesses through PILOT offerings.
Koetzle said towns should have the power to override such agreements. Gillen said Metroplex works closely with town officials before approving a PILOT.
“When we do them they are done with the full cooperation of the tax jurisdictions that are impacted by it,” Gillen said. “These PILOTs are not imposed unilaterally on communities, it is a joint effort with them to bring more tax base and jobs into the community.”
Gillen argued the agreements aren’t hurting residents because the properties were generating little revenue before being redeveloped. He believes with every PILOT the payment was more than what revenue it had yielded.
“It is a way to kind of gradually put these projects onto the tax rolls at full value,” Gillen said.
The county’s townships don’t see equal play from PILOT projects. Rotterdam has the most PILOT agreements at 14, totaling nearly $2.1 in property tax revenue. Niskayuna has six PILOTs yielding around $1.37 million and Glenville has four totaling $630,000.
Elmer Bertsch, a Niskayuna resident, recently complained at a Town Board meeting that Metroplex doesn’t release figures on what the full taxable value of its PILOT projects would be.
“There is no information that is really relevant, it seems to me,” Bertsch said. “To have a report about how much it paid in PILOTs without knowing how much these various entities would pay if there were no PILOT is to keep people in the dark.”
Bertsch added if residents had information on the agreements, “it may very well be most residents” would think it is a good investment.
Gillen disagreed and said issuing PILOTs “is a very public and open process” and Metroplex is “very open and transparent” about its projects.
Information released by Metroplex didn’t outline how far along each agreement is or what percentage of the assessed value is being paid.
In Niskayuna, five of the six PILOTs were given for company expansions. Three of the expansions were at General Electric facilities and total $600,000, which include its Global Research Center, chemical engineering building and Energy Learning Center. Outside of expansions, Unilux at Niskayuna Tech Park is paying around $100,000 on its 67,000-square-foot manufacturing plant built on vacant land.
According to Metroplex, 17 projects were built on vacant land that formerly generated approximately $50,000 in taxes. Now, those properties, with the majority in Rotterdam, are generating more than $1.87 million combined.
There are 15 PILOT projects built on former government-owned or tax-exempt land that generated no tax revenue. This year, they generated more than $1.7 million. Two of those sites are located in Glenville and generate around $360,000 in payments. The rest are located in the City of Schenectady.
“The facts are the facts … and there is misinformation out there on some of these PILOTs,” Gillen said.
Koetzle said PILOT offerings can be beneficial in certain situations, but doesn’t believe all of the 51 agreements are needed.
“If you look at this list and say, ‘All of these people wouldn’t be here otherwise,’ to me that is a difficult argument to make,” Koetzle said.
The complete list of PILOT projects can be found on Metroplex’s website at schenectadymetroplex.org.
“This is how you get new investment into your community,” Gillen said. “We have many other projects that have got done that aren’t on this list that we didn’t use PILOTs.”