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Monday, April 25, 2011

Can a school in NYS legally participate in Tax Increment Financing?

According to the NYS Conference of Mayors and Municipal Officers website:

Tax Increment Financing, often referred to as TIF, is a gap financing tool that taps the incremental increase in tax revenues resulting when a formerly vacant or underutilized property is redeveloped. The increased property tax revenues that would normally go into a municipality’s general fund are instead used to pay off the debt obligations that are issued to help finance the real estate development project. However, New York’s TIF law currently only permits the municipal portion of local real property taxes to be used to finance debt service for such projects. School districts’ real property tax revenues, which comprise approximately 61% of all property taxes levied in the State, are excluded from the TIF program.
[emphasis added]
Hmmm...isn't that how they described the bond to build the New Hartford Business Park? And isn't that what is planned to be used to build the right in/right out?

Shortly after the presentation, former Superintendent of New Hartford Central School Dan Gilligan [remember him?] provided us with a copy of the slide presentation presented to the public on January 28, 2008.

Here is the cover of that presentation:

We questioned Dan Gilligan regarding the use of Tax Increment Financing and we were presented with a letter from the law offices of Ferrara, Fiorenza, Larrison Barrett & Reitz, P.C. Attorney Joseph G. Shields reasoned that because they were using a PILOT with a deviation for Tax Increment Financing, that made it legal for the school to participate. Interesting it a PILOT with a deviation...what gives OCIDA the right to a deviation that is illegal?

If this is legal, how come other IDAs in NYS are not doing the same? Why is the NYS Conference of Mayors and Municipal Officers not considering using the same method of a PILOT with a deviation to help "spur economic development"?

How about the group Unshackle Upstate who in June of last year wrote a memo in support of TIF Financing?

Or how about Attorney Kamlet, an attorney with Hinman, Howard & Kattell of Binghamton, who recently wrote an article that appeared in the Ithaca Journal on January 14, 2011. He wrote, in part:

As a steadfast advocate of "brownfield" redevelopment and economic revitalization in Greater Binghamton and throughout upstate New York, my look back on the year just ended, and my wishes for the new year, are a bit different from those of the average overburdened taxpayer....

* It failed to enact (for at least the fourth year in a row) effective Tax Increment Financing (TIF) legislation.
Didn't anyone tell them how easy it is to circumvent the law?

We emailed Attorney Kamlet regarding the use of PILOT Increment Financing (PIF) instead of Tax Increment Financing (TIF). Attorney Kamlet was kind enough to respond to our email. According to Attorney Kamlet, who is very much in favor of Tax Increment Financing:
Some New York municipalities, in conjunction with local Industrial Development Agencies (IDAs), have used a complex financing mechanism known as "PILOT Increment Financing" to cobble together a substitute TIF-like procedure that can include school districts. It relies on the fact that, under the IDA law, IDAs (with the consent of the local taxing jurisdictions) can negotiate Payment In Lieu of Tax (PILOT) agreements with developers.
In other words, they found a way to circumvent the law, and until it is tested in court, it is legal much like the Fees In Lieu of Mitigation scenario.

Attorney Kamlet concludes his email with:
Taxing jurisdictions may be left with less residual revenue under PILOT Increment Financing than under TIF--but it may still be advantageous if it stimulates much-needed economic development, which generates a steady stream of future tax revenues.
IF, that is a big word.

This does leave a lot of questions that need to be answered before the project continues. We would love to hear from some New Hartford School Board members.

- Did you know that in NYS it was illegal for a school to participate in a TIF project?

- If you were told before you voted that a NYS school cannot take part in Tax Increment Financing, would you have still voted 'yes' for the New Hartford Business Park bonding proposal put before you in October 2008?

- When Mr. DiMeo presents the next proposal on behalf of Larry Adler for a PILOT-Tax Increment Financing for the right in/right out, will you once again be voting yes?


Anonymous said...

Don't you worry A WAY WILL BE FOUND after all this is New Hartford where most of the people can be fooled all of the time.

Anonymous said...

Another great effort Ed and Cathy. Now why can't the OD do half as much as the CC do in researching the town of New HArtford. Heck, on Bryon Ackerman's he complained that he couldn't finad anyone to talk to in Chadwicks. Maybe he would not have that much trouble if he spent more time at Butler Hall