| Author | Message | ||
     vermontgolfer Citizen Username: Vermontgolfer Post Number: 30 Registered: 12-2002 |
doublea, agreed, hopefully Mark can shed some light and I will do some other inquiring to see what I can learn. | ||
| J. Crohn Citizen Username: Jcrohn Post Number: 105 Registered: 3-2003 |
Washashore et al., an argument in favor of a PILOT for the supermarket site could be made, I think, on the basis of the cost of cleaning up its environmental hazards. That would seem to be a legitimate disincentive to development, particularly of a market, since grocery margins are small and so a market development might be inherently risky to start with. Huge cleanup costs going in would not be attractive. I don't know about the Beifus site. As for the Gaslight Commons, I can't honestly see why its developer required a PILOT. As others have pointed out, the site could certainly have supported a smaller development, which would probably have been more in keeping with public preference. One could speculate that the expectation of obtaining a PILOT may have tilted development plans in favor of something huge. The town's interest in granting a PILOT may have been motivated by the opportunity to increase quickly the size of municipal coffers--in which case a small development (generating a smaller in-lieu payment to the Village) would have been implicitly discouraged. | ||
| bets Citizen Username: Bets Post Number: 320 Registered: 6-2001  |
J. Crohn, I disagree about a PILOT for the supermarket site, for the pure reason that the village should not have condemned the site before they had it inspected. A PILOT during development of the site may be appropriate, but not another 30-year deal like the Gaslight. Again, when I asked how the village could possibly PILOT single family homes (the condos), Mr. Taylor did not have an answer. If those single family homes receive PILOT status, why not every other property in town? | ||
| jimmurphy Citizen Username: Jimmurphy Post Number: 128 Registered: 5-2001 |
Given that the Beifus site is already under construction (or at least demolition) and the investors in the Market/Condos have already made a significant effort in planning and design, it seems unlikely that either project would be scuttled without a PILOT agreement. It seems like PILOTs are best used to encourage desirable development that otherwise would not occur. These two projects seem to be well underway without a PILOT. Why would one even be considered at this point? Jim | ||
| David Lackey Citizen Username: Davidlackey Post Number: 26 Registered: 4-2003 |
I'm with Jim on this. These projects have been planned, submitted and approved. Is it wrong to think the developers should now proceed without big tax breaks? It seems to me that if a developer creates a plan that he will only build with the contingency that he be granted a tax break, the time to negotiate any break should come before the planning board spends hours, days and months analyzing that particular plan. That aside, during the trustee campaign, when asked how property taxes can be controlled, BOTH sides said we need to increase commercial tax rateables. Granting long-term pilots or abatements runs counter to this strategy and places the full tax burden for the schools and county on homeowners. | ||
| bets Citizen Username: Bets Post Number: 321 Registered: 6-2001 |
I think the PILOT was discussed during the planning, sumbitting, and approving and was granted with a handshake. It'll be formally announced, no doubt, with plenty of spin. | ||
| snshirsch Citizen Username: Snshirsch Post Number: 37 Registered: 1-2003 |
Can we see the financial information on which this decision to offer PILOT was based? It should be simple enough to provide a spreadsheet displaying the current taxes to homeowners, broken out as municipal, school, and county, with and without the new development being given PILOT status. This information should be provided to the homeowners and open for debate before a decision is made. | ||
| bets Citizen Username: Bets Post Number: 322 Registered: 6-2001 |
I was told that such information is part of the "negotiating process" and would not be made public. | ||
| doublea Citizen Username: Doublea Post Number: 133 Registered: 3-2003 |
Bets: My guess is that you are probably right and there already has been some kind of handshake. However, I wonder if the trustees are willing to proceed with a PILOT if the whole premise on which it was based is not correct. Hang on to those sample calculations. | ||
| J. Crohn Citizen Username: Jcrohn Post Number: 108 Registered: 3-2003 |
David: "That aside, during the trustee campaign, when asked how property taxes can be controlled, BOTH sides said we need to increase commercial tax rateables. Granting long-term pilots or abatements runs counter to this strategy and places the full tax burden for the schools and county on homeowners." This is probably my own chief objection to PILOTs per se. However, I think it only fair and reasonable to examine each case independently. Bets: "J. Crohn, I disagree about a PILOT for the supermarket site, for the pure reason that the village should not have condemned the site before they had it inspected." I don't believe it was, and the reason I don't believe it is because I heard talk around town about the "environmental hazard" in the building well before the site was condemned. I think it unlikely the town admin had no inkling of what a singularly unconnected schmo like me could pick up via the grapevine. "A PILOT during development of the site may be appropriate, but not another 30-year deal like the Gaslight." One would think so, but if Mr. Matthews could be persuaded to expand on his previous remark about how the Gaslight PILOT will actually turn out to be a net gain for the town as time goes on, one might change one's mind. (IOW, a 30-year PILOT might under certain circumstances be better, not worse, than a short-term PILOT. But we haven't yet been shown why.) | ||
| woodstock Citizen Username: Woodstock Post Number: 143 Registered: 9-2002 |
I wanted to check some assumptions about what a PILOT program is. I had thought I understood, but I want to make sure I'm not making incorrect assumptions. And please, rather than simply stating that an assumption is incorrect, tell me WHY it is incorrect, and what the CORRECT assumption would be.
If there are additional items that define a PILOT program, I would appreciate that feedback as well. | ||
| doublea Citizen Username: Doublea Post Number: 134 Registered: 3-2003 |
Woodstock: You have it right except for the last bullet point: the PILOT property is not included for county or school tax purposes. However, it is my understanding that the agreed upon value is included for municipal purposes. One of the problems I can see with this is that initial value is not subject to any revaluation as are other properties in S.O. The municipal tax paid by the PILOT is subject to whatever inflation rate there is in the municipal tax rate. | ||
| woodstock Citizen Username: Woodstock Post Number: 145 Registered: 9-2002 |
I'm going to put these on another page so that I can update them if I get more feedback. http://www.klomstock.com/pilot.html Please post feedback here as well. | ||
| doublea Citizen Username: Doublea Post Number: 135 Registered: 3-2003 |
In going back through the posts before answering Woodstock, I found Mark Rosner's post of May 9, 2003 4:05 in the "South Orange Downtown Redevelopment" thread. Mark's post was in response to Peteglider's request for an explantion of how PILOTs work. In that post, Mark explains how the PILOT is or isn't included in the tax base for municipal, county and school tax purposes. Interestingly Mark makes the statement that S.O. taxpayers are better off because the PILOT is not included for school tax purposes. This is an example of what I said earlier that the trustees, in good faith, might have been using the wrong assumption. | ||
| J. Crohn Citizen Username: Jcrohn Post Number: 110 Registered: 3-2003 |
AA: "The municipal tax paid by the PILOT is subject to whatever inflation rate there is in the municipal tax rate." Yes, or that is more or less what I gleaned from Edwin Matthews' post of May 14: "A few common misundeerstandings about the tax abatement (and the Payment in lieu of taxes that Lcor makes). The 25 millin dollars the payment is based on has nothing to do with what the assessed value of the property would be ($25,000,000 is the construction cost) Thus if there was no abatement it is not clear that the tax would be the $1,2000,00 everybody has discussed. Second the payment is not a thirty year $500,000.00 payment. The amount goes up every year by a formula which also has future payments tied to a percentage of what the taxes would be if there was no abatement. The numbers were worked out so that Village taxpayers never pay more taxes than they would have had the project not received a tax abatement." | ||
| doublea Citizen Username: Doublea Post Number: 136 Registered: 3-2003 |
J. Crohn: Since I didn't go "down the shore" because of the weather, I have nothing better to do than think about PILOTs. With regard to the inflation factor, I'm wondering why Mr. Matthews' statement doesn't just say what I said, which is the way heard it expressed someplace. Maybe what he's saying is that the inflator is tied to the lower amount of municipal taxes that would have been paid had it not been abated. Have a happy and safe MDW. | ||
| Edwin R. Matthews Citizen Username: Edwinrmatthews Post Number: 25 Registered: 3-2003 |
Since I posted yesterday at noon 28 posts have been added to this. A number raising new questions about tax abatements and Pilot agreements, some recycling prior comments and some I am not sure I understand. It is in part why I say it is difficult to explain this subject in this forum. It also takes me considerable time to type as I have no keyboarding skills. I also rely heaavily on spell check which is not available to me here. (I am told messages can be created elsewhere and transferred here after spell check but my skill level does not permit that.) Yesterday at around 5 P.M. I composed a response to some of the issues raised and some how managed to erase it before I posted it. My ultimate point is it really is difficult for me to use this forum to communicate on this topic which can be very complicated. Before addressing specific issues raised I want to make a few points. In the end development gets done or doesn't get done if there is sufficient economic incentive to the developer. The project must throw off enough money to give an adequate rate of return to the investors after expenses are covered. If the return is not there the investors put their money elsewhere. Our high tax rate makes it difficult particularly in the early years for investors to get any return much leaa an adequate rate of return. One of the ways for developers to increase the rate of return on residential developments is to have a high enough density. This helps to spread some of the costs over a larger number of units. LCOR thought with the density at the third streeet site they could build with out a tax abatement. When they finally realized what the taxes would be utilizing actual proforma numbers it became clear that the project could not meet a satisfactory rate of return particularly in the early years. The tax abatement and pilot agreement were negoiated so that LCOR could meet its required rate of return. WITHOUT THE DENSITY AND THE TAX ABATEMENT THE LCOR PROJECT WOULD NOT HAVE BEEN BUILT. Indeed no residential project could have been built on that site. A smaller development would have required a larger tax abatement which could not have been given because the payment has to atleast equal 2% of the construction costs. Once LCOR reequested the tax abatement (which the Village anticipated - since LCOR was the only potential developer of the site that did not indicate from the start it would need a tax abatement and because our analysis indicated they would need one - the Villagew wanted to make sure it negoiated as good a deal as it could. Once the project was built the d property owener went form an $80,000.00 tax payment to a $500,000.00 PILOT payment. That payment gets adjusted for cost of living and goes up by a formula so that in the last yuears of the PILOT the payment reaches to more than 80% of what the actual tax payment would be. While the abatement and Pilot payment were based upon actual numbers (which were given to the Village in confidence) the concept was to allow the developer to make a certain rate of return particularly in the early years. The length of the agreement and the timing of the bumps in the payment were designed to make sure that the tax payers of South Orange would have gotten as much monetery benefit from the Pilot agreement as it would have had the project been put on the tax rolls as a fully assessed property. The $500,000 amount was reached not based upon what the taxes would have been but rather what the abatement statute required the payment to be. (based upon the cost of construction of $25,000,000) It must be kept in mind that the project needed the abatement and PILOT agreement to be built. The tax payers from day one get the benefit of an additional $420,000 in the first year. There are no significant additional costs to the Village. While the taxpayers miss the benefit of the additional money that would have come in if it was on the tax rolls in the early years that money is made up in later years. I have deliberately not used numbers here and will not do so because I don't have actual number in front of me. Numbers are best used in person where the interrelationship between the different numbers can be seen. It is very clear that the Village never wants to use a short term abatement and that if an abatement is to be given the longer the term the better off the village is even if the developer only needs an abatement for somewhere between 5 and 15 years. Doublea in your post of 5/22 at 12:59 P.M. you say you were "repeatedly told the PILOT was good for South Orange because otherwise it would be included in S.I.'s assessed value, thereby increasing the amount of school taxes paid by other South Orange taxpayers." I don't know who told you that but it is not true. A PILOT does not go into the villages total assessed value. More importantly there is never an increase in the amount of sohool taxes paid by other taxpayers. What occurrs is the tax payers don't get a reduction in what they pay as school taxes. Over the lenght of the agreement this loss of reduction is made up for by the increase in the actual payment made to the village. Doublea in your 5/22 3:16 pm post you quote a response a gave to suggest that one should compare pilot to non Pilot. I first said the comparision is to before project to after project because without the abatement the project would not have been built and we would have had an abandoned auto site ( where the tax payment may have decreased from the $80,000 the property owner was paying). If the pilot to non pilot comparision is done it demonstrates over the term of the agreement the taxpayers are better off with the pilot. Washashore in your 5/22 4:04pm post you express concern that pilots are being negoiated fro the Beifus and Supermarket sites. Although I fully expect the developers to ask for tax abatements they have not formally requested them. They have indicated they may need an abatement. If and When they submit their draft of the developers agreement it will be reviewed. If an abatement is requested (again I expect that each developer will ask for one) the request will be evaluated including their financial pro formas (which will be submitted in confidence and not released to the public). Staff will make a recommendation to the Board of Trusatees who will be able to review the confidential financial data and a decision will be made by the Board of Trustees as to whether to grant the abatement or not. While I do Not control what process the Board will follow I doubt that it will wait "unless and until a majority of SO residents have come to understand their benefits, or lack thereof, and agreed, or not, to advance them." The Trustees were elected to decide whether to grant a tax abatement or not. While I fully expect the Trustees to entertain discussion and expect their to be some effort to explain some of the principles as well as benefits of the tax abatements I don't expect them to make a decision by polling the residents. I also expect that you will never have a majority of residents showing enough interest in the subject. Doublea in your 5/23/10:02 post you suggest that all some want is to take a good objective look at any proposals. That is what was done with the LCOR project and what will be done with any other requests. Ultimately it is up to the Board of Trustees to decide if the Village is better off granting an abatement and entering into an agreement. They do so with more information available to them than the public. Keeping in mind the big decision may be do we want this project or not? If the Village wants it an abatement may have to be given to make it happen. J. Crohn In response to yours of 5/23 at 11:14. If the village could have gotten a smaller development on the LCOR site without a tax abatement it would have jumped at the chance. Bets in response to yours of 5/23 at 11:19am A pilot during development of the site makes no sense and helps no one. During construction the taxes stay they same as they were before construction thus the developer doesn't need an abatement then (Under the terms of any abatement the payment can never be lower than the apyment before the abatement is given. As I explained above the thirty year abatement helps the village more than the developer particularly in the later years. You suggest that the Village should not have condemned the supermarket site before it was inspected. I have explained before that the Village moved on the site to prevent the lease holder from putting in a Bravo Market as it did on Scotland Road in Orange, an Xtra Sumermarket like it did on Irvington avenue, a low end Five and Dime store or some kind of a discount store we did not need or want. We evaluated the possibility of contamination (which in the end was less than we anticipated). A problem at the site which arises because the developer is going to completely gut the site is the need to remove asbestos. The fact remains that if we had anticipated that problem the cost would have been the same to us because we would have to have paid fair market value which we did. We don't get to deduct the costs of renovations we decide to do. Or in this case the developer. The problem is that the asbastos removal does increase the developers costs and it could become one of the factors that in the end will justify a tax abatement jimmurphy in response to yours of 5/23 at 11:32A.M.. Now that the builders have their approvals they will get their firm construction costs and refine their proforma statements. They will be talking to their investors and banks. They are in a much better position to know if they need an abatement, for how long and on what terms. During the planning board process the shop rite developer revised its plans and eliminated approx 25 units. That has to impact on its financial numbers. David Lackey in response to yours of 5/23 at 11:57 a.m. see my response to jimmurphy above. As I have indicated above if we negoiate the Pilot agreement, if one is granted we should be able to do one that will not cost the taxpayers financially (using the pilot vs non pilot anaylsis) If we use the built vs not built analysis the taxpayers are always ahead financially. Bets in response to 5/23 at 1:05 P.M. Ia am not going to say that the developers have not raised the topic but I can tell you there are no agreements to give abatements and no specific request has been made. snshirsch in response to yours of 5/23 at 1:53 P.M. You will not be able to see the financial data upon which the Board of Trustees makes its decision because that information is confidential propietary information. You should be able to see a spread sheet displaying the current assessed values with the pilot agreement and the asseessed values if the property had been placed on the tax rolls. Doublea in response to yours of 5/23 at 2:32 P.M. We don't know what the premise of any future abatement will be. If you believe the premise if the LCOR abatement and Pilot agreement was "not correct" please indetify the premise and tell us why it is not correct. I am more than happy to meet with you and John Gross to do such a review. Woodstock your assumptions in youpost of 5/234:40 P.M. are correct. doublea your reply to woodstock of 5/23 at 5:01 P.M. is not correct. The value is not included for municipal purposes. The amount is also subject to other adjustments. The payment particularly in later years is affected by an revaluation that is done. doublea in response to yours of 5/23 at 5:18 P.M. Mark is correct in that the assessment of an abated project (with a PILOT agreement) is not included in the equalized asseassment for school or county tax purposes. What is the wrong assumption you think the Trustees made? I have spent three hours on this post. I have tried to respond to each issue raised in the 28 posts since noon on 5/22. I apologize for the length. If there are spelling and grammar mistakes I apologize but I am tired as it is way psat my bed time. | ||
| mayhewdrive Citizen Username: Mayhewdrive Post Number: 282 Registered: 5-2001 |
Edwin, Well, I think you win the award for lengthiest MOL post ever.  I will leave it to everyone else to address your points on the PILOT. However, I would like to respond to your comment: (I am told messages can be created elsewhere and transferred here after spell check but my skill level does not permit that.) It's real simple....use Microsoft Word (or Wordperfect as most lawyers do) to draft your message. Use the features of that software for grammar and spell check. When you feel your message is complete, within that software, select Edit....Select All and then Edit....Copy. Come here to MOL and where you would normally type your post, click your mouse and then at the very top of your browser menu, select Edit....Paste. Don't mean to sound condescending, but it is very simple. | ||
| doublea Citizen Username: Doublea Post Number: 137 Registered: 3-2003 |
Mr. Matthews: Thank you for your lengthy and exhaustive response. Since you and I are probably contemporaries, I know what you mean about lacking some of the skill levels and keyboarding skills. Your last question asks "what is the wrong assumption...the Trustees made?" What I am referring to is the blanket statements made that because the PILOT is not included in S.O's tax base for purposes of allocation between S.O. and Maplewood, this means that S.O's allocated share of the school budget does not increase and therefore this must be good because otherwise the amount of school taxes paid by other S.O. taxpayers would increase. The pro-forma calculations that I did are meant to show that this depends on the real assessed value of the PILOT property and how that assessed value compares to the total assessed value of all S.O. properties. The examples I used were only examples,and only by using real numbers would we know where we stand. Then you have to offset the benefit gained by increased amount of municipal taxes paid by the PILOT. An example of this kind of reasoning is found in Mark's post of May 9, 2003 - 4:05 p.m. in the "South Orange Downtown Redevolpment" thread. "It is important to remember that since the village would get double what it normally gets, that it has an impact on the municipal portion of the tax bill. So why (sic.) your school portion might increase,the municipal portion might decrease. Also, the split between the two towns which is based on a property wealth formula would actually benfit the village since this property would not count in that formula and could actually reduce the percentage the village has to pay (right now it is about 42% of the school budget)." It is this last statement that I believe has become a mantra to explain why a PILOT is good for S.O. taxpayers. The fact of the matter is that the justification for a PILOT is that it is the only way developers would build (as you have pointed out). I do think that the postings on this board have been extremely useful in giving the people involved whether actually posting or just reading a pretty good understanding of how PILOTs work. It is important to note that from what I have seen on this board the questions asked for the most part have been impartial and not part of any political agenda. I think we all want the best for South Orange and want a thriving downtown. But we also want it done in the best possible manner, both financially as well as physically. Once again, thanks for the time you have spent on these postings and let's see what happens. | ||
| doublea Citizen Username: Doublea Post Number: 138 Registered: 3-2003 |
Mr. Matthews: Thank you for your lengthy and exhaustive response. Since you and I are probably contemporaries, I know what you mean about lacking some of the skill levels and keyboarding skills. Your last question asks "what is the wrong assumption...the Trustees made?" What I am referring to is the blanket statements made that because the PILOT is not included in S.O's tax base for purposes of allocation between S.O. and Maplewood, this means that S.O's allocated share of the school budget does not increase and therefore this must be good because otherwise the amount of school taxes paid by other S.O. taxpayers would increase. The pro-forma calculations that I did are meant to show that this depends on the real assessed value of the PILOT property and how that assessed value compares to the total assessed value of all S.O. properties. The examples I used were only examples,and only by using real numbers would we know where we stand. Then you have to offset the benefit gained by increased amount of municipal taxes paid by the PILOT. An example of this kind of reasoning is found in Mark's post of May 9, 2003 - 4:05 p.m. in the "South Orange Downtown Redevolpment" thread. "It is important to remember that since the village would get double what it normally gets, that it has an impact on the municipal portion of the tax bill. So why (sic.) your school portion might increase,the municipal portion might decrease. Also, the split between the two towns which is based on a property wealth formula would actually benfit the village since this property would not count in that formula and could actually reduce the percentage the village has to pay (right now it is about 42% of the school budget)." It is this last statement that I believe has become a mantra to explain why a PILOT is good for S.O. taxpayers. The fact of the matter is that the justification for a PILOT is that it is the only way developers would build (as you have pointed out). I do think that the postings on this board have been extremely useful in giving the people involved whether actually posting or just reading a pretty good understanding of how PILOTs work. It is important to note that from what I have seen on this board the questions asked for the most part have been impartial and not part of any political agenda. I think we all want the best for South Orange and want a thriving downtown. But we also want it done in the best possible manner, both financially as well as physically. Once again, thanks for the time you have spent on these postings and let's see what happens. |
