-By Arthur Barnett, Mineola Board of Education President
Since 2012, two large apartment complexes have begun construction in Mineola. Both received PILOT agreements from the Nassau County Industrial Development Agency (NC IDA). Both of these buildings received these tax abatements at the same time as the 2 percent tax cap law was enacted in New York State. It was not until a year or more later that taxing jurisdictions around the state began to become aware of the negative impact PILOT agreements had on their tax cap calculations.
A third apartment complex is now in the approval process. It has passed the Mineola Village Board and is now headed for another application for tax abatements in the form of a PILOT agreement from the NC IDA. Through our research with the Nassau County Assessor’s office and the Office of Real Property Tax Services, we have determined our first year loss from this latest proposal will be about $403,000 due to PILOT buildings not being permitted to be added to our district’s tax base growth factor. This loss will compound by up to 2 percent per year in perpetuity.
The district’s combined losses from these three properties is upwards of $30 million in the first 20 years. Further exacerbating the problem is the fact that these new complexes are residential, which will lead to more students in the school district with no way for us to raise additional revenue within the cap.
Certainly when the tax cap law was enacted this was not likely a concern, since only in unusual circumstances would IDAs be expected to offer tax abatements to residential or retail construction as they do not generate jobs. That trend seems to have shifted dramatically of late. Tax abatements for multiple dwellings and mixed use residential/retail projects has become the norm and recently, the NC IDA granted PILOT agreement to a storage facility expected to generate only two jobs.
An excerpt from the New York State Economical Development Council states “The purposes of industrial development agencies are to promote, develop, encourage and assist in the acquiring, constructing, reconstructing, improving, maintaining, equipping and furnishing industrial, manufacturing, (civic facilities), warehousing, commercial, research and recreation facilities including industrial pollution control facilities, educational or cultural facilities, railroad facilities, horse racing facilities … and continuing care retirement communities and thereby advance the job opportunities, health, general prosperity and economic welfare of the people of the state of New York and to improve their recreation opportunities, prosperity and standard of living.”
This year, the Sharon Springs School District in Schoharie County had their tax cap decimated by this little understood, negative impact. A PILOT agreement with a Walmart Distribution Center caused the school district’s tax cap to be set at -12.6 percent. That is negative 12.6 percent. The loss of more than 10 percent inrevenue is extreme, but for them there would, at least, not be a spike in student enrollment.
For Mineola schools, a -12.6 percent tax cap would cause the district to lose $10.08 million from its budget and devastate the district as we know it.
On top of the budget cut, we would need to absorb students coming from 856 new residential units. Even as PILOT payments increase over the years, they are subtracted from our allowable levy creating a “more is less” scenario. This just played out in the Geneva School District in Ontario County this year, as they see the net difference in PILOT payments, year to year getting deducted from their allowable tax levy calculation.
This has indeed been a very difficult situation to explain to our residents and local government alike. We as a board are being looked at as trying to block expansion with some ulterior motive. This is simply not the case. We are fully aware of the vital role a strong school district plays in the overall value of a community, its homes and commercial base. A 12.6 percent cut from our allowable tax levy would eliminate all sports, music, drama and clubs.
Transportation would be unaffordable, teaching positions would be abolished and class sizes would explode. Nobody would want to bring their family into a district like this and home values would plummet.
The leadership of the Village of Mineola has regularly been preaching “as goes the downtown, so goes the village.” I suggest, “as goes the school district, so goes the community.”
The Village of Mineola’s decisions on these projects will impact five villages that make up the Mineola School District. We have made numerous attempts to make our concerns known and are met with cynicism and distrust as to our motives. Their simple answer to us is, “you get money, don’t you?” They simply cannot understand or accept the fact that it is a net zero gain when deducted from our allowable levy and that we cannot add a tax base growth factor to our calculations.
The tax cap law must be amended to allow tax abated projects to be included in a taxing jurisdiction’s growth factor calculation. It should be further amended to grandfather these inclusions back to 2012 for buildings approved for exemptions since the tax cap law was enacted. These would need to be phased in over a few years so as not to cause a sudden spike in a district’s allowable tax levy.
Until then, a moratorium should be considered for some of these minimal job creating projects, if not all PILOT arrangements. The unintended consequences are just beginning to be seen.
We cannot afford to wait until it’s too late. If you bankrupt a school district, you destroy the entire community.
