Ulster County’s Industrial Development Agency is taking a hard line in the case of two prominent clients in arrears for some $720,000 in property taxes and fees.
On July 22, the Hudson River Valley Care Center (known as the head trauma center) in Lake Katrine and the Birchwood Village housing complex on Flatbush Avenue in Kingston were formally put on 60 days’ notice that they had to come up with plans to pay down $519,090 and $201,101 respectively in delinquent taxes or face legal action.
Care-center director Mark Badolato, who attended last week’s IDA meeting, pledged an immediate good-faith payment of $130,000. IDA chairman Dave O’Halloran said that Birchwood Village developer Steve Aaron had contacted him the day before the IDA meeting and pledged a $50,000 payment on his debt. IDA director Lance Matteson said neither payment had been received by Friday, August 19, but that he expected compliance. The firms have until September 21 to produce payment plans for IDA review.
Matteson said the “overwhelming majority” of IDA sponsored projects pay their obligations in a timely manner.
Industrial development agencies were created under state law to allow counties to offer incentives for economic development. Developers with IDA sanction can be relieved of mortgage and sales taxes (for construction materials) and can seek tax-exempt bonding in the private sector. A substantial benefit is a negotiated PILOT (Payment In Lieu of Taxes) agreement with the IDA that allows developers to pay as little as 25 percent in property taxes during the first years of operation. With a sliding scale, full taxation is usually reached after a decade of operation. Taxing authorities sign off on such agreements, reasoning that a percentage of taxes on a new development is better than no development and no taxes at all.
The IDA is not a lending authority. It acts as a pass-through and collection agency, charging developers a one percent fee for its services. Should an IDA development fail, taxing and bondholding authorities must take legal action to attempt to recover what’s owed.
O’Halloran explained to the seven-member IDA board that the care center has had financial difficulties since its founder, Tony Salerno of Long Island, died two years ago. A state-appointed receiver has taken over the facility. With over 400 staff, it is one of the biggest employers in the county.
Badolato said the facility lost $250,000 during the last quarter of 2010 and another $40,000 in January. By shifting the classification of 120 beds from nursing care to traumatic care, however, the center’s reimbursement rate per patient from the state was increased from $225 to $334 a day in January. “We’re in the black now,” Badolato told the IDA board.
Board member Steve Perfit expressed board sentiment. “We don’t want to create a default here,” he said. “Our option is to give them a little breathing room.”
O’Halloran rejected Town of Ulster economic development advisor Patrick Sheehan’s contention that the IDA was “a paper tiger” when it came to enforcement. “We are a very conservative board. The taxpayers’ interests are foremost,” O’Halloran retorted. He suggested that the IDA needed to be flexible during difficult business times.
‘Of a pattern’
There were no ready explanations for Steve Aaron’s delinquency, other than he is fighting the City of Kingston over assessments on Birchwood Village. Aaron was not present at the meeting.
Town of Ulster Supervisor Jim Quigley, who has frequently clashed with Aaron over tax issues, said the latter’s refusal to pay the IDA was “of a pattern” with Aaron-owned properties in Saugerties and Esopus. “He just does not want to pay taxes,” Quigley said.
Aaron was unavailable for comment.
In other IDA action, O’Halloran said he was “comfortable” with Skate Time USA of Accord reporting only 12 FTE employees (full-time equivalent) when the firm had promised at least 20 on its IDA application four years ago. Matteson said Skate Time, owned and operated by Independence Party chairman Len Bernardo, has fulfilled its commitment to create a destination for tourism.
The IDA is scheduled to meet next on Sept. 21 at 8 a.m. at the Business Development Center on Albany Avenue in Ulster.
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