The Saugerties Town Board set a deadline last week of 45 days for developer Larry Regan to complete all the requirements for a PILOT (payment in lieu of taxes) agreement. If he fails to do so, the agreement will be withdrawn.
Regan’s project, called Dickerson’s Keep, is planned for Route 32 in Glasco. It’s still before the planning board. Regan and the town agreed to the PILOT last year, which would guarantee regular tax payments over a period of 30 years. (Property taxes usually vary annually through changing assessments and tax levies. Generally, any new large project is eligible for a PILOT, a pro-development tool.)
But town officials say that a year has passed and Regan has yet to comply with key terms of the agreement, especially the creation of a corporation to hold title to the property and be the beneficiary of state affordable housing subsidies sought by the developer. As a result, Regan has not yet signed the PILOT. Finally, economic conditions have changed in the past year, and it’s likely a PILOT negotiated now would look different. (On that point, numerous town officials have said they’d be unlikely to negotiate another PILOT because of issues they have with the project.)
Supervisor Kelly Myers said the developer has been given more than enough time to get his plans underway. “They have had more than a year, and they have not met the terms of the PILOT agreement. They haven’t even signed it, and they haven’t received the funding.”
The town board’s resolution states that Regan must meet all the terms of the PILOT but does not give specifics — understandable, as the agreement is quite a thick document. Whatever action Regan takes will likely have to be interpreted by the town’s legal counsel. It would be difficult for all terms to be met. As the Saugerties Times has previously reported, Regan’s agreement with the current property owner states he will purchase the property only if the town’s planning board grants approval to the project. Unless that happens at the next meeting, or Regan purchases the land without getting approval first, he won’t be in a position to meet that requirement.
One reason the project’s progress has slowed is the state has yet to bestow affordable housing subsidies it needs to be viable. The preferred sequence for the developer would have been to (1.) Conclude a PILOT, showing local support for the project; (2.) Gain approval from the planning board, showing a green light; (3.) Receive subsidies to ensure the project can operate with low rents; (4.) Buy the land. Without meeting the first three conditions, purchasing the land would be riskier.
Calls to Regan’s office were not returned.
Board no longer supports project
Underlying the board’s vote is the gradual reversal of its support for the project. Early in the process, board members visited other projects by the developer and liked what they saw. But later, they heard less glowing stories from officials in those towns about increased crime rates. Also, the project was presented as “workforce housing,” intended for working adults and small families who earned enough to get by but not enough to buy a home — especially in today’s mortgage market. Many town officials were unhappy to learn that if the complex was not fully occupied with paying residents, it would have to accept Section 8 tenants, who receive direct rental subsidies through the federal government and are usually associated, fairly or not, with increased rates of crime and declining value of surrounding homes.
Another criticism of the project is that it would add additional students to the schools and increase the school budget without much of an offset in property taxes because of its low rate.
Throughout 2011, former supervisor Greg Helsmoortel was a strong supporter of the project. Many observers attribute his loss in November and the election of Kelly Myers, who opposed it, to this issue.
Now, the board as a whole seems to have changed its opinion on the project. An earlier vote last week would have rescinded the PILOT effective immediately. By advice of the town attorney, they opted to give Regan 45 days to avoid a potential lawsuit.
“We would be in a weaker position if we just revoked it, and I don’t want to burden the taxpayers [with a lawsuit],” said councilman Fred Costello.
PILOT vs. another state tax break
Regan is free to pursue funding under Section 581a of the state law, which specifies that taxes for housing for low-income residents may be calculated using a complex income formula, rather than the usual property value basis for calculating taxes. In fact, members of the Town Council have said the 581a could be less costly to the developer than the proposed PILOT.
However, having a local PILOT shows support and sets taxes at a regular amount which makes them easy to plan around. A local PILOT can also be helpful to an application for state subsidies, so losing it could sting.
Under the agreement, the payment in lieu of taxes would amount to $650 per unit on the proposed 40-unit Dickinson’s Keep development in Glasco in the first year, with a 3 percent per year increase over 30 years, at which time the developer would pay the full tax.