To keep taxes under control for town residents, the town needs to offer big tax breaks to get businesses to move to Saugerties. That, in a nutshell, is the plan Economic Development Committee Chairman Steve Guerin proposed at the June 12 Town Board meeting.
The plan would help relieve what he described as, “a community burdened with both general and school taxes, which are crippling too many residents and businesses alike.”
The proposal calls for a 50 percent tax break in town property taxes for new businesses in year one. The program would last 10 years, with a five percent increase to assessment each year.
The businesses would have to have a “bricks and mortar” presence – that is, buy or build a building, and employ five or more people, Guerin said.
Reaction to the idea — and to Guerin himself — from Town Board members was positive. Councilman Bruce Leighton called the idea “spot on.”
Supervisor Kelly Myers praised Guerin, who was appointed only this year as chairman, for “jumping right in with the committee. You’re taking an aggressive approach, and that’s what we needed.” The committee is also working on other projects, she said, including Steve Hubbard’s study of business on Kings Highway and improving the town’s website.
Myers pointed out that development on vacant land would be a good deal for the town. “We’re getting a very low assessed rate on vacant land, so even if we accept 50 percent the first year we’re still making more than we did before,” she said. “And this gives a new business an opportunity to reinvest and become stronger.”
Our own thing
The Town Board is caught in a bind, Guerin said, as it must try to hold taxes level while not affecting outlays and programs. “It has reached a point where the community has an expectation of services but is unable to, at any great degree, increase the outlay of taxes to meet new needs,” he said.
Guerin said the idea would apply for small businesses in all areas of the town.
“Kings Highway is a wonderful economic zone, but we’re really looking for home runs there. We’re looking for larger businesses, we’re providing much of the infrastructure, but truly the growth in economic development is in small business,” Guerin said. “This would be businesses of less than 25 people. [Small businesses account for] 85 percent of the growth of jobs in America; not Ford stamping plants, not these large tech companies in California.”
Guerin said he would like to see Saugerties be the first to say to the state, “we’re going to do our own thing. We’re not expecting the IDA to situate a stamping plant for an automotive manufacturer; we’re not expecting a petroleum plant or a rail yard or an airport. We’re just going to do our own thing with small business.”
A ‘black hole’
Saugerties has a lot going for it, Guerin said. “We are the northernmost town in the county. We are an extremely large town, 64 square miles, approximately. We have 24,000 people. We rival Kingston virtually in population, and swamp them in area.”
The town of Ulster, which lies between Kingston and Saugerties, brought in $30 million in new business, Guerin said. This “increased their tax base without having to affect homeowners or existing businesses.”
He provided some hypothetical numbers.
“If a firm moved in and spent a quarter of a million dollars building a facility or buying and renovating a building — and a quarter of a million is not outrageous these days, unfortunately — and they are assessed at $15,000 a year in general taxes, we would take half of that.”
The only taxes that would be affected are the town levies, Guerin said. It wouldn’t affect school, village, county or special districts. “When you look at the amount of money we would not be taking up front, over time we’re not talking about a lot of money, not enough so it would make the difference between an existing business and the new business,” he said.
Guerin stressed that the tax break would be open to any business interested in locating in Saugerties. “Government is a poor predictor and chooser of successful businesses. We should not be picking winners and losers. We should lay out a program that is neutral and allow businesses to succeed or fail on their own.”
The volume of new businesses would eventually make up for the loss of taxes, Guerin said. However, he acknowledged that in the short run, there could be some loss of tax revenue.
“If the town boards can keep tax increases to zero or marginal, over time, with the volume of new business, we will be able to bend the tax curve back,” Guerin said. “This not only helps our businesses, it also helps our residents.”
If Saugerties does establish a townwide economic development zone, it will be the first in the state to do so, Guerin said. “We would be the first community in the state to publicly say for new businesses we’re just going to charge you 50 percent, with an increase of five percent over 10 years.”
The press coverage would be widespread and unequivocal, Guerin predicted. “We would become known as business-friendly.”
He said if Saugerties institutes the tax breaks, “we will become a black hole; we will suck all the potential business from a 50-mile radius.”
Guerin said Governor Cuomo had recently proposed tax havens near the State University of New York schools, but lacking a SUNY school, Saugerties could not take advantage of that initiative. “Our SUNY school is in New Paltz; it might as well be a million miles away.” [Though Myers later pointed out that Ceres Technology on Kings Highway and SUNY Albany are now in year one of a five-year, $20 million partnership.)
Saugerties can’t rely on federal or state help, Guerin maintained.
While tourism is a major industry in Saugerties, not everyone can work in tourism, Guerin said. He urged the Town Board to adopt the plan, go over it with attorneys, and to “keep it simple, don’t try to add to it.”