Ulster County Comptroller Elliott Auerbach has done us all a favor by overseeing the publication of a concise, comprehensive report titled “A Study of the Impact and Best Practices for Industrial Development Agencies.” The October 7, 2014 report highlights the true cost of job creation and retention in our county with regard to the projects currently operating under Payment in Lieu of Taxes (PILOT) agreements. The report also allows us to calculate the true extent of the financial havoc that will be wreaked on the taxpayers of New Paltz and the New Paltz Central School District (NPCSD) if the courts allow the proposed PILOT awarded to the Wilmorite corporation to stand.
Those pressed for time will learn a good deal by simply reading the four-page Executive Summary, which serves as an indictment of the decision-making skills of past and current Ulster County Industrial Development Agency (UCIDA) board members.
The Comptroller’s report shows that 37 projects were operating under PILOT agreements in Ulster County in 2013. These projects would ordinarily have paid $4,407,701 in local taxes but, under the PILOT agreements, were permitted instead to make payments of only $1,384,253 to their local taxing authorities. This represented a net benefit to the project sponsors that year and a net loss in revenues to the county and involved towns and school districts of $3,023,448.
Each and every dollar not paid toward the annual cost of municipal and educational services by a business or organization awarded a PILOT represents one dollar of additional cost to the remaining taxpayers of that community, whose tax rates will go up to cover the cost of those services. Basically, the UCIDA board members force local residents and businesses to make up the revenue deficit created by the granting of tax abatements to projects awarded a PILOT. Keep in mind that these board members are not elected officials; they are political appointees, and are, in essence, using taxpayer dollars to “buy jobs,” with the justification that these jobs will result in a net economic benefit to the entire County of Ulster. Using Wilmorite as an example, let’s see if they’re right.
The Comptroller’s report shows that the average annual tax break provided to the 37 Ulster County projects receiving PILOTs in 2013 was $81,715. The proposed annual tax break to be provided to Wilmorite for its Park Point project in New Paltz is over $950,000. The average number of jobs created by the 37 Ulster County projects was 105. The number of jobs to be created by the Wilmorite corporation would be 8.5.
The gift of over $3 million in net tax abatements to the 37 projects active in our county in 2013 paid for 3,902 jobs that year. This works out to an average “cost per job” of $775.00. Assuming these jobs would not exist but for the tax exemption granted by the PILOT, I initially considered it a reasonable investment. On the other hand, it’s important to keep in mind that this is not a one-time cost. It is a cost that impacts taxpayers and taxing authorities annually for the entire term of the PILOT agreement, a term which can last anywhere from ten to 25 years or more.
Now let’s look at Wilmorite. The “cost per job” to the taxpayers in our community for the 8.5 positions promised by Wilmorite would be $111,765 per year for the term of its PILOT agreement. The term of its PILOT agreement is 25 years.
Executives of the Wilmorite corporation, the SUNY New Paltz Foundation, the UCIDA Board members who granted the PILOT, along with all those others with a vested financial interest in Park Point, want the taxpayers of the Town of New Paltz and the NPCSD to subsidize this project to the tune of $111,765 per job per year when the other 37 Ulster County projects combined are costing taxpayers an average of $775.00 per job per year.
Even more disturbing is that we also learn from the Comptroller’s report that little factual evidence exists that PILOT agreements actually do create or retain jobs. The report cites a 2007 econometric analysis research article published in the Journal of the American Planning Association titled “The Failures of Economic Development Incentives”, which concludes: “The upshot . . . is that on [the] most basic question of all — whether incentives induce significant new investment or jobs — we simply do not know the answer.”
The decision on the part of UCIDA board members to grant Wilmorite this PILOT cannot be allowed to stand. Mike Horodyski is chairman of UCIDA. He is also the president and CEO of the Wallkill Valley Federal Savings and Loan. I watched him participate in and oversee UCIDA’s monthly meetings for over a year and found him to be an intelligent and well-organized leader. I’m hoping that, given his financial acumen as a banker, he will be able to help us all understand why he considers that granting a PILOT to Wilmorite is a good idea for the taxpayers of New Paltz, the NPCSD, Ulster County and New York State.
I also ask that the other members of the UCIDA board study Comptroller Auerbach’s well-researched and well-written report, and then join the discussion. Perhaps they will be able to provide answers to several questions that come to mind, including:
Why is it that UCIDA employs only two of the seven “Best Practices” identified on the second page of the report’s Executive Summary?
Why is it that UCIDA is not already employing the twelve recommendations for improvement outlined in the report?
This recent publication by the Comptroller is worth reading and discussing with our friends, neighbors and fellow taxpayers.
Oh, by the way, those 8.5 jobs that Wilmorite would like to “sell” to New Paltz at $111,765 per job per year? The average annual salary for these positions would be under $40,000. Now that’s enough to frost anyone’s pumpkin.