The Saugerties Town Board voted 4-1 to take half off litigious senior housing developer Steve Aaron’s tax payments, but Supervisor Kelly Myers is refusing to sign the agreement because she says the town can’t afford to lose the tax revenue.
“We are giving away over $100,000 of tax money that we budgeted for,” said Myers. “That creates a hole in our budget, and it’s money that has already been spent.”
The supervisor is standing alone on this one. Speaking with members of the Town Board, one gets the sense that they held their nose when they voted to settle with Aaron. Still, for the four, it was the best deal the town could get and better than rolling the dice in court. The supervisor needs to carry out the board’s will, says councilman Bruce Leighton.
“[Myers] acts on behalf of the board,” said Leighton. “A majority voted for this, and if she can’t carry out the board’s decision, she should resign.”
Deputy supervisor James Bruno said he would sign the agreement, if the board asked him to and it were legally permissible.
The deal
The Birches at Saugerties is a 60-unit housing complex on Route 9W for low-income senior citizens. The agreement concluded a lengthy battle between Aaron and the town that began soon after the initial 2005 tax agreement. (A tax break agreement, known as a PILOT [Payment In Lieu of Taxes], is standard for any large project, though their existence is routinely opposed by local property taxpayer advocacy groups.) The Birches agreement called for a payment of 6.5 percent of gross rents, rather than on the taxable value of the 60-unit Birches senior citizens housing development. The 2005 agreement states that “in no event shall the PILOT equate to less than $400 per dwelling unit per year.”
Soon after the agreement was inked, the state created a tax designation that allowed developers of low-and moderate-income housing to pay a certain guaranteed amount — in this case, estimates put the amount at less than the PILOT. Since that time, Aaron has been fighting to have the Birches tax payments lowered. The deal brings the payments down from $400 per unit to $200 per unit, and lowers the total of past due taxes from over $100,000 to $42,852. (This is the amount the supervisor said will lead to a budget-gap.)
The tax payments begin at $12,000 and increase by two percent each year — much less than what the original agreement called for (nearly $30,000 each year so far, minimum $24,000).
The new deal has the same expiration date as the old one, 2045.
Different views on court prospects
The board majority that voted for the deal has said the deal ends years of negotiation and gives the town at least some income from the development. Aaron had been holding out for $80 a unit, so $200 is significantly better, said Councilman Fred Costello. He acknowledged the settlement was not ideal, but the alternative would be court action and further delays. This would be expensive, and the outcome would be uncertain.
The town has already spent thousands of dollars in legal battles with Birchez Associates, Costello said. “When do we say, enough is enough?”
Not yet, says Myers. Myers believe the town would probably have prevailed in court because the PILOT agreement was signed in 2005, before the state’s 581-a law went on the books. In fact, she said, some towns have successfully revoked PILOT agreements for nonpayment, leaving the developer to pay the full tax on the property.
“I opposed agreeing to the stipulation to settle the lawsuit the town took against Aaron to recoup the money,” she said. “I feel we’re entitled to all of it, and our attorney thought we had a good shot at getting it back. I believe we should really be strong with this.”
While Aaron will pay far less under the new agreement than he had originally accepted, the town will realize some payments after four years of no payments, Costello said. State law changed the landscape for low-income developments, as it gave developers a benchmark they could use in negotiations. “This is not just happening in Saugerties, it is happening with developers all over the state,” said Costello.
Myers said the Birches deal would place severe financial constraints on the town. The $60,000 in lost tax revenue represents about two percent of the budget. Since there’s a two-percent tax cap (per year) in effect, that’s equivalent to an entire year’s allotted increase in taxes.
“(This) is to fund additional tax breaks for somebody who already had them and wasn’t keeping up their responsibility to the town,” said Myers.
But cap or no cap, “people in town just can’t afford any more,” Myers said. “I have gotten a lot of calls and emails; I really believe in the way I voted on this, and I think the community really supports the position of not giving additional breaks to The Birches and Steve Aaron.”
Myers said that as the financial officer for the town she does not feel comfortable signing the stipulation, and, “I’m not going to do it.”
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