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Apr 1, 2009 11:38 AMPublication: The Southampton Press

Thiele to propose legislation to clarify PIIOTs

Apr 1, 2009 11:38 AM

Legislation pending in Albany might help clarify how much relief taxing districts are eligible to receive from preservation fund subsidies.

Southampton Town can allocate up to 10 percent of its Community Preservation Fund revenue for payments in lieu of taxes, or PILOTs, to offset the tax impact on school and fire districts when land is preserved and taken off the tax rolls. How much each district can receive is based on how the value of the preserved land in those districts is calculated.

Legislation sponsored by New York State Assemblyman Fred W. Thiele Jr., one of the original architects of the CPF, aims to alleviate some of that ambiguity by simplifying how PILOT payments to the districts are calculated. “We want the calculations to be nothing more than a mathematical, administrative act,” Mr. Thiele said.

Before Mr. Thiele’s legislation can go forward, the assemblyman said he is waiting on more accurate assessments of the lands eligible to be included in the PILOT calculations from the town.

“In essence, the idea of the PILOT law, to help those areas within the pine barrens that have lost tax revenue, is a meritorious one,” Mr. Thiele said. “But the town’s administration of the PILOT program has been less than stellar. There’s been a lot of politics at play and we haven’t had accurate numbers.”

The town is currently working on producing more accurate evaluations of those lands, according to Town Assessor Ed Deyermond.

“The ball’s in the town’s court. We can’t move on the legislation until we have more accurate numbers,” Mr. Thiele said. “The law is crystal clear on what lands are eligible. It’s the same lands that are eligible to be purchased through the CPF for open space and historic preservation. It’s been the town’s interpretation that’s been the issue. The standards are clear.”

The CPF, created in 1998 as a mechanism to save open space and farmland, was amended in 2002 to allow for tax relief payments to districts that lost revenue due to land within those districts being taken off the tax rolls for preservation. Initially, only the Riverhead School and Fire districts, the Flanders Fire District, the Flanders-Northampton Ambulance District and North-End Fire Protection District qualified for PILOTs. However, in 2007, an amendment to the PILOT law widened the scope of the program by defining PILOT eligibility for districts based on high or average need. With that 2007 amendment, Hampton Bays and Eastport-South Manor became eligible for the subsidies.

The assemblyman’s legislation lists the districts eligible for PILOTs as: the Riverhead School District, the Hampton Bays School District, the Eastport-South Manor School District, the Riverhead Fire District, the Flanders Fire District, the Northeast Quogue Fire Protection District and the Northampton Ambulance District.

In 2007, the Town Board adopted the need index amendment without putting it before the voters for a referendum, thereby possibly invalidating subsequent payments. Since a 2002 CPF amendment to allow for PILOTs in the first place was passed by referendum, state lawmakers have argued that any further amendments to the CPF law be approved in the same way.

At the time, town attorneys argued that the Town Board had to honor the change approved in Albany, and that a referendum was not required. The result was $4.8 million in PILOTs for 2008, with the bulk of those payments, $3.1 million, going to Riverhead. Due to the confusion, the Riverhead District received a $2 million overpayment, according to Town Supervisor Linda Kabot.

While Mr. Thiele’s legislation would mandate that any future amendments to the CPF go to the voters, it would also sanction the 2008 payments—a crucial aspect of the legislation, Ms. Kabot said, as it would prevent those living within the Riverhead district, including residents of Flanders, Northampton and Riverside, from having to reimburse the CPF for the $2 million overpayment.

The PILOT issue has become a political football in recent years as Town Board members have argued over how much should be paid out to the districts and how that revenue is calculated.

Revenue for the CPF is generated by a 2-percent sales tax on real estate transactions paid by the buyer at closings. While PILOTs can range from zero to 10 percent of CPF revenue collected, interpretations have varied as to whether that revenue should be calculated on how much CPF revenue a town collected yearly or how much it collected over the life of the program.

The Southampton Town Board has calculated its PILOTs based on CPF projections for the coming year. For instance, in 2008, Southampton Town doled out roughly $3.5 million in PILOTs based on what it projected to collect in 2009 CPF revenue.

But before the Town Board decided on that amount, there was a debate among Town Board members to increase those payments to $4.8 million, the amount of relief provided in 2007. To do that, the Town Board would have had to base the 2008 payments on 2007’s revenue, not the projected revenue for 2009. Earlier in the debate, there was discussion of basing the 10 percent on the total amount collected since 2002, the year that the CPF law was amended to allow for PILOTs.

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