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Jun 17, 2009 2:18 PMPublication: The Southampton Press

Town Board members uncomfortable with PILOT revisions

Jun 17, 2009 2:18 PM

New legislation in Albany aiming to clarify how money set aside for land preservation can be used to reduce the tax burden on school and fire districts in western Southampton Town has reignited a controversy that some town officials thought had been resolved.

In May, the Town Board voted to support state legislation that would have helped resolve several issues regarding PILOTs, or Payments in Lieu of Taxes, which are designed to help other taxing districts when land is preserved and taken off the tax rolls. The way PILOTs are calculated and paid had been a matter of interpretation, and the Town Board members said they welcomed the state’s effort to clear up the matter.

But since then the legislation sponsored by New York State Assemblyman Fred W. Thiele Jr. and State Senator Kenneth P. LaValle has been revised in several key ways that concern town officials. It would give residents a chance to alter terms of the PILOT program—or even to eliminate it altogether—through initiative and referendum. Also, the new legislation would hold town officials responsible for reimbursing its Community Preservation Fund for overpayments made in 2007 because of the way the PILOTs were calculated; the earlier proposed legislation forgave the town and taxing districts for the gaffe.

Town Councilman Chris Nuzzi had introduced resolutions at a special meeting on Friday that would have voiced the Town Board’s support for the new legislation, which is pending in Albany. But he later withdrew the resolutions after Town Board members balked.

That left the Town Board without a position on the legislation, and the State Legislature could act on it before adjourning on Monday, June 22. Mr. Nuzzi said it is crucial for the Town Board to reach some sort of consensus on the proposed PILOT revisions while it still has a chance to voice an opinion.

“Albany is going to do what it wants to do,” he said. “But at least we can help shape what they do in a way that is best for the town.”

Under the PILOT program, a portion of revenue for the town’s Community Preservation Fund, which is fed by a 2-percent real estate transfer tax and used to pay for open space preservation, can be used to compensate eligible taxing districts that have lost revenue due to land being taken off the tax rolls for preservation purposes. The town can allocate up to 10 percent of its CPF revenues to the PILOTs each year.

The changes also allow for two additional school districts, Hampton Bays and Eastport South Manor, to also qualify for the special payments. Prior to that, only the Riverhead School District qualified.

As part of the 10th anniversary of the CPF in 2008, lawmakers not only looked back at the successes of the program but also took into account some of its problems, Mr. Nuzzi said, such as ambiguity in how PILOTs could be calculated, which lands were eligible, and how the values of the lands were assessed. Since then, much work has gone into clearing up some of that ambiguity, the councilman said—but that work could be lost if state lawmakers hand down a set of guidelines that town officials, environmental groups and district representatives find unfavorable. “We’re being threatened with the status quo,” Mr. Nuzzi said.

Mr. Thiele said it was up to the Town Board to voice support for the proposed changes. “We don’t need permission of town officials to introduce state legislation to protect the taxpayer from problems created by the town,” he said.

But Town Supervisor Linda Kabot said she would not be rushed at “the 11th hour” to adopt legislation that could potentially harm the PILOT program. She also vowed that the school and fire districts would still receive PILOT payments in 2010.

In May, the Town Board agreed to support legislative guidelines authored by Mr. Thiele that were designed to clear up ambiguity in how PILOTs are allocated. Those guidelines established that the percentage paid to the school and fire districts would be based on the revenue collected in the prior 12 months, as opposed to projections of what the town might collect in the coming year. The changes also switched the formula for how the payments were calculated from a tax levy system to one of tax loss, which means the districts would receive subsidies based on how much they lost in tax revenue, not how much have been paid in taxes.

The guidelines also listed the districts that are eligible to receive PILOTs: the Riverhead, Hampton Bays and Eastport South Manor school districts, the Riverhead, Flanders and Northeast Quogue fire districts, and the Flanders-Northampton Ambulance District.

The legislation left it up to the Town Board to determine the exact percentage of CPF revenue to be doled out to the districts. Town Councilwoman Anna Throne-Holst has spoken out against the “up to 10 percent” flexibility in the CPF legislation, arguing that the size of the payments can be used for political purposes. She said Friday that she plans to introduce a resolution that would set the exact percentage paid out based upon the CPF revenue collected in the prior 12 months. “That would provide the districts with more predictability in crafting their budgets,” Ms. Throne-Holst said. “And would take the politics out of it.”

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