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Aug 26, 2009 12:58 PMPublication: The Southampton Press

State lawmakers want an audit of PILOTs

Aug 26, 2009 12:58 PM

More auditors may soon be visiting Southampton Town Hall, as two state legislators and several environmental groups have formally asked the state to take a closer look at the way the town has used Community Preservation Funds in recent years.

New York State Assemblyman Fred W. Thiele Jr., New York State Senator Ken LaValle, and the heads of the Nature Conservancy, Group for the East End, the Long Island Pine Barrens Society, the Peconic Land Trust and the Long Island Farm Bureau are calling on New York State Comptroller Thomas DiNapoli to conduct an audit of Southampton Town’s Payment in Lieu of Taxes, or PILOT, program.

The PILOT program was established in 2002 to provide tax relief, using CPF revenue, to certain districts that have lost property tax income because land within those districts has been purchased by the government and preserved as open space, and thus taken off the tax rolls.

Specifically, the group has written a letter asking the comptroller to review all PILOT payments made since 2003, to certify the proper amount of the payments for each year and to provide recommendations to ensure the reimbursement to the town’s CPF for any and all overpayments.

Mr. Thiele, one of the chief architects of the CPF legislation in 1998, has been critical of the town’s handling of its PILOT program, in particular the town’s use of what Mr. Thiele referred to as “wildly inaccurate” assessments of land values in calculating the payments as well as throwing ineligible lands into the mix.

For instance, in 2007 the town assessed a 155-acre parcel off Dune Road in Hampton Bays for $47.6 million, despite the fact that the bulk of the acreage is wetlands stretching into Shinnecock Bay that cannot be developed. The more accurate value of that parcel, according to Mr. Thiele, is less than $3 million. For that year, the town also calculated the value of the entire Riverhead School District, not just the portion confined within Southampton Town, in determining its payments.

A state audit of the Peconic CPF conducted last year, on the fund’s 10th anniversary, which led to criminal investigations of East Hampton Town’s CPF program, revealed that Southampton Town has overpaid the PILOT districts some $6 million since 2003.

Mr. Thiele has proposed new state legislation that would require PILOT overpayments be reimbursed to the CPF while holding the districts that received the payments harmless.

Although there has been no formal response from the comptroller’s office yet, Mr. Thiele said Mr. DiNapoli is “very well aware” of the issues regarding the town’s PILOT program.

“It’s not for me to speak for the comptroller, but he has certainly shown an interest in maintaining integrity of the CPF,” Mr. Thiele said.

The state comptroller is already in the process of auditing Southampton Town’s books thanks to a request filed earlier this year by Councilwoman Sally Pope, who, along with most other town officials, wanted answers to growing questions about the state of the town’s finances and financial records. Deficits and major accounting errors discovered in the town’s police, waste management and capital funds in the last several months have also prompted the Town Board to commission forensic audits of the police and capital funds.

According to Dennis Tompkins, director of communications for Mr. DiNapoli, the full scope of the state’s audit of Southampton Town is still being defined, but he said the comptroller would certainly consider the PILOT request.

Mr. Tompkins would not speculate on what any state audit of the PILOT program would mean for the town until the auditors have had the chance to thoroughly review the records.

Southampton Town, Mr. Thiele alleges, has dragged its feet in addressing the troubles with the PILOT program. And the bulk of the money Southampton overpaid in PILOTS—$4.2 million to Riverhead School District, and $2.05 million to the Hampton Bays School District—should have been spent purchasing environmentally sensitive lands.

“The only way now to achieve a fair and equitable resolution,” he said, “is through the intercession of the state comptroller.”

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