FUN WITH PROPERTY TAX
“Only the Little People Pay Taxes.” – Leona Helmsley
UPDATE 2020 Aug. 17 – Following is a partial explanation of criticism leveled by NYS Comptroller Thomas DiNapoli and others that the tax burden of PILOTs is shifted onto the remaining taxpayers. According to a lawyer who asked to remain unidentified, if a new commercial property assessed at $19 million was added into the tax base, the owners would pay $932,000 in property tax each year, and assuming the tax levy remained the same or rose only slightly, all commercial, aka non-homestead, taxpayers would receive a small reduction in their taxes. But in the case of a PILOT, there will be no such reduction, and so it follows that other non-homestead property owners are carrying the freight. A faceless corporation with a dozen Airbnbs may not elicit sympathy, but what about the mom-and-pop landlord trying to make the mortgage? What about the local café that may shut its doors? Yes, other taxpayers are unfairly disadvantaged.
Say your (pre-Covid) office orders in pizza every day, and you divide the bill. Say there’s a new hire, and he gets a slice, but he never pays his share, and this goes on for 25 years.
What if there is an increased cost of community services due to, say, infrastructure weakness or more students in the school district? Stay tuned for quotes from attorneys and lawmakers who have watched these travesties unfold.
PILOT properties may still have to pay special assessments. What if cutting corners, aging infrastructure or the lack of bedrock under the garage causes a calamity? What if global warming causes the Esopus to flood, compromising the structure? Will everyone else also have to pay that special assessment? Stay tuned, and in the meanwhile, see To Tell The Truth, because now the answer is apparent.
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Early August, 2020 – A reporter should seldom use the pronoun “I” but here is an exception. I have searched high and low to understand NYS Comptroller Thomas DiNapoli’s statements that property tax that would have been paid by exempted properties is shifted onto remaining taxpayers. I have placed at least a dozen calls to various departments in New York State, but people either do not know or have not returned my phone calls. I sent two emails to Kingston assessor Dan Baker but received no answer. I called about a half-dozen local township assessors and received vague answers except from one lovely woman who told me flat out that probably no one knew. I have spoken to treasurers, comptrollers, finance directors and various officers. All to no avail.
However, there is one law that bears investigation – RPT § 485-b. To my reading, it says newly constructed commercial property ex-residential rentals is entitled to an exemption from inclusion in the assessed tax base that is phased out over ten years. This could mean that Dan Baker’s proposed $19 million assessment could become part of Kingston’s non-homestead tax base, to be phased in over ten years. In that case, the balance of the property taxes that the Kingstonian would have paid in the absence of a PILOT, around $890,000 annually, will be divided among the rest of Kingston’s commercial property owners.
Do I know this to be true? No. I emailed this question to Dan Baker, and he has not answered.
In a phone call Aug. 10, an attorney at Office of the State Comptroller who asked to not be identified and who seemed apologetic about the run-around nevertheless declined to walk me through RPT 485-b. Later, OSC spokeswoman Tania Lopez suggested that I keep trying the NYS Office of Taxation and Finance.
Then, consider the equalization rate. If a school district straddles more than one town or city, as is the case with the City of Kingston and the Town of Esopus, taxpayers in each ought to pay school taxes in proper proportion. Picture this scenario: Kingston hasn’t assessed its properties for a while, prices have risen, and properties are now assessed at only about 90% of market rate. Esopus, on the other hand, re-assesses its properties each year, and homes are assessed at their full market value. Then, say the two districts are supposed to split the school taxes 50%-50%. If houses in each town are worth $100, but in Kingston they’re assessed at $90, the Esopus taxpayers aren’t getting a fair deal. In that case, Kingston will then be assigned a new equalization rate of 90%, which means Kingston taxpayers will have to pay a little bit more than their neighbors in Esopus. In fact, this is what happened this year in Kingston.
Now, what if the Kingstonian goes back into the tax base even though the owners are still obligated to pay only their PILOT? What if the $19 million is a severe under-assessment? What if a truer value is the construction cost of $57.8 million? Then the tax base of Kingston is being under-assessed by almost $40 million and taxpayers run the risk of an even lower equalization rate. Or, what happens if the building is flipped into condos? Will the purchasers find out they are being taxed as if they owned a home worth, say, $350,000?
What if the mayor, the assessor and various councilmen of Kingston are aware of this, and what if all along the goal was to increase property taxes across the board, and perhaps even “improve” the liquidity profile of Kingston taxpayers? If you can afford it, fine, and if you can’t, you’ll sell to someone who can.
Do I know this to be true? No. Please ask, and see if you can get an answer.
Click here to see comments on school taxes and how much similar properties pay from James Shaughnessy, who sits on the Kingston school board. Click on the image to expand it to the full document. Click here for a KingstonCitizens.org analysis of the loss to schools.
Click here to listen to Bruce McLean talk about the comps he did on similar warehouses to the one owned by Kingstonian developer Brad Jordan, and how they’ve been paying roughly double of Jordan, who sits on the Kingston Police Commission and the Kingston Local Development Corporation, and attended the Downtown Revitalization Commission where he awarded himself $3.8 million in DRI grants.
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