BILL NUMBER: S7258A

SPONSOR: KAMINSKY
 
TITLE OF BILL:

An act to amend the general municipal law, in relation to requiring an
assessment of the direct and indirect property tax impact before award-
ing financial assistance

 
PURPOSE:

To provide greater transparency and accountability in Industrial Devel-
opment Agency financial assistance by requiring IDAs to include an esti-
mation of direct and indirect property tax impacts of any tax exemptions
in the agency's written cost-benefit analysis for a major project.

 
SUMMARY OF PROVISIONS:

Section 1 amends General Municipal Law § 859-a(5)(b) to require Indus-
trial Development Agencies to include the estimated direct and indirect
property tax impact of any tax exemptions, including the indirect impact
              

to entities benefiting from revenues derived from payments in lieu of
taxes, in the written cost-benefit analysis published before a major
project is approved.

Section 2 amends General Municipal Law § 859-a by adding new subdivision
3-a to require Industrial Development Agencies to provide written notice
of the project to entities who may be impacted.

Section 3 establishes the effective date.

 
EXISTING LAW:

The written cost-benefit analysis currently identifies the extent to
which a project will create or retain permanent, private sector jobs;
the estimated value of any tax exemptions to be provided; the amount of
private sector investment generated or likely to be generated by the
proposed project; the likelihood of accomplishing the proposed project
in a timely fashion; and the extent to which the proposed project will
provide additional sources of revenue for municipalities and school
districts; and any other public benefits that might occur as a result of
the project.

 
JUSTIFICATION:

In 2014 and 2015, the Town of Hempstead Industrial Development Agency
(TOHIDA) authorized two Payment In Lieu Of Taxes (PILOT) agreements
relating to the Green Acres Mall and the Green Acres Commons. These
PILOT agreements resulted in a significant loss of revenue to Valley
Stream Union Free School District 30 (District 30) and the Central High
School District (CHSD), among others, and therefore a significant
increase in property taxes in those districts. The PILOT agreements also
had the effect of raising taxes in Valley Stream Union Free School
Districts 13 and 24, even though the Mall is not in those districts and
contributed no property taxes directly to the districts.

According to a recent State Comptroller report on the PILOT agreements,
the TOHIDA considers property tax implications when developing PILOT
programs but does not have policies or procedures to conduct a review of
the direct and indirect property tax impact. In this case, the Comp-
troller found that the PILOT agreements effectively raised taxes in
Districts 13 and 24 because of their CHSD revenue agreement with
District 30. The decreased tax revenue due to the PILOT agreements
affected District 30's ability to contribute to the CHSD and affected
the proportion of the CHSD's budget attributable to each District; as a
result, Districts 13 and 24 had to make up a larger share of CHSD's
budget and raise taxes.

Local officials need the complete picture when looking at the impact of
a PILOT agreement on their budgets and services. In the Comptroller's
audit, the Comptroller suggested that TOHIDA should "(d)evelop addi-
tional policies and procedures requiring TOHIDA officials to document
the direct and indirect property tax impact of significant PILOT agree-
ments and implement methods to communicate this information to all
affected taxing entities and taxpayers." This legislation seeks to apply
this common-sense suggestion to IDAs statewide for all future projects
receiving over $100,000 in financial assistance.

Taxpayers and local officials should not be subject to surprise
increases in the tax levy based on the decision of an IDA in which they
were not consulted or considered. This legislation will ensure that the
IDA must consider the full impact of their decisions, direct and indi-
rect, on all taxpayers. Furthermore, by including this impact in the
written cost-benefit analysis, taxpayers and officials will be able to
more easily hold IDA officials to account for their actions.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

To be determined.

 
LOCAL FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
Immediately.