Six nonprofits are off the hook for property taxes this year, despite failing to file the right forms with the city to prove they were tax-exempt.
The city taxed 12 nonprofits this year, ranging from longtime fraternal organizations to churches and social services agencies. Their nonprofit status normally spares them from paying the taxes, but it took a special act of the state Legislature to set things right when the nonprofits skipped the paperwork they must file to preserve their tax-exemption every year.
In the closing days of the session, the Senate and the Assembly quickly passed six bills that individually freed each organization from their city tax bills.
“Beautiful. That’s a relief,” said Home Furnishings Program Administrator Ron Cromer. “We were afraid that would put us out of business.”
The faith-based program collects used furniture and gives it to needy families, including fire victims. While the 40-year-old agency usually files its exemption on time, the administrator died just before the deadline and no one else knew that the paperwork was due, Cromer said. Making matters worse, a final warning letter never got to Cromer because the city sent it to the program’s warehouse — which has no mailbox.
(The city sent the tax bills to that address as well. Eventually an official taped those notices to the door, Cromer said.)
Of all the delinquent nonprofits, the furnishings program had one of the lowest tax bills, at $4,000. But the expense was overwhelming to the small agency.
“We operate our whole program on a $35,000 budget,” Cromer said.
Of that, $12,000 goes to insurance and $18,000 pays his salary. The final $5,000 covers gasoline, heating, telephone charges and other expenses, leaving only pennies in the account at the end of the year. The agency asked for special donations to cover the taxes, but had only scraped up $1,000 by mid-year. Meanwhile, the city started tacking on interest charges for the unpaid balance.
The state legislation is retroactive, which means Cromer might get that $1,000 back. But he’s not holding his breath.
“I don’t suppose they’ll give us back what we’ve already paid. That might be pushing it,” he said.
But, Councilman Mark Blanchfield was lobbying his colleagues to pay the nonprofits back next year, even if the state legislation hadn’t passed.
“That’s money I don’t want,” Blanchfield said, adding that no nonprofit should be taxed even if they file late.
“It’s a no-brainer in my opinion,” he said. “It’s too bad we had to go through such an involved process for these nonprofits to get what they’re entitled to. To have to get an extraordinary act of the Legislature is just unfortunate.”
The issue has been brewing for half a year, ever since the first tax bills hit in January. Some nonprofits, including Carver Community Center, refused to pay five-digit tax bills. Others started fund drives and said they might be forced into bankruptcy. Many begged the Schenectady City Council for help, but Assessor Patrick Mastro said the city did not have the legal authority to retroactively exempt the nonprofits. Corporation Counsel L. John Van Norden said it could also set a dangerous precedent, leading to sweeping retroactive exemptions for veterans, seniors and anyone else who didn’t file their paperwork on time.
However, the state legislation says the city did have a legal way to help out the nonprofits.
According to legislation sponsored by Assembly Minority Leader James Tedisco, R-Schenectady, the state Real Property Tax Law allows assessors to use their own discretion in cases involving nonprofits. If they observe that the nonprofit is still operating as a tax-exempt agency, they can choose to continue the exemption.
Tedisco’s legislation criticizes Mastro for not taking that option, saying his insistence on timely paperwork “result[ed] in impossible-to-pay tax burdens on churches and charities.”
SOME LEFT OUT
However, the legislation doesn’t cover all 12 of the active nonprofits that didn’t file their exemptions. Only six were included because the city did not respond to Tedisco’s requests for a full list of the affected nonprofits, communications director Joshua Fitzpatrick said.
“We sent a letter out on May 30th asking for information and telling them what names we had,” Fitzpatrick said. “We didn’t hear back.”
Nonprofits that weren’t in the legislation include several churches, the Loyal Order of the Moose and the Schenectady Civic Players.
Corporation Counsel L. John Van Norden said he passed on the names of any nonprofit that complained to him about the exemption issue.
“If they did not approach us, we did not refer them,” he said.
Members of the Loyal Order of the Moose appealed to the Schenectady City Council for help at a public meeting, but Van Norden said that didn’t count.
“They complained to the mayor. I’m not sure they approached the mayor,” he said.
Mayor Brian U. Stratton added that he feels the Moose are “deliberately delinquent” because they took on a building in 2005 after the filing deadline, refused to pay the $8,200 tax bill, and then missed the 2006 filing deadline.
He added that the other nonprofits don’t have any excuse for missing the filing date.
“They all had several notices. We’ve bent over backwards accommodating them,” he said.
Van Norden acknowledged that he could have asked Mastro for a complete list of late-filers to give to the state so they could be included in this week’s legislation. When asked why he did not do that, he said, “Look, these nonprofits have certain obligations. They received a number of warnings and they didn’t file.”
Exempt from taxes
The nonprofits freed from their taxes are:
* Home Furnishings Program
* Carver Community Center
* Ancient Order of the Hibernians
* Faith Deliverance Tabernacle Church
* Calvary Orthodox Presbyterian Church
* Mount Olivet Missionary Baptist Church
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