Schenectady County

Missteps leave academy in Schenectady facing foreclosure

The Zone 5 Regional Law Enforcement Academy is facing threats of foreclosure over a tax debt that


The Zone 5 Regional Law Enforcement Academy is facing threats of foreclosure over a tax debt that the city once promised to waive.

That debt — which, it turns out, was never waived — has grown from $4,000 to $70,000 through five years of interest and late fees.

Now the City Council may intervene and negotiate with American Tax Funding to stop the foreclosure.

The whole situation is a “comedy of errors,” said academy director Pat Smith, detailing the series of miscommunications that led to the crisis.

First, he said, the academy intended to buy its present home from Metroplex Development Authority.

If Metroplex had bought the building, he thought, it would have been taken off the tax roll. Then when the nonprofit took it over, it would have stayed off the tax roll.

But instead, the academy bought the building directly from its owners and thus had to file a form stating that the property is now tax-exempt.

The trouble is that the city can only change tax status once a year. The academy bought its property after the deadline — meaning it had to pay taxes until the next status change.

“There’s kind of a loophole,” said Corp. Counsel L. John Van Norden. “It’s a long-standing issue when a nonprofit buys from a for-profit.”

He noted that the state changed the law so that for-profits must immediately start paying taxes if they buy a property that was tax-exempt. But the state didn’t address the opposite issue.

“It’s a trap,” he said. “They got stuck with a very large bill.”

But it started out small — just $4,000, said academy treasurer Tim Bradt.

“When the bill came, I’d said I’ll pay it — not that I thought we should,” he said. “But everyone kept saying no, no, no.”

The city promised to forgive the tax bill in exchange for free training for its police officers, Smith and Bradt said. They agreed to the deal, and the officers got their training. But the bill didn’t go away — partly because the city cannot forgive school taxes.

“It didn’t work out for us,” Bradt said, but he added that he doesn’t blame the city.

“The city’s been excellent. We have no complaints. They’re on our side,” he said. “It’s just the law.”

With every avenue for tax forgiveness exhausted and with the current bill far higher than the nonprofit wants to pay, Van Norden brought the City Council a novel solution Monday.

He asked for permission to negotiate with American Tax Funding and try to buy back the tax liens for the discounted rate at which ATF bought them from the city years ago.

Then the academy will pay the city for however much it had to spend.

The council will vote on the plan next Monday at 7 p.m. at City Hall.

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