Schenectady’s nonprofits must file tax papers by Monday

It’s that time of year again: the time when even well-organized, large nonprofit organizations flail
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It’s that time of year again: the time when even well-organized, large nonprofit organizations flail through the state’s confusing tax exemption laws.

The mayor has personally called more than two dozen nonprofits himself, calling each two or three times in an attempt to get them to file their required paperwork. He estimated that he had made 125 to 150 phone calls.

The nonprofits have all received letters from the city as well. But even so, six nonprofits were no-shows by Friday afternoon, with just one business day left to file. The deadline is Monday.

Among the last-minute procrastinators this year is Union College, which finally filed on Friday after Mayor Brian U. Stratton called repeatedly.

“They walked their paperwork in today,” he said, adding with a laugh, “maybe I shouldn’t have. All my financial problems would be solved!”

Any nonprofit that does not file by March 1 must pay property taxes the following year. The last time nonprofits in Schenectady were taxed, in 2008, it took an act of the state Legislature — as well as many hours of debate for the City Council — to eliminate the tax bills, refund any paid taxes and retroactively restore each nonprofit’s tax-exempt status.

That time, only relatively small agencies were taxed. But this year, the Albany Diocese may end up with a tax bill.

As of Friday, the diocese still hadn’t signed the paperwork swearing that the former St. Clare’s Hospital is still being used by a nonprofit.

Ellis Hospital now leases the property, which is known as the McClellan Campus. But Ellis can’t file the paperwork because the property transfer has not yet been completed. Only the owner can file.

“We’re going to call over there and see if we can help facilitate this,” said Ellis spokeswoman Donna Evans.

Ellis officials are motivated to get the paperwork in because by the time the taxes go into effect, Ellis will be the property owner.

The mayor called Ellis Executive Director James Connolly repeatedly about the problem in recent weeks, but he didn’t get the messages because he’s been away, Evans said.

No one at Ellis knew about the problem until a reporter called. By then, it was late Friday and the person at the diocese who handles such paperwork had already left for the day. A diocese spokesman said the diocese would look into the issue on Monday.

Four other smaller agencies also haven’t filed yet, but most responded to a final urging from the mayor. More than 15 nonprofits have just now turned in their paperwork, Assessor Patrick Mastro said.

“A lot have been running in with ’em at the last minute,” he said. “Some things never change.”

Stratton said the law is confusing and often onerous. He doesn’t think it’s reasonable to tax a nonprofit just because the workers didn’t sign a form on time.

“I wish it weren’t so rigid,” he said, adding that he wants the state to change the law. “A third of the city is nonprofits, so 30 percent of our property owners have to go through this exercise.”

The confusion lies in the fact that residents are treated differently from nonprofits. While residents must file a basic STAR tax exemption just once, only refiling if they move to a new address, nonprofits must file for their tax exemption every single year.

The paperwork is relatively simple: they must certify that their property is still used solely for nonprofit purposes.

But invariably, some nonprofits forget to file. City officials said the usual problem is turnover among volunteers.

When the volunteer who took care of the paperwork leaves, the replacement often doesn’t know the rules.

The goal behind the state law is to ensure that property no longer used by a nonprofit is quickly returned to the tax rolls.

In 2008, all but one of the agencies that didn’t turn in their forms were still genuine nonprofits. But the rule also served its purpose — it helped Mastro discover that the Broadway United Methodist Church was no longer owned by a religious group.

The church closed in December 2005 but retained its tax exemption until 2008.

Monday is also the final date by which new property owners can file for STAR, which reduces school taxes.

It can only be filed by owners who use the property as their primary residence. It only needs to be filed once, usually as soon as the owner moves to the address. When the property is sold, Mastro automatically removes the STAR exemption until the new owner seeks it.

That’s because some new owners won’t qualify — if they rent out the entire building or use it for commercial purposes, they are not eligible for STAR.

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