Metroplex: Payments in lieu of taxes hit $15.7 million in 2017

PHOTOGRAPHER: Peter R. Barber

SI Group’s Rotterdam Junction factory.

SCHENECTADY — Development incentives extended by Schenectady County’s main economic development agency brought in $15.7 million in payments from developers in 2017.

The Schenectady County Metroplex Development Authority on Friday issued its annual report on PILOT activity, payments in lieu of taxes, and said it had 61 PILOTs active in 2017. Metroplex Chairman Ray Gillen said the agency has authorized hundreds of others that have since expired, and some of the 61 active in the 2017 report will expire and be replaced by new PILOTS in the 2018 report.

The PILOTs active in 2017 ranged from $2,997 for a site on Peek Street in Schenectady to $704,960 for SI Group’s Rotterdam Junction factory. The only larger PILOTS were not development incentives per se, they were created as part of the settlement of a tax assessment battle over General Electric’s sprawling plant at the foot of Erie Boulevard. These PILOTs sent $2.67 million to Schenectady and $4.8 million to Rotterdam in 2017.

Metroplex will turn 20 years old this year. It was created in 1998 to foster development in the county’s commercial parks and business corridors, particularly in downtown Schenectady, which was in sorry shape at the time. Metroplex gets a percentage of the sales tax paid within the county and uses it to attract and retain companies that plan to create jobs, increase tax revenue and invest in the community.

Payments in lieu of taxes go to school districts, the county and the host municipality just as property taxes do. The difference is that they are for lesser sums, and they are locked in place for the duration of the agreement. The PILOT would remain at the scheduled amounts, for example, if the local tax rates went up 5 percent one year and up 10 percent the next.

Gillen said since he came aboard in 2004, Metroplex has incentivized roughly 500 projects with a combined value of over $1 billion.

PILOTs are sometimes criticized as a giveaway or subsidy to private industry, but Gillen defends them as good business, and a good deal for taxpayers. He gives a few examples why:

Fifty-four of the 61 PILOTS active in 2017 were for sites that were paying no taxes or much lower taxes before they were redeveloped.
Some of the sites were vacant, derelict, contaminated or otherwise detracted from their surroundings before development.
The projects receiving PILOT deals may generate other revenue for municipalities, such as sales, mortgage or hotel tax, even as they pay less than 100 percent property tax.

“We have a smart-growth program,” Gillen said. “We’re basically taking sites that were not producing any jobs, not producing any tax revenue.”

He rejects the idea that the development projects on the list of 61 PILOT recipients could have all come to fruition without incentives and been paying much more now in taxes than they are in PILOTs.

Incentives, he said, are a necessary part of modern economic development.

“It’s not New York state, everyone does this,” Gillen said. “There isn’t a state or a community in the country that doesn’t have some sort of economic development group.”

Gillen said he was pitching the county on Friday to an English company that was looking at sites, and he wasn’t their only appointment on this trip.

In recent years, Railex went looking to build a terminal somewhere on the East Coast and chose Rotterdam. CTDI wanted to build a facility somewhere in the Northeast and chose Glenville. REVA Air Ambulance chose the county airport when it wanted to expand to the Northeast. Each was probably offered incentives by other economic development agencies, Gillen said, each got PILOTs or other incentives from Metroplex, and each brought jobs to the community that hadn’t existed here before.

“Every deal we have, people have [other] options for space,” he added. “The landscape is probably more competitive than it ever has been.”

Metroplex judges each request on its own, and not just by size, Gillen said. For example, he said, the city’s largest project in a generation, the $500 million Mohawk Harbor, got only a short-term property tax break. It made PILOTs of $40,000 during construction and $400,000 plus partial property tax in 2017; it will pay full property taxes in 2018, millions of dollars worth. Also, it is generating increasing amounts of gambling revenue sharing, hotel taxes and sales taxes for state and local governments. Finally, the workforce on the formerly vacant site exceeds 1,000 and is still growing.

More typically, Gillen said, Metroplex grants PILOTs that equal 100 percent of the taxes due on the land and 50 percent of the taxes due on the structures in the first year, then gradually increase to full value over the next nine years.

“Some communities do 10 years tax-free. We don’t do that,” he said.

TOP 10

The ten largest payments in lieu of taxes made in Schenectady County in 2017, as reported Friday by the Schenectady County Metroplex Development Authority: