Montgomery County legislature to vote on repayment plan for Amsterdam back taxes

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AMSTERDAM & MONTGOMERY COUNTY —  While city of Amsterdam taxpayers paid $725,037 in Montgomery County taxes in 2013, city officials at the time only turned over $32,401.

Since the city no longer has the money, County Treasuer Shawn Bowerman said it’s likely the city, or city officials, defrauded taxpayers, broke the law and spent the money for other purposes.

“My conclusion is that they must have used these funds for city operations,” Bowerman said.

The $694,696 never turned over to the county is a little more than half of the $1.24 million the city of Amsterdam owes Montgomery County in unremitted taxes between 2000 and 2013.

The city of Amsterdam collects all of the property taxes — city, county and school district — from parcels in its jurisdiction — city, county and school — it is supposed to remit the county and school taxes to the county and Greater Amsterdam School District. That said, the city is only required to make the school district whole for unpaid taxes, not the county.

“Our arrangement with the city of Amsterdam is probably the most lenient among municipalities in New York state,” Bowerman said.

The city of Amsterdam, unlike the rest of Montgomery County, is responsible for its own foreclosure process for properties that aren’t paying taxes. The city will usually enter into installment payment plans with properties that owe property taxes, with the installment payments including money owed to the school and county.  

Bowerman said between 2005 and 2016 while the city of Amsterdam received $546,811 of county taxes from installment plans, it failed to turn what it received over to the county. That amount, plus what is still owed to the county from 2013 brings the city’s bill to the county to $1.24 million.

But there’s more. Bowerman said county records show there should have been an additional $769,163 in county taxes paid by property in the city of Amsterdam between 2000 and 2010. However, some of the those properties were engaged in installment plans of which the city says it collected $254,908 but never turned over to the county.

Normally, some of the foreclosed properties would have been auctioned off and the county would have received a portion of the proceeds to cover the unpaid taxes, but that never occurred for those properties, leaving about $514,254 worth of unpaid county taxes unaccounted for betweeen 2000 and 2010.

Bowerman said his county records don’t include parcel-level data for taxes owed, and he has to rely on the city for that information. He said city officials claim that when former City Controller Heather Reynicke convinced the city to put in place new computer accounting software, one which required that the city’s fund totals reconcile with the actual amounts in the city’s bank accounts. As such, the city’s system was no longer compatible with the county’s accounting software, resulting in a loss of all records for the years prior to the software change.  

Bowerman said he’s not completely certain why the software change-up resulted in the loss of all of the records, but that has been the claim of city officials.

“Apparently, there’s nothing that can be done about it, because the city doesn’t even know of that $514,254 who even owes it. They have no idea what properties make up that [owed money],” Bowerman said. “The claim, when they did the [software] switch-over they lost all of the records. They, conveniently, lost all of the details, with no backup. It doesn’t make any sense to me either.”  

Bowerman said he hasn’t officially written-off the $514,254 as uncollectible, but he will likely introduce a resolution to the legislature later this year to do so, which leaves the $1.24 million in accountable unpaid county taxes owed by the city as the subject of a hotly contested resolution set for Tuesday night’s legislature meeting.  

The Montgomery County Legislature is set to consider a resolution to allow the city to repay the owed tax money over a 20-year period at a 1 percent interest rate. The plan passed through the county’s finance committee last week, with all of the legislators weighing in the vote, 6-3, with Legislature Chairman Joe Isabel (District 8), Finance Committee Chairman Michael Pepe (District 7) and District 4 Legislator Robert Headwell all voting against the plan.

The crux of the debate has centered on whether or not the county should try to require the city of Amsterdam to include the $1.2 million in county taxes as part of the money the city borrowed from the municipal bond market to clear off the city’s  accumulated budget deficit.

New York state passed special legislation in 2019 to allow the city of Amsterdam to borrow up to $8.3 million to pay off the city’s accumulated budget deficit built up over a period of approximately 10 years, a condition that has led Amsterdam to be labeled the most fiscally stressed municipality in the state by the state comptroller’s office.

The city’s accumulated deficit includes money the city largely owes itself in terms of revenues inappropriately taken from money borrowed for capital projects that were never completed, the city’s sewer fund and the city’s water fund and, possibly, county taxes never turned over to Montgomery County. During that ten-year period the state comptroller’s office and the city’s independent auditors have determined the city pooled all of its revenues together into one account, and covered daily expenses from it, resulting in a huge accumulated deficit for its various funds.

Bowerman said Amsterdam’s city charter requires the city’s controller to do an annual reconciliation with his office to determine what taxes have been remitted and not remitted. He said that never happened between Reynicke’s tenure and until Cassandra Kinowski, who had worked in Bowerman’s office, was hired as the city’s assistant controller in 2016. He said from that time forward, the city and the county are on the same page in terms of what county taxes are owed, which means the county is getting paid its portion of installment tax payment plans and from the foreclosure auction.

As for the $1.24 million, Bowerman said city Controller Matt Agresta had been telling him until recently that the amount would be part of the city’s deficit financing plan.

Two weeks ago Mayor Michael Cinquanti announced the city would be borrowing $7.7 million from the municipal bond market, and that doesn’t include any money owed to Montgomery County. While Cinquanti said he had been told in January that the money owed to the county was part of the city’s accumulated deficit, Agresta has since said that it is not.

This controversy led to sparks flying between county legislators last week. While Pepe demanded the city explain in writing why it wasn’t borrowing the money owed to the county, his committee took no action on that issue.

“Look, if you’re sitting there telling me that if we had a chance to take the $1.2 million, from a state loan, and you’d prefer to restructure it over a longer period of time, I am in total disagreement with that, but if there’s no other means to collect it then we should move forward,” Pepe said.

District 9 Legislator Robert Purtell and John Duchessi (District 6) advocated for leniency for the city supporting the 20-year repayment plan with a 1 percent interest rate.

Purtell said he believes the city’s annual payments will equate to between $72,000 and $74,000 per year. He said the city is a major economic engine for the county and it is in the best interest of the county for the city to not borrow an additional $1.2 million and have to repay it plus a higher interest rate.

“Look, the past is the past. Was it criminal? I don’t know,” Purtell said, but was then interrupted by Pepe.
“Nobody said it was criminal,” Pepe said.

“I’m just making a statement, was it malfeasance, I don’t know,” Purtell said. “To be honest with you, I’m not interested in that. They’ve recognized that they owe us $1.2 million. The fact-of-the-matter is, you have a mayor now that is trying to be fiscally responsible, to set this up and to increase our relationship, and he would like to stand up and do the right thing.”

Purtell and Pepe — who had briefly been rivals for the chairmanship of the legislature in January before the emergence of Isabel as the majority choice — crossed rhetorical swords during the debate over the repayment plan. Pepe, Purtell, Duchessi and Isabel all represent portions of the city of Amsterdam.

Purtell prevailed, but Pepe was adamant in his disapproval of the committee’s choice.

The final vote on the tax repayment plan is set to take place Tuesday night with the meeting scheduled for 7 p.m.

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