WATERFORD — Residents of the Waterford-Halfmoon Union Free School District are looking at a 26 percent to 32 percent hike in their school taxes this month but are expected to see only a 5-percent increase in their town tax bills early next year.
After years of negotiations and legal maneuvering, Momentive Performance Materials last month received a more than 50-percent reduction in the assessment of its headquarters and silicones factory, shifting millions of dollars in expenses onto the other taxpayers in the town and school district.
Momentive was and remains the largest taxpayer in town, Supervisor John Lawler said Thursday.
The sprawling industrial complex constitutes a significant portion of the economy, as well, employing generations of area residents first as General Electric Silicones, now as Momentive.
The financial benefit has lessened over the years as employment on the site and its taxable value have both diminished. Lawler noted that the previous assessment, $195 million, was itself a decrease negotiated in the GE years.
Just days before Lawler announced to town residents that the assessment would be cut to $95 million, Momentive announced it would eliminate 300 of 1,000 jobs on site.
On top of that, as part of the deal, Momentive is owed a $5 million tax refund to be split among the school district ($3.5 million), town ($1 million) and county ($500,000).
Lawler said the town intends to pay for its share of the refund and cover Momentive’s reduced tax payments by cutting expenses and tapping into reserve funds, and by raising the property tax rate no more than 5 percent when it next sends out bills in early 2021.
The Waterford-Halfmoon school district will pay almost all of the refund with a reserve fund. On the 2020-2021 tax bills it sent out this month, the district raised taxes to replace the money Momentive is no longer paying.
Combined school and library taxes rose 26.4 percent for Waterford property owners within the district and 31.9 percent for Halfmoon property owners.
Waterford-Halfmoon Superintendent Patrick Pomerville, like Lawler, said the district knew Momentive would get its cut, the question was when and how much. District officials made this known at Board of Education meetings and in newsletters, but still there were some very dismayed taxpayers when the bills arrived.
District voters June 9 approved a $21.51 million budget with a 2.74 percent property tax levy increase, which is about one-tenth the tax bill increase they got three months later.
Levy is the total amount borne by all taxpayers. A bill is one taxpayer’s share. That’s the distinction that can get lost amid the sticker shock, Pomerville said — the district isn’t raising the levy or spending more money, it’s collecting more money from certain sources to make up for the loss.
“In fact, all they’re doing is covering Momentive’s share,” he said.
Waterford-Halfmoon serves about 750 students in a single building divided between grades K-6 and 7-12. The school year began Sept. 10 with a mix of in-person and online instruction.
Business Manager Rachel Schwendinger said the big drop in Momentive’s assessment has had minimal impact on the budget compared with the increased expenses of the COVID pandemic and potentially decreased state aid.
“We really have not made any changes to the budget as a result of the tax certiorari,” she said.
What happens with spending and taxes in 2021 depends on too many moving targets to predict now.
“I have been trying to do some long-range planning but it is very, very challenging,” Schwendinger said.
Supervisor Lawler said a tax assessment challenge, or certiorari, is complicated and difficult to fight when it involves a large industrial complex.
When Joe and Jane Smith claim their four-bedroom Colonial-style house is overvalued, the town can look at the sale prices of similar nearby houses for guidance.
There isn’t anything comparable to the Momentive complex sitting on 173 acres at 260 Hudson River Road. State law classifies it as a specialty property, Lawler said.
“You can’t use what it would sell for,” he explained.
Instead, the value is determined by replacement cost minus depreciation.
Momentive originally wanted its assessment reduced from $195 million to $54 million, with a $10 million refund. The final deal was the $95 million assessment and $5 million, plus an agreement that Momentive would not challenge the $95 million assessment for five years.
“In five years I have every expectation, no doubt in my mind, they’ll come back and say $95 million is too much because our plant has depreciated,” Lawler said.
“I think that this valuation methodology is so unfair to municipalities that I’ve reached out to Assemblyman [John] McDonald and Sen. Daphne Jordan to consider amendments to Real Property Law.”