The City Council Monday night began the process of ridding itself of having to reimburse the city school district and the county approximately $4 million annually in delinquent taxes.
It submitted home-rule legislation to the state Legislature that seeks to exempt the city from having to make the city school district whole on delinquent taxes. It also agreed to amend the City Charter so that it does not have to reimburse the county for delinquent taxes. The council can take this action on its own, following a public hearing. The hearing will occur in the coming weeks.
The city reimburses the city school district approximately $3.25 million and the county $375,000 annually for delinquent taxes. The money comes from the city budget.
Corporation Counsel L. John Van Norden said the cost is “passed onto taxpayers who have paid their taxes.”
Mayor Brian U. Stratton called the obligation “a huge financial drain, and it puts Schenectady in a somewhat unique and unfair position compared to other local governments.”
The city recoups some, but not all of the money, through penalties and interest when the property is foreclosed on and sold, Van Norden said. Often, the property is so dilapidated that it does not sell at auction, leaving blighted buildings throughout the city, he said.
These buildings remain vacant and many fall into disrepair to the point where the city is forced to demolish them, Van Norden said. The city does not budget for demolitions and does demolitions on an emergency basis.
“We can’t afford it. There are a lot of buildings in city that need to be torn down,” Van Norden said. “All we can do is try to keep them secure and safe as we can until they can be removed.”
The city is trying to deal with the blighted buildings, first by taking them off the tax rolls by moving them to control of the Schenectady Urban Development Agency. It is also looking into the possibility of creating a land bank, an agency that can develop blighted properties through tax incentives.
Van Norden said other small cities have similar provisions to make counties and school districts whole. If Schenectady succeeds in gaining an exemption from state law others may follow suit, he said. Schenectady County makes the towns whole for delinquent school taxes.
The council also submitted a request to the state Legislature that seeks to establish special property tax rates for non-owner occupied rental or investment properties in the city.
“This would be first for the area. It would involve a differential tax rate structure to offset the higher cost of government services associated with absentee landlord owners,” Van Norden said.
Some landlords oppose the measure, saying it will drive up rental prices. City officials said some absentee landlords fail to maintain their properties, increasing blight.
The proposed home-rule legislation says “non-residents who, because they do not reside in the community, lack interest and investment in the community’s appearance and in the safety of the community’s residences.”
The legislation says establishing the differential tax rate will relieve residents of the costs “they are forced to incur to ensure the enforcement of community standards and to protect their quality of life.”
The measures face tough battles in the state Legislature. Assemblyman James Tedisco, R-Glenville, and state Sen. Hugh Farley, R-Niskayuna, both said they do not support the city’s requests.
Nevertheless, Council President Gary McCarthy said he is pressing ahead with the proposals. “These concepts are to foster discussion,” he said.