General Electric got a little extra perk from the town last May, leading up to a landmark agreement that resolved a decades-long dispute over its property value in Rotterdam, according to a critic of the deal.
The company was given a one-year stipulation lowering the value of its 322-acre property from $141.5 million to $132 million, saving it an estimated $323,000 in combined town, county and school taxes this year. The Town Board later settled a lengthy legal dispute with General Electric by setting the assessment at $132 million until 2023, but having the company pay taxes on the property as if it’s valued at $141.5 million.
The payment-in-lieu-of-taxes agreement with the company doesn’t kick in until 2014, meaning the company’s 2013 tax bill was based on a property value that was $9.5 million lower than it would have been even after the Town Board ratified the deal on June 20, just as a lawsuit over the assessment was heading to trial.
Robert Godlewski, the lone board member to vote against the deal, offered the stipulation as further evidence the administration of Supervisor Harry Buffardi rammed home a deal that was extremely favorable to General Electric. Godlewski earlier this month received a copy of the stipulation, showing it was in place a month before the town voted on the long term deal.
“GE had what they wanted even before we had that meeting [in June],” he said.
Supervisor Harry Buffardi said the stipulation — signed by Assessor John Macejka Jr. on May 18 — was done with his knowledge and was part of the bargaining that occurred between town negotiators and General Electric. He said those negotiations ultimately allowed the town to put aside decades of legal wrangling that cost hundreds of thousands of dollars.
“It was a calculated effort,” he said. “We can finally put this to bed and not have this hanging over the taxpayers head.”
General Electric’s main campus is split almost equally between Schenectady and Rotterdam. The land located in the town is bordered by Interstate 890 and includes the company’s 1-million-square-foot-plus steam turbine plant known as Building 273 — the facility toured by President Barack Obama in 2011.
Legal arguments over the company’s property value in Rotterdam date back to 1983. The grappling seemed to peak when the town assessor valued the property at $275 million in 2000.
A state Supreme Court judge set the 2003 property value at $126.4 million and the 2004 value at $129 million, locking the company into the higher assessment through 2007. But the battles over assessment continued when the town upped the taxable value of the property to $141.5 million in 2008; a wastewater treatment exemption the company has because it treats its own sewage reduces the taxable value of the property by $2.8 million.
The PILOT agreement has General Electric paying a combined $4.8 million per year in property taxes to Rotterdam until 2018. During the sixth year of the agreement, the company will pay a total of $5 million per year — or the amount of taxes it would owe were the property valued at $146 million.
Rotterdam, the Schalmont Central School District and Schenectady County also agreed to refund roughly $1.8 million in tax payments made by the company between 2003 and 2011. The repayments are expected to be spread out through the duration of the PILOT agreement.
Godlewski, who spent two years as deputy supervisor, remains stunned by the agreement, especially after having personal insight into the machinations of the town’s legal battle with General Electric. He said the attorney defending the town seemed confident about the chances of defeating the company in court.
“In his professional opinion, he thought [the property] was worth a whole hell of a lot more than $141 million,” he said.
Godlewski also questioned why Macejka would make a stipulation before the legal matter was resolved. He said handing the company a reduced assessment undermined the town’s legal leverage.
“Why would you undercut the board’s position?” he asked. “It’s not the reasonable thing to do.”
Macejka said his stipulation was the start of the settlement that came to fruition the following month. He said the reduction he granted would have only lasted a year, had General Electric not followed through with signing the PILOT agreement.
“Because of where we were, that was the only mechanism in place to lower the assessment based on the negotiations that were ongoing,” he said.
In addition, Macejka said the stipulation was done under the auspices of all the taxing entities. Schalmont officials previously indicated the agreement will save the district some legal fees and finally provide it financial security over some of the costly judgments in the past.
Macejka further said the reduction afforded to the company was offset by other gains in the assessment rolls, meaning the respective taxing entities didn’t need to increase rates on residents.
“It did not result in an impact,” he said of the stipulation.
Likewise, Buffardi said the town sacrificed a little to save a lot. He said the ongoing litigation was costly and an agreement simply prevented more tax dollars from being wasted on a fruitless legal battle.
Buffardi also defended his decision to keep Godlewski out of the loop about the progress of the agreement up until the end. He said Godlewski made it clear to him that he never intended to approve any settlement with General Electric and figured his adamant stance would only hinder the progress that was going on internally, starting from his first month in office.
“He made it very clear where is stood on this,” he said. “He wanted to take this to the limit. He wanted to take this to trial.”