Schenectady County’s local governments received nearly $14.2 million in payments this year from property owners that benefit from special agreements known as payments in lieu of taxes, or PILOTs, a 53 percent increase from $9.23 million generated in 2012.
The Schenectady Metroplex Development Authority administers the agreements, which exempt a property from assessment rolls in return for annual payments that typically increase each year. While the payments generated are less than what the owner would have paid in taxes, the idea is to entice investments that might otherwise have gone elsewhere. In Schenectady County, these agreements are typically set for 10- or 15-year terms. Once the term ends, the property is placed on the assessment rolls and the owner pays 100 percent of the resulting property tax.
“There are some exceptions where the agreements go longer,” said Metroplex Chairman Ray Gillen. “There are some that we inherited that go longer. But generally, they’re for 10 or 15 years. The key is that the vast majority of these agreements were for projects on vacant or government-owned land that paid no or nominal taxes. The others were expansions of major facilities. So in almost every case, this is new and very substantial revenue for the community.”
Of the 47 PILOT agreements that Metroplex administers across the county, 38 were negotiated on projects at empty buildings, vacant land or previously tax-exempt property. They generated minimal or no taxes prior to the developments being built.
The remaining nine PILOT agreements were for companies, primarily General Electric, that expanded at various sites within the county.
While most of the agreements generate increasing payments each year, three PILOTs actually decreased this year. One of them was Ellis Medicine, which owns a 45,550-square-foot medical office complex at 600 McClellan St., behind the former St. Clare’s Hospital. The facility was built on previously tax-exempt property and generated a $38,771 PILOT this year, down $16,018 from last year. The drop, according to Gillen, is explained by the makeup of the building’s tenants.
“In the last year, the share of the building that Ellis, a tax-exempt organization, occupies grew while the share occupied by other, tax-paying tenants decreased,” he said.
Two other property owners in the county saw their PILOT payments go down this year.
World Star LLC, owner of the tall SuperPower building at 450 Duane Ave. in Schenectady, contested its property assessment in 2011 and got it lowered from $5.8 million to $4.15 million. For that reason, Gillen said, its PILOT fell $14,551 this year to $164,678.
Cyclics Corporation also recently grieved the property assessment at its 22,000-square-foot facility in Schenectady’s Tech Drive Business Park. The resin manufacturer got its assessment lowered, causing its PILOT to fall $16,289 this year to $45,422.
A handful of PILOT agreements expired this year, including agreements with Time Warner Cable for its regional headquarters in Rotterdam, Mallozzi’s Ballrooms and Catering for the Belvedere Hotel in Rotterdam, Fortitech for its 130,000-square-foot facility in Schenectady, SI Group for an 83,640-square-foot expansion of its Niskayuna facility and Environment One Corp. for a 34,000-square-foot expansion of its Niskayuna facility.
Seven new agreements will generate PILOT revenue in the coming year, including the new Target store in Glenville and redevelopments at the former State Bakery and Curry Road Plaza in Rotterdam, as well as the Schenectady Armory. Two vacant buildings and two vacant lots are slated for housing in Schenectady, including 845 Broadway, 301 Green St. and 245 Broadway.