Why Weren't We Warned About This PILOT Payment?

I kept hearing about Sachem's shortfall in revenue, and one particular aspect of it had me intrigued: the Motorola PILOT payment "surprise."  Board member Dorothy Roberts suggested I e-mail Associate Superintendent for Business Bruce Singer about it.  So I did.

That led me to make some inquiries of Brookhaven Town Councilman Neil Foley, concerning the IDA, and the process for how the town, the IDA and the school district work together, so that Sachem can get a handle on the revenue side of its budget equation.

From these discussions and e-mail threads, one thing is becoming clear: Sachem was not shorted over $1MM.  What's less clear is whether or not the PILOT from Motorola was anticipated anyway.  Read on and I'll attempt to explain this convoluted mess:

When I e-mailed Bruce Singer, he said the Brookhaven IDA told the board that Motorola (formerly Symbol Technologies) moved off of PILOT and on to full assessment.  What that means is that the Motorola stopped making Payments In Lieu Of Taxes (PILOTs), but paid regular taxes just like other commercial properties in the town, a large percentage of which goes to the district.  (Call it two-thirds.)  Mr. Singer claims the Board of Education was informed of this move in May of 2014.  In the context of the timeline for the budget and planning, the budget's already printed and you're starting to get to things like public hearings.

But this may not be material to the conversation.  The following was provided by the Brookhaven Town Assessor James Ryan, passed along via e-mail by Brookhaven Town Councilman Neil Foley:

"The Industrial Development Agency (ida) is an agency of the State formed under General Municipal Law. Any property owned by or under control of the agency is exempt from taxes as authorized by Real Property Tax Law Section 412a.

The IDA is authorized to grant tax exemptions for real estate tax, mortgage tax, and sales tax. The IDA typically requires a company that comes to the IDA for tax benefits to pay a PILOT (payment in lieu of tax) for the amount of tax they would have paid before construction of a building or improvements to an existing building.

The PILOT agreement is for a fixed term (generally 10 years) and at the end of the term the PILOT payment is most often an amount that would be the same as if the property were taxable. PILOT payments are made to the IDA and the IDA distributs the PILOT money to all taxing authorities in the same manner as taxes are distributed. So the School District typically receives 67% of the PILOT collected.

Once the real estate tax exemption is exhausted, that is to say once the PILOT payment is equal to the amount of tax ( as per the PILOT agreement) that would be paid were it not for the IDA, then the property is turned back to the property owner and the assessment is returned to the taxable part of the assessment roll.

Motorola was tax exempt during the 12/13 tax year because the property owned by Motorolla was owned or controlled by the IDA. At that time the PILOT amount paid to the IDA was equal to what they would have paid had the property been taxable. In the 13/14 tax year, the property was conveyed back to the Motorolla from the IDA and the assessment was made taxable. Motorolla for the 2013/2014 tax year received a tax bill in the amount of approximately $1,700,000.00 and it was paid to the tax receiver. Motorolla will continue to receive tax bills into the future.

As such, the Sachem School District is mistaken to say that the Town took away $1,000,000.00 in PILOT money since it was replaced by a real estate tax."

Those last few lines are key.  TL;DR - Brookhaven says we got the money, but it was through the usual tax channels, not a PILOT.

Until I receive more information, I'm left to speculate.  Whose responsibility is it to track properties moving off of PILOTs and back onto the tax rolls?  Were Singer and the BOE expecting the PILOT, not realizing they were already getting the money as part of normal, everyday tax payments?  I have e-mails in to both Singer and Foley asking for clarification and will post when I get more information.

I'm also looking to Foley to shed some light on the process for keeping school districts in the loop on sunsetting PILOTs and how we're supposed to learn of these things.  Singer was also supposed to get a statement from the IDA stating that we would have had no advance knowledge of Motorola moving off PILOT, but that was last week and he has yet to deliver.

I like to give people the benefit of the doubt in such situations, and all of this could be attributed to some kind of miscommunication.  But the fact remains, we got the money.  So it's time to stop running around claiming we were shorted.  Check back here for updates.

UPDATE - 9/30 - 9:45 AM: I've exchanged several e-mails and participated in phone calls with Councilman Foley and Brookhaven IDA Deputy Director James Tullo.  I have also heard from Bruce Singer via e-mail and am promised a financial analysis later today.  Please stay tuned.

UPDATE - 10/1 - 2:45 PM.  I have another post up that explains the current situation.