Are PILOT Programs Good For Business? County Considers Tax Incentives

By Holly Crocco

The approval to grant Payment in Lieu of Taxes agreements for two Putnam businesses that seek to relocate within the county led to a discussion on PILOTs in general during the County Legislature’s June 29 Economic Development Committee meeting.

APAP Land Management LLC plans to move from its current location in Patterson to a much larger site on Route 22 in Southeast, and the Kinsley Group is planning to relocate to 20 Fields Lane in Brewster.

According to Bill Nulk, chairman of the Putnam County Industrial Development Agency, the IDA board mandates that the agency get authorization from the local taxing entities for PILOTs, even though it’s not required by law.

“New York State legislation that allows the IDA to operate gives us the power and the authority to go ahead and give these tax abatements without having to go to you folks,” he said. However, as courtesy, the IDA seeks the blessing of the local municipalities.

“Both of these projects are from Putnam County and are moving to bigger properties, so we’re retaining them,” explained Nulk. “One of the reasons we’re going to give them the benefits, on top of other things, is we have competition next door in Connecticut.”

To keep these businesses in Putnam, the county will offer them a 50 percent reduction in property taxes for the first year, 45 percent the second year, 40 percent the third year, and so forth until they reach 100 percent taxation at year 11.

“That’s a standard, sort of typical project,” said Nulk, who explained that the state offers much larger and longer incentives, which doesn’t make sense for Putnam. “We want the guys to get in, get themselves settled, then become full-fledged taxpaying members of the community within a reasonable time,” he said.

A local labor requirement is also a dominant part of the PILOT program, according to Nulk. “In both cases… they’re offering good wages and both are bringing on some additional employees,” he said.

Nulk pointed to another company that recently settled in Putnam – thanks to the PILOT incentive – in Southeast.

“The smaller of the two warehouses is now fully occupied and employed, and when they came over, they brought 50 people, I believe it was, from their Connecticut Operation,” he said. “That’s Lesser Evil Snacks, and they have an additional 40 people… Most of the people are Putnam or lower Hudson Valley residents.”

Legislator Erin Crowley, R-Mahopac, voiced her full support for PILOT incentives.

“I like to see that we’re getting some infrastructure here and maybe taking a touch off the tax burden of the constituents that live here,” she said. “I have always supported PILOTs, especially when it’s vacant land… It’s going to essentially boost the worth of the land.”

Legislator Tommy Regan, R-Brewster, disagreed, saying he is uncomfortable with alleviating taxes for businesses, with residents having to make up for it.

“Yes, Connecticut is a draw, but the location is prime where both of the businesses are going,” he said. “We’re looking at existing businesses, moving to a prime location, and for those 10 years, us here in the county – the Town of Southeast, the school district… still have to pay our bills. So in the interim the citizens have to fill in.”

Further, he pointed out that those businesses are paying 100 percent of their tax bills currently, and the county is going to reduce those tax bills for the next 10 years.

“I don’t know that that best represents the individuals that we’re sent here to represent,” he said, adding that the incentives should be reserved for businesses looking to come to Putnam, not just stay here. “In my core, I’m pro-business, but I’m also thinking about other business that we have here, and specifically the residents.”

Senior Deputy County Attorney Heather Abissi countered that the county is not losing money with these abatements. Instead, she said the businesses are moving to land that is not currently bringing in tax money, they are bringing jobs, and increasing local spending with employees buying more gas and food in the area.

“It’s sort of a multifaced game for a package which is a small reduction in what (they would be paying in taxes),” she said.

Nulk added that there was a good possibility Putnam would lose these businesses to Connecticut if the county didn’t offer the incentive. “They made a strong statement that they would like to stay in Putnam County, but the dollars and cents make sense to go to Connecticut,” he said.

Further, he said there are already plans for the locations they are vacating. “So both the properties they’re in now and the new properties will become better-paying taxed properties,” he said.

Legislator Jake D’Angelo, R-Carmel, said keeping the business community in Putnam County growing is important.

“We have two businesses here who have proven they can generate sales tax revenue in this county,” he said. “They want to grow… Business owners think in dollars and cents, and they move quick. They will go somewhere more favorable… If we have the ability to keep and retain business here, we have to jump on that.”

Legislator Laura Russo, R-Patterson, agreed. “It’s hard to attract new businesses when they see that we can’t even retain the ones that we have,” she said.

The committee unanimously approved both PILOTs.