By Holly Crocco
Although a vote to approve a PILOT agreement with Brewster Industrial Owner, LLC, failed the Brewster School Board during its Feb. 27 meeting, a revote of the board at its March 12 meeting pushed the agreement through, meaning the commercial business will receive a $5.7 million tax break over the course of a decade.
BIO is nearing completion on construction of two warehouse distribution/logistics facilities totaling 921,000 square feet, to be leased to end users on Pugsley Road in the Town of Southeast. It has applied for “financial assistance” through the Putnam County Industrial Development Agency, which includes a Payment In Lieu of Taxes agreement.
As required under the rules of the IDA, the school district – as well as the town and county that would receive property tax payments from the business – must approve the agreement. The town and county previously approved the PILOT.
Under the agreement, BIO would pay 50 percent less in property taxes the first year of operation, with the discounted percentage decreasing 5 percent each year until it is paying the full amount (10 years).
In a January letter to the school board, IDA Chairman Bill Nulk said the PILOT is “a necessary component for the rental success of the building space” and that they are proposing the “standard progression for property tax abatements that bring increased revenue to the town, county and school district, as well as new jobs and access to other properties in the area.”
During the Feb. 27 meeting of the school board, during which two members were absent, the vote to approve the PILOT failed because, while three members voted “yes” and two voted “no,” approval requires a quorum of the total board, not just the members present.
“After the vote I was contacted by our legal counsel regarding the vote, and thereafter the board received legal advice,” said School Board President Kerry Cunningham at last week’s meeting. “As a result, a majority of the board decided it would be put back on the agenda… I want to make clear this is not the result of any particular board member being unhappy with the result of the vote. This came about based on contact from our counsel and legal advice.”
Trustee Jamie Callanan, who voted “no” in February and again last week, said BIO claimed the value of the project to the community is in economic output and job creation, and that labor income during the construction phase was expected to reach $45 million at the local level.
The project broke ground in January 2023, and is near completion, with the certificate of occupancy expected in the spring, she said. “So, within 18 months, $45 million of local-level labor income was expected in Putnam and the mid-Hudson Valley,” said Callanan. “Was that the actual outcome?”
She said $100 million in “economic output” was expected to go toward the Town of Southeast economy during construction. “Where are the metrics that are able to demonstrate this actually happened?” she asked.
Callanan said that during an October meeting of the IDA, members recognized that the project was not living up to its end of the agreement on local labor income – specifically not giving jobs to locals.
Callanan asked if the 600 construction jobs that were promised ever materialized, or if the 665 jobs that are anticipated once the site opens can be counted on. “What are the claw-backs if that doesn’t happen?” she asked.
“The principal of a PILOT is that it’s good for you and it’s good for me,” said Callanan. “It means drawing this project to the area would be good for the community, and the PILOT would be good for the developer to make this their location. This project is here and built, so we don’t need to attract them. There is very little incentive for the district to offer a $5 million tax break after the completion.”
Board Vice President Cynthia Fox agreed.
“Our policy, in my opinion, is well written, and it says (a PILOT) is to attract commercial and industrial development, and this is already here and is already finished,” she said. “So, in my opinion, it does not need this PILOT.”
Trustee Erik Grutzner said the valuation of the property each year depends on the occupancy of the buildings, so the PILOT does impact how BIO will attract tenants to fill the buildings, and therefore bring in more tax revenue.
He also said that if the board denies the PILOT, the company may very well take the district to court to get it.
“It is my understanding that, were we to vote ‘no,’ there is still a very good chance that we are going to end up with the same terms of taxation as per 485-B of the taxation law,” said Grutzner. “The process that we’ll get to that point is irrelevant… But we may need to defend ourselves and pay for a lawsuit up to that point.”
Further, he said PILOTs are designed to attract business at any point in the process.
“There are other projects that are potentially in the works,” said Grutzner. “The IDA is working to potentially generate more commercial and corporate revenue for our school district, and I don’t think – especially if there’s a good chance we are going to see a savings – that we send a message to the business community or the corporate community that may be looking to develop or expand in Brewster that we don’t appreciate their efforts.”
Lastly, he said the district should welcome the tax revenue, even if it is at a discount.
“Usually, the districts that can provide exceptional service and facilities have a strong corporate or commercial tax base,” he said. “I think it sends a strong message if we tell other businesses that may want to come and invest in our community and provide us with a huge amount of tax money at absolutely no cost to the district, ‘Well, we don’t like the way you’re doing it, we think you came too late,’” he said. “That’s a problem.”
Cunningham noted that the board is not tasked with looking at the propriety of the project itself, just the tax implications for the district.
“The town approved this PILOT, the county approved this PILOT,” she said. “This board and previous boards of different members have approved PILOTS, and I think it’s not a good idea for the board to pick and choose projects – that comply with the tax law and comply with our polity – to pick and chose wish ones we’re going to approve.”
Also, Cunningham pointed out that the board approved a PILOT for Ace Endico’s expansion project. While it was for new construction, it was for a business that already existed in town, she said.
“I just want the board to be consistent with the way that we respond to PILOTS,” she said. “We are the primary beneficiary of the PILOT payments and taxes thereafter, and we have done nothing for it. The town has had to do some work… We haven’t, and we are the primary beneficiary of this. From my perspective, I’m fulfilling my fiduciary duty to the district and to our community by approving the PILOT.”
Prior to the vote, resident Jeff Saccomanno said the full tax potential from the project could be used to fund teacher raises and offer more programs and services for students.
“I don’t know why we’re giving them the opportunity for this PILOT program,” he said. “They’re not really bringing anything to this community, that I can see… It’s bringing traffic, pollution.”
Saccomanno added that if the company benefitted the school community, maybe he would feel differently.
“I’m all for the PILOT for ProSwing,” he said. “They’re going to be an advantage to our children and to our community. A giant warehouse? No. Sorry, I disagree. And to revote on this, to me, I think is a giant shame.”
Resident Paul Castle said BIO is not in need of a handout.
“That company was ready to build its own on- and off-ramp on I-84, which would have cost millions and millions and millions of dollars… but the state shot them down all three times when they wanted to build it,” he said. “So, they have the money to pay. You are shortchanging yourselves and everybody in the community, and the kids, if you vote ‘yes’ for this PILOT program.”
Ellen Lepere said she was shocked the board was taking a revote. “I don’t ever get to revote when things don’t go my way,” she said.
Scott Seaman said the PILOT will likely be granted no matter what, with BIO taking the district to court. However, he said the district can still send a message with its vote. “Warehouse jobs, while they are necessary to this world, they do not do anything for our students,” he said.
Nulk also addressed the board before the vote, reminding it that a PILOT is not a complete abatement of all taxes.
“You’re going to be getting 50 percent of the assessed value, once it gets the certificate of occupancy,” he said. “And it will go up over 10 years… By the time you get done, you’re looking at more than several million dollars in new taxes.”
A representative of BIO explained at last week’s meeting that, even though the project is already in the works, the tax breaks are needed to attract tenants.
“So in order to lease the property – and the market is difficult now – this is a help,” he said. “And you’re helping someone that, at one angle looks like they don’t need help. But the project does need help.”
The vote passed 4-3, with Cunningham, Grutzner, and Trustees Lenor Volpe and Dehisy Jimenez-Vazquez voting “yes,” and Callanan, Fox and Trustee Melissa Finateri voting “no.”