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Oct 29, 2008 9:35 AMPublication: The Southampton Press

Changes in PILOT payments in the works

Oct 29, 2008 9:35 AM

School districts eligible for tax relief from the Community Preservation Fund may be getting more dollars in 2009 than previously budgeted.

Southampton Town Councilman Chris Nuzzi wants to more than double the $3 million set aside in PILOTs—or payments in lieu of taxes—that Town Supervisor Linda Kabot has earmarked in her 2009 tentative budget, raising the figure to $6.5 million. With support from Town Board members Dan Russo and Anna Throne-Holst, Mr. Nuzzi has the necessary votes to get his way.

But before that increase goes through, the equation for how those payouts are allocated has to be changed. At Tuesday’s meeting, the Town Board set a public hearing on Mr. Nuzzi’s proposal for Wednesday, November 12.

While Ms. Kabot and Town Councilwoman Nancy Graboski voted in favor of holding the hearing, the two voted against the increase in PILOT payments. “I’m all for a public hearing,” the supervisor said, but she voiced strong opposition to amending the 2009 budget to include the increase in subsidies.

“What’s being proposed here,” Ms. Graboski said, “is a major policy shift that would eliminate important safeguards put in place by the Town Council back in 2003 to limit the amount of CPF money allocated for school tax relief for certain districts.”

As it stands now, Ms. Kabot’s budget allocates $3 million in PILOT payments, with $1.8 million going to Hampton Bays, $953,428 to Riverhead, and $48,061 to Eastport South Manor, and the remainder spread out among the Flanders-Northampton Ambulance District, Quogue Fire Protection Area and the Riverhead Fire District.

The added $3.5 million in Mr. Nuzzi’s initiative would bring the Hampton Bays payout to $2.8 million and Riverhead to $3 million.

Ms. Kabot said she was “outraged” about Mr. Nuzzi’s resolution to alter the payments in the budget and said the initiative would “pit one community against another.”

Mr. Nuzzi rejected those comments and said easing the burden on taxpayers was a priority in today’s economic climate. Ms. Kabot was angered at the timing of Mr. Nuzzi’s resolution, which he introduced at Tuesday night’s meeting. “There was no communication here,” Ms. Kabot said, who argued that Mr. Nuzzi’s resolution did not contain a “financial impact.”

“That’s what the budget process is all about,” Mr. Nuzzi said, adding that his resolution was “time sensitive” due to the November 20 deadline for filing the final budget.

Currently, the payments are determined by tapping 10 percent of the total CPF revenue for a given year. Ms. Kabot’s 2009 budget projects $30 million for the CPF, thus $3 million can be set aside for PILOTs. Mr. Nuzzi’s proposal changes that formula to base the PILOTs on 10 percent of CPF revenue collected since 2002, which was when the CPF program was amended to allow for tax relief payments. The intent behind the 2002 amendment was to compensate eligible districts that lost tax revenue when land in those districts were taken off the tax rolls for environmental protection.

Ms. Graboski said that Mr. Nuzzi’s proposal “subverts” existing CPF protections by redirecting large dollar amounts away from land preservation to provide school relief. “I’m all for tax relief,” she said, “but at what cost?”

“There’s an obvious benefit to land preservation,” Mr. Nuzzi said, “But there’s also a negative impact to taxpayers, and we need to be mindful of that, especially in these tough economic times.”

“While there is no question about the need for school tax relief, change in the law needs to come from Albany, and despite repeated requests from local government, we are still waiting,” said Ms. Graboski.

According to Mr. Nuzzi, State Assemblyman Fred W. Thiele Jr., one of the architects of the CPF, said the town could base the 10-percent tax relief payments on the total preservation funds collected over the life of the CPF. In Mr. Nuzzi’s view, going back to 2002, when the state legislature changed the structure of the CPF to allow for tax relief, was the most equitable formula. The CPF legislation was created in 1998.

Ms. Throne-Holst said she understood the supervisor’s position, saying the “timing was unfortunate,” but that the eligible school districts needed to know how much they would be receiving so they could budget appropriately. “These school districts are the most in need,” Ms. Throne-Holst said, adding that the districts experienced “sticker shock” when they were told they would be sharing only $3 million.

Ms. Throne-Holst also pointed out that the tax formula was set to change next year from one of tax levy—which determines how much a district can receive based upon how much that district pays in taxes, to one of tax loss—which would equate the amount based upon how much tax revenue that district has lost due to the land being removed from the tax rolls for preservation. When that formula changes, Flanders and Riverside will likely receive more in tax relief.

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two things: land value tends to be much more cyclical than house value, so if housing prices in the Hamtpons have just started going down, land prices will go down much harder. Land prices will be lower next year, and the year after that!!
Also, if we were to use 10% of the CPF since the the change to pay operating expenses from the CPF in 2002, won't we run the CPF down very quickly? Isn't that kind of what East Hampton did?? Have the auditors figured out what happened there yet?
By saggish (8), sag harbor on Oct 30, 08 12:03 PM
Isn't it amazing how Nuzzi's suggestions come from out of nowhere. He doesn't communicate with the Supervisor and lines up his cronies before he plunges head long into battle. This is reminiscent of the way Heaney used to work and if I'm half-way correct this looks as if Nuzzi is still being driven by that same, now outside force. These ideas are not springing from his (Nuzzi's) head that much is obvious. It looks as if he is trying to build up his reputation (or have it built for him) in advance ...more
By foodie (74), Remsenburg on Oct 30, 08 12:38 PM
Amazing...last year, all I heard was how we needed property tax relief. Councilman Nuzzi comes up with a practical solution, and now he's getting criticized. What is wrong with everyone?
Here's a suggestion to all of those who know so much better - get off the computer, stop writing letters and whining, and go run for public office since you know all the answers.
By WHB Resident (9), WHB on Nov 8, 08 9:06 AM