County, village will discuss easing development burden
Yates County and Penn Yan Village officials agree that two new hotels in the village will have an impact on the local economy. Now, they are trying to find a way to make sure that the impact is positive for each of the municipalities.
For some time, Penn Yan Village officials have sought shared sales and/or occupancy tax revenues to make up for what they say are burdens piling up on village property taxpayers who can't foot the bill for increased police and fire protection, street maintenance and other village services.
Village officials say those services are bankrolled from village property tax revenues, and when new businesses are granted PILOT agreements (Payments in Lieu of Taxes) which include breaks on property taxes, it can have a negative impact on the village budget.
Up until last Tuesday, Yates County Legislators have not engaged in discussions about the possibilities of sharing sales tax revenues or finding other ways to lessen the burden on property taxpayers. But when Mayor Robert Church and Trustees Michael Christensen and Dave Reeve attended the legislature's Aug. 6 finance committee meeting, they left with assurance that county legislators will discuss ways to make sure any PILOT agreement is constructed to maintain increased revenues that would equal the amount of property taxes that would be paid by the business through the life of the agreement.
PILOTs vary from project to project, but often give property tax breaks for a period of time and waive sales tax on construction materials used to develop the business. The PILOT agreements are established by the local Economic Development Agency, in this case, Finger Lakes Economic Development. While no agreement has been established or requested, both county and village officials say it's likely to happen.
The village officials also left the room with a promise that legislators will discuss the possibility of sharing sales tax or occupancy tax revenues with other local governments. When Finance Committee Chairman Timothy Dennis (District II - Potter) polled the legislators at the meeting, it was clear that most legislators feel if tax revenue sharing is to occur, it should involve all the towns and villages in the county, not just Penn Yan.
Now that a new hotel is planned for construction on Elm Street, and a second new lodging facility is on the drawing board for the area near the former Sarrasin's Restuarant, village officials say it's time to begin talking about ways that Penn Yan can benefit, especially if the village will be responsible for making infrastructure improvements.
"We just feel it's time for the county to step up and provide some relief," said Church, who explained the village isn't asking the county to give up any funds it already has. Rather, the county could reach an agreement to ensure the village gets the funds it would receive if the hotel property were fully taxed on its assessed value.
Church, Christensen and Reeve said 40 percent of the real property within the village of Penn Yan is exempt from paying property taxes, while 22 percent of the property in Yates County is exempt. Dennis said the Village of Dundee and the Towns of Benton and Italy have higher percentages of tax exempt properties on their rolls.
"I wonder how much those tax exempt properties are costing those towns," said Christensen, who also commented, "It's very difficult to say to someone on East Main Street that their property taxes go toward plowing public parking lots and flowers all because it's great for economic development."
Reeve called the revenue flow "upside down," and added that while the developments are good for the local economy he can't see an advantage for the village.
"Realistically, without some sharing, what good does it do the village?" asked Church.
In a July letter to Legislative Chairman H. Taylor Fitch, Church wrote, "The county would still receive the remaining sales and occupancy tax generated by this project. They will also receive the sales tax generated by what the hotel and its guests spend in the community, most of which will be spent inside the village."
"I don't think there's any question that we need to make them whole," said Legislator Rick Willson, describing the impact of additional cars that will be going to the hotel and noting that developers prefer to build where water and sewer services are available.
"We all have to take a giant leap of faith and start working together," he added.
Saying he was basing his figures on 60 percent average occupancy at a room rate of $100 per night, the county stands to take in a total of more than $130,000 annually in sales and occupancy tax from the proposed Elm Street hotel alone, according to Church. When the additional sales tax revenue from shopping and dining in Penn Yan businesses is factored in, Church estimates the county will collect an additional $65,000 annually.
Estimating the property value of a new hotel at $2 million against the current assessed value ($360,000) of the Elm Street parcel, Church said the village would stand to forfeit over $25,000 in potential property tax revenues in just the first year of a PILOT agreement, and potentially $160,000 in revenues over the 10 years of a PILOT.
PILOT programs do not decrease the amount of tax revenue collected by a jurisdiction, because the program is based on the value of the property after improvements have been completed.
If county legislators are going to promise payments to the village, they have to determine a source for the shared funds, noted Dennis. One complication, says County Treasurer Noni Flynn, is that the county cannot determine from what businesses sales or occupancy taxes come.