By Rebecca Martin
We’re coming up on nearly three years of following the Kingstonian project process, a proposed $58 million dollar project that promises 129 high-end units, 14 affordable units (with Area Median Income (AMI) based on Ulster County, nearly ⅓ higher than the City of Kingston), a 32-room luxury boutique hotel, 9,000 square feet of retail space, and a 420 parking space complex. The proposed Kingstonian deviated payment-in-lieu-of-taxes (PILOT) is a 25-year, $30.6 million dollar deferment of taxes for a mixed use, high-end housing project. Since the Ulster County Executive has commissioned a study with the National Development Council (NDC) October 23, 2020 report, in an effort to ‘sweeten the pot’ doesn’t appear to have influenced members of the Board of Education – the agency who has the most to lose.
Here are the next important steps in the process for each of the decision-making agencies as we currently understand them.
Village of New Paltz
On November 4, the Village of New Paltz submitted the following letter to the Board of Education, members of the Ulster County Legislature, County Executive Pat Ryan and City of Kingston Mayor Steve Noble.
Prior to becoming Mayor of the Village of New Paltz, Tim Rogers went to business school and held a successful career in the financial industry. It’s clear in following his advocacy on the matter that our own elected and appointed officials in the City of Kingston do not understand the potential negative impacts that this unprecedented tax incentive may likely have.
“NDC’s suggested PILOT schedule for the Kingstonian is problematic for Kingston’s school district finances now and long into the future
National Development Council’s (“NDC”) October 23, 2020 cost/ benefit analysis for the proposed Kingstonian development is curiously silent about NYS Property Tax Cap law impacts and how PILOTs harm local taxing authorities’ ability to fund new services.
Property taxpayers, including those across the Kingston City School District that serves several municipalities, will likely face one of two outcomes if the Kingstonian developers receive the PILOT they asked for or if NDC’s proposed PILOT is used. The board of education will have to choose between:
- Cutting school district programming (e.g. teacher and staff layoffs, increased class sizes, etc.), or
- Increasing property taxes
This is just how NYS law and the Property Tax Cap formula works. It is unreasonable to list “net public benefits” from the Kingstonian without even mentioning let alone considering Tax Levy Limit (TLL) impacts. An alternative third option to these two could only occur if there was a material contraction in the number of students residing in the district.
School districts are primarily funded by property taxes and state aid. Property taxes are levied against the Full Taxable Value of real estate and its calculation is subject to the NYS Property Tax Cap law. Annually, each school district follows an eight-step formula to calculate its TLL. The TLL does not change when there is a change in the taxable value due to assessment increases; in that instance, the tax rate decreases. However, when there is significant new project construction, the NYS Commissioner of Tax and Finance calculates a Tax Base Growth Factor (TBGF) that increases the TLL to pay for services arising from the new construction.
If it’s fully taxed, the taxable value of $19 million for the Kingstonian would result in a TBGF of approximately 1.0042 and an increase in the district’s TLL of more than $440,000. However, when a new project is subject to a PILOT agreement, its taxable value is never included in the TBGF. This significantly limits a school district’s ability fund educating new K-12 students created by increases in housing supply.
Using NDC’s newly proposed PILOT, the Kingstonian developers would pay approximately $2.1 million over 25 years in lieu of school taxes. In comparison, if the project was fully taxed with an assessed value of $19 million at year 1 and the district’s ’19-’20 TLL of $105,589,983 escalated 2% annually, the developers would pay $16.6 million in school taxes.
Moreover, harm is perpetual. During years 26 through 50 the school district could see $23.8 million less in TLL because of the original PILOT. This would happen because the tax cap formula’s Tax Base Growth Factor never adjusts — even at the end of a PILOT’s term when properties become taxable.
Given these scenarios, if the district’s board of education opted not to cut programming because of its lowered TLL from the PILOT, the board could try to make up the difference and raise revenue by raising property taxes. This would require asking voters to support a tax cap override. And, a supermajority of 60% or more would be needed to vote in favor of raising taxes to offset the shortfall.
In 2020, only 13 districts across the state chose this option; there was a 69% success rate, compared with a 99% success rate for districts that did not need a supermajority approval of their budget. The Kingston board of education has never attempted a budget override.
We are troubled by this proposal to prop up investors of market rate for-profit housing, lodging, and retail. The Kingstonian could set a dangerous precedent for Ulster County that unfairly harms taxpayers and school districts’ ability to serve students. Please take a closer look at what is being considered.”
Kingston City School District Board of Education (BOE)
During a recent Board of Education meeting on November 4, Trustee James Michael, who also is chair of the Audit and Finance Committee, publicly revealed his concerns regarding the Kingstonian PILOT process and the Ulster County Executive’s NDC Study. Michael says that the BOE was not contacted by the consultant or the county while new PILOT terms for the Kingstonian PILOT report were being considered. Weeks after the report was released, the board said that it had still not received the new PILOT terms or any communication from the county. Superintendent Dr. Paul Padalino revealed at that time that he had received the new PILOT terms on that day (11/4) and would release it to the board following their meeting that evening.
The next Kingston City School District Board of Education meeting is on Wednesday, November 18 at 7:00pm. If you wish to submit public comment (live public comment is not permitted during Covid) please consider supporting the members who have correctly taken a stance against a PILOT for this proposal. WRITE: email@example.com
“Last Friday, I was reading the news with a headline that stated the county officials celebrated a new PILOT deal for the developers of the proposed Kingstonian project. That caught me by surprise. What I want to tell the county and the developer is that they ignored us (BOE) and they didn’t respect us at all. We are the biggest stakeholders of this development and the biggest losers as far as tax revenue…that’s what the politicians do. They always promise you something and do something else. Last year, Ulster County Executive Pat Ryan stated the Kingstonian project was unacceptable and absurd for the community. Politicians get paid, we don’t. We do this for the love of the kids. Politicians lie, but we don’t because we teach our children to be truthful and honest.”
“…(Joesph) Bonura stated on July 18 that if the PILOT agreement didn’t go through, the city would lose the $3.8m (Downtown Revitalization Initiative grant, DRI) grant….I met with Mayor Steve Noble and I asked him face to face, is it true that we can lose the grant money (DRI) if we don’t approve the Kingstonian PILOT and his answer was yes. That was a blatant lie….I had a conversation with the Director of the DRI grant program in the Hudson Valley. He told me that the city is not going to lose the grant. It can easily be allocated to the rest of the project.””We need more revenue for the district. They (the developers) were very arrogant, demanding and made an ultimatum and said either we have this project otherwise we don’t have a parking garage. Maybe the City of Kingston needs a parking garage, the developers want to build it and expect the city of Kingston taxpayers to pay for it, but to me that’s unacceptable.”
“When you think about the Ulster County Industrial Development Agency PILOT program, I want you to keep in mind the students because they have the most to lose and deprived of a good education…I send a message to developers, the Kingstonian developers and the future developers that the school district will not accept anymore deviated programs. I would suggest that the Kingstonian developers come back to the district with a more traditional PILOT program of 5- 10 years, not a deviated PILOT for two generations.”
City of Kingston Common Council
There has been mixed signals about whether or not the Kingston Common Council has to vote on the Kingstonian PILOTs new terms. It isn’t clear why they wouldn’t, as the terms are different then they were when their unanimous vote was cast over the summer. We’ll have to wait to see what sort of fancy footwork Kingston Corporation Counsel Kevin Bryant and Dan Gartenstein have in store.
If new PILOT terms appear, it would go in front of the Kingston Common Council’s Finance and Audit Committee (posted above). Please consider WRITING TO EACH OF THEM INDIVIDUALLY and request that if new PILOT terms appear for a council vote, that they align their decision with the Board of Education, as it is our children and tax paying families who attend the school district that have the most to lose.
Ulster County Legislature
In October when the Kingstonian PILOT terms were submitted to the Ulster County Legislature, both the Economic Development, Tourism, Housing, Planning & Transit and Ways and Means Committees each had a crack at it. At that time, it was already known that County Executive Pat Ryan had requested an “Independent” study regarding the Kingstonian PILOT terms. The Economic Development committee passed the old terms through anyway while Ways and Means tabled their decision until the study was delivered and the committee had time to review it.
With the results and new PILOT terms delivered in late October, the Economic Development committee did not take it up again during their November. We inquired with the Ulster County Legislative Clerk to understand why, and were told at the time of inquiry, “We still haven’t received any new document in relation to potential changes. As such, the resolution currently stands in the Ways and Means Committee. However, we anticipate having a new proposed agreement very shortly. The Ways and Means Committee members will have the option to amend the resolution in Committee to consider the new agreement.” Although the response didn’t answer our question thoroughly as to why the new terms would not have to be reviewed by both committees as was the case last month, at the Ways and Means Committee meeting this week, the committee adopted the new terms (that have not yet been made public). With much disrespectful banter from Legislators Dave Donaldson and Ken Ronk, Legislators Tracy Bartels and Lynn Archer called them out and held their ground securing the majority of votes to postpone the Kingstonian PILOT vote until committee members had their questions answered by the consultant. Legislator Eve Walters (New Paltz) publicaly stated that she would reject the Kingstonian PILOT agreement.
to Audio of the Ways and Means Committee discussion of the Kingstonian PILOT from 11/10/20
The next Ways and Means Committee meeting will occur on Tuesday, November 17 at 5:30pm. If they decide to pass the new PILOT terms through their committee, it will go to the floor that evening at 7:00pm for a full legislature vote. Since Covid, the Ulster County Legislature amended its rules to allow only public comment on items listed in the agenda. In this case, we won’t know whether or not the Kingstonian PILOT will be on the agenda until 6:30pm that evening, 30 minutes before the legislature meets. NYS Open Meetings Law has no requirements for when Agendas are made public. It’s a flaw in our system, in our opinion. A good practice would be to post agendas at least several days prior to any public meeting in order to allow the public to plan to attend and to prepare their comments.
Missed the Kingstonian PILOT press conference event? Here’s a recap and next steps
Criticism of Ulster County’s Independent Review for the Kingstonian PILOT
The road paved by a $30.6 million dollar Kingstonian PILOT (in exchange for a parking garage): A timeline and next steps in October 2020
Highlights from the UCIDA Public Hearing on October 1
The Complication of the Ulster County IDA Recent Policy Change and Public Hearing Date on October 1
The Kingstonian Project PILOT Needs Independent, External Analysis to Review Economic Assumptions Before Approving $30.6m over 25 years