Monday, July 8, 2013

Understanding NYS Tax Payments On State Lands

Historic Forest Preserve LandsThe idea that the State of New York does not pay taxes on state lands is an enduring myth in the Adirondack Park. At the June-July 2013 APA Forest Preserve classification hearings some speakers erroneously made this charge. Different state laws require property tax payments by the state for both Forest Preserve and conservation easements. The NYS Real Property Tax Law defines most categories of state tax payments.

The State of New York pays local property taxes on Forest Preserve lands it owns just like any other taxpayer. In 2011, it was estimated that combined town, county, school and special district taxes topped $75 million from the state for over 3.4 million acres of Forest Preserve and conservation easement lands in the Adirondack Park. Here is information from NYS Real Property Services organized by town-level data and county-level data.

A lawsuit involving Forest Preserve land assessment brought by a town in the Catskills in the 1980s upheld the right of local assessors to establish valuation on Forest Preserve lands. NYS Real Property Services also provides assessment estimates for local municipalities for Forest Preserve lands, which are helpful to local assessors. Efforts by Governors George Pataki and David Paterson to reduce state property tax payments in the Adirondacks, and for other state lands across New York, were opposed by the environmental community and local governments.

The NYS Department of Environmental Conservation establishes the value owned by the state in a state-held conservation easement. Both the state and private landowner pay taxes on easement lands according to the values each owns.

Other factors also effect the amount that municipalities within the Adirondack Park receive in tax payments. “Transition Assessments” have been triggered in various Adirondack communities according to a state formula. For instance, in 2011 it is estimated that the Town on Newcomb received over $1.4 million in transition assessments and the Newcomb Central School District nearly $1.8 million. Other towns have triggered transition assessments too, but none like Newcomb.

Another factor is Real Property Tax Law section 542, which is the “Additional Aggregate Assessment.” This action was enacted at the time of the Adirondack Park Agency (APA) Act to provide more tax payments to some Adirondack communities. This payment is based on a formula of state Forest Preserve ownership and valuation in a given town in 1960. Implementation of Section 542 through the years has created winners and losers among local governments. The amounts received vary from town to town. Newcomb received (county, town, school, special district) nearly $1 million in 2011, Minerva over $2 million, North Elba over $300,000, and Schroon just $45,000. A number of Hamilton County towns do well with this payment: Arietta took in over $2 million in 2011; Benson over $800,000; Indian Lake over $775,000; Long Lake over $1.4 million; and, Wells over $1.4 million. The Town of Webb is the Park’s biggest winner with nearly $3.4 million in Section 542 payments; note that $1.7 million of this went to Herkimer County.

Total Forest Preserve tax payments vary town by town, largely due to the acreage owned by the state, but the transition assessments and additional aggregate assessments create widespread discrepancies. Other features on Forest Preserve lands, such as shorelines, public road frontage, miles of state roads, etc., also effect the valuation/assessment and resulting tax payment.

In total, the Town of Webb topped $5 million in estimated combined taxes from the state in 2011 (though $2.6 million of that went to Herkimer County). Newcomb received $3.7 million, Arietta was not far behind at $3.6 million, Minerva $3.2 million, Long Lake $3.1 million, Indian Lake $2.8 million, Harrietstown $2.3 million, Santa Clara $2 million, and North Elba $1.9 million. See all other town payments here.

In general terms, the Forest Preserve is valued higher and taxed higher than private commercial forest lands. Oftentimes, the Forest Preserve values are considerably higher.

One last oddity of Forest Preserve tax payments, which merits closer scrutiny, is that some lands classified as Intensive Use areas under the State Land Master Plan are subject to property tax payments while others are not. For instance, the state pays taxes on Million Dollar Beach in Lake George, but not on its ownership of Prospect Mountain. The state does not pay taxes on Whiteface or Gore Mountain Ski Areas. Across the Park, some state campgrounds are subject to local property tax payments, but most are not.

 

Related Stories


Peter Bauer

Peter Bauer is the Executive Director of Protect the Adirondacks.

He has been working in various capacities on Adirondack Park environmental issues since the mid-1980s, including stints as the Executive Director of the Residents' Committee to Protect the Adirondacks and FUND for Lake George as well as on the staff of the Commission on the Adirondacks in the Twenty-First Century. He also worked at Adirondack Life Magazine. He served as Chair of the Town of Lake George Zoning Board of Appeals and has served on numerous advisory boards for management of the Adirondack Park and Forest Preserve.

Peter lives in Blue Mountain Lake with his wife and two children, enjoys a wide variety of outdoor recreational activities throughout the Adirondacks, and is a member of the Blue Mountain Lake volunteer fire department.

Follow Protect the Adirondacks on Facebook and Twitter.




19 Responses

  1. Andy says:

    State Forests outside of the Forest Preserve (Hewitt Amendment) also pay local and school taxes, but do not pay county taxes. State Unique Areas do not pay any taxes.

  2. Paul says:

    “In general terms, the Forest Preserve is valued higher and taxed higher than private commercial forest lands. Oftentimes, the Forest Preserve values are considerably higher.”

    Peter I think it is also important to note in an essay on this topic that Forest Preserve land is valued much lower and taxed much lower than private residential and commercial property in the Adirondacks. You can find some good “commercial forest land” comparables. But take away the “commercial forest land” part of the description and it is a whole different story.

    To get a good idea folks should simply look at the town generated rolls. For example look at any waterfront property owned by NYS and compare a similar privately owned waterfront parcel. I think if you look at the Sarnac Lakes (one example) you will see that state owned parcels get off with paying almost nothing in comparison to privately owned parcels with development potential. Not saying that this is wrong it is just a fact of life in those areas.

  3. Paul says:

    Or you can also look at the total Peter gives. The state, on average, pays 22 dollars per acre in taxes on over 3 million acres of land in the Adirondacks. They pay but it isn’t much in comparison to what you would collect on private land in total. Especially since some of the state owned land would be the most valuable and highly taxed if it were owed by a private entity.

  4. John Sullivan says:

    a — Peter, thanks for drawing attention to the state tax payments. It’s long overdue, even though some folks, like Paul, still won’t believe it.

    b — Paul, I can’t speak for anyone else, but my tax bill on Adirondack forest land is about one fourth the amount the state would pay at $22/acre. Who is getting the bargain here?

    Many Adirondack towns are crying all the way to the bank. Good for them; that’s the way it should be. But don’t sob on my shoulder.

  5. Matt says:

    Good article. There are absolutely winners and losers in the Park when it comes to Forest Preserve/Easement tax payments. Park residents need to understand this reality and we must implore our elected leaders to discuss this in an open forum. Regardless of how you feel about state-ownership of land, this is fundamental.

  6. Mark says:

    Well written and actually factual. However, “do well” is a bit of an overstatement. These payments are less than a private owner would pay and do not address the other economic impacts. For example, the Town of Arietta is over 90% state land. It is great that the state pays taxes, but imagine the cascading economic impact an employer would make on this town if there was a workforce and someplace to build a business to employ those workers.
    Lastly, it is time that ORDA or NYS kicked in some taxes for their intensive use areas.

  7. Pablo says:

    Actually not factual. It is the Arietta Decision that forced the state to pay taxes on Forest Preserve lands. That town is in Hamilton County, Adirondack Park, not the Catskills, as this article says.
    The state has an agency, Office of Real Property Services, that arm-twists towns into setting low assessments on state lands, so Paul is right. ORPS must approve assessments, so the state is essentially approving its own property valuations.

  8. Will Doolittle says:

    John S.
    What do you mean, Paul won’t believe it? Paul says in his post that the state pays property taxes, but less than a private owner would pay. So he clearly believes the state pays property taxes.
    The $22/acre figure is an average across 3 million acres. That you pay less on one particular parcel means nothing. You have to compare properties that are similar. In that case, Paul says, for example with waterfront properties, the state pays less. That makes sense, in my opinion, since the state land can’t be developed and the whole arrangement is a compromise, anyway.

    • Paul says:

      Thanks, absolutely that is the point. The land cannot be developed so it will overtime generate less tax revenue for the town. We just have to understand that by placing the land in state ownership we are making that choice. I don’t think you can really make the argument, and I don’t think Peter is trying to, that state ownership is some kind of tax windfall for the towns.

  9. Alan Senbaugh says:

    Of course! How do you think the town of Keene affords to have the best public school in the state?

  10. All,

    Thanks for the comments. A few thoughts, starting from the top.

    Paul: The Forest Preserve residential values are valued in areas of state ownership in residential areas. Actually the assessments are complicated and meant to provide a fair index for the types of lands involved. Remember it’s vacant land, not built land, so you can’t include built values.

    But, as mentioned, shorelines and public road frontage, effect values the most, just as with private lands. While much of the Forest Preserve is away from developed shorelines and roads, there is a considerable amount that is located in such areas and taxed as such. You can bet local assessors are not going to tax Forest Preserve lake frontage as commercial forestland but rather for its residential values. That’s part of the NYS ad valorem tax structure.

    On your second comment Paul, you’re also including a large amount of easement lands. If you want to figure out per acre Forest Preserve payments you have to go to the county or town files provided, tally the Forest Preserve tax payments/acres, and then do the math. $22 is not accurate.

    John S: Yes, thank you. If you are enrolled in 480a/480 then the tax costs of your commercial forestlands are considerably cheaper than the Forest Preserve. And, I submit, that’s a good thing for all of us.

    Matt: Good points. The additional aggregate assessment and the way that the transition assessment has been used, clearly creates winners and losers in the Park. I own a home in Indian Lake, a town that I submit gets a good deal from the state. My home is not on lakeshore and itss a modest home. When I compare my tax bill with friends and family who live in other parts of NYS I always have the lowest taxes, even though our homes have similar modest values.

    Mark: I agree with your point on intensive use areas. Other argue that since these lands have been developed by the state and since they’re being used in a highly economic way, then they can forgo the taxes. I don’t get that. As to what a managed forest would produce economically versus the unmanaged forest (the Forest Preserve in this case) — that’s a huge question. How much does the Forest Preserve underwrite the second-home and resort economy? How many jobs are supported by the Forest Preserve? How many jobs in this day of highly mechanized logging are produced by managed forest tracts? We ship our logs away as to processing them here, outside of a few terrific mills, like Tupper Lake Hardwoods. Certainly an area that deserves inquiry.

    Pablo: I was referring to the Town of Shandaken in the Catskills, which, to my knowledge, had the case that affirmed the right of local assessors to assess Forest Preserve lands. Here’s the citation for the Shandaken decision: Town of Shandaken v. State Board of Equalization and Assessment, 63 N.Y.2d 442, 483 N.Y.S.2d 161, 472N.E.2d 989 (1994). Here’s a NYS Department of Taxation reference to the importance of the Shandaken decision (there’s no mention of an Arietta decision); http://www.tax.ny.gov/research/property/reports/landcomp/section2.htm. Please provide a link to the Arietta decision that you reference.

    Will: I don’t recommend using Paul’s math as the basis of your comments; see comments to Paul above. Forest Preserve lands with “residential values,” especially shoreline, are taxed like private shoreline lands. There is no tax for the house, but you can’t tax the state for houses that don’t exist. Spend some time talking with the ORPS Forest Preserve estimators in the Park and you’ll see that they have a complicated, and I think just, system for estimating the Forest Preserve shoreline values depending on a variety of factors, like proximity to roads and developed properties, to name a few. These “estimates” are provided to local assessors. Some assessors I have talked with find that the ORPS “estimates” come in higher than their assessments, so they use the ORPS estimates.

    Paul: As to your last comment, Forest Preserve taxes continue to go up; just as private lands taxes continue to go up. There is no cap on Forest Preserve assessments.

    It’s an interesting question to look at increases over time of Forest Preserve versus non-Forest Preserve. Remember, we’re talking lands and not buildings. Also, there are lots of communities that are struggling with road maintenance costs. This is one of the chief costs of many local communities, outside schools. Property taxes in many neighborhoods have never provided a net gain for a community when road maintenance costs are considered.

    • Paul says:

      Peter, do you know what the aggregate tax payments are for the easement lands. Then you can simply subtract that from the 75 million and re-calculate for the non-easement lands.

      But looking at the data you have above we can pull out a few examples. In the town of Harrietstown the state owns about 95,000 acres of land and pays only 2.2 million in taxes. So about 23 dollars per acre? Not 22 but close. Or in the town of Santa Clara the state owns 55,000 acres and pays about 1.2 million in taxes. So there for some of the most beautiful (and I would say valuable) land including large amounts of waterfront property the state is paying about 25 dollars per acre. These type of parcels seem to strengthen my argument above. The math is what it is but I do take your point about easement lands. Maybe you can give us some example of state land where it is closer to the per acre totals for similar private lands in those same towns?

      Again, I don’t have a problem with the rates the state is paying it is simply a fact that those lands would generate more tax revenue if they were not simply vacant undevelopable (not sure if that is a word?)land. There are other benefits for sure and some of them are economic. You name a few. I would also guess that proximity to undeveloped land like Forest Preserve land does raise the value of other adjacent or nearby property. I own property that is almost surrounded by Forest Preserve it certainly gives me a view that will never change and a guarantee that I will never have neighbors. But I am not sure that higher tax assessments are exactly what some local residents would like to see?

  11. Dave Gibson says:

    Peter Bauer’s oddity in the final paragraph may be explainable in part by the Hamilton County Appellate Division of Supreme Ct case of 1966 (Town of Indian Lake v. State Board of Equalization and Assessment). The Town had sued over the tax status of two parcels of State Land claiming unpaid taxes. Had these parcels become Forest Preserve the moment they came into state ownership? If so, they were taxable for all purposes. We would say yes on both counts today, unquestionably, because Article 14 of the State Constitution says they must be Forest Preserve, and because the real property tax law states that if Forest Preserve they are taxable for all purposes. But not in 1966, and not for most of the 20th century whereby the State bought a variety of parcels in Forest Preserve counties and tried by various subterfuges (and unconstitutional statutes) to get around the plain language of Article 14 of the Constitution which states (since 1895): “the lands of the state now owned or hereafter acquired, shall be forever kept as wild forest lands.” So, were these two parcels in Indian Lake deemed Forest Preserve? Yes, said the 1966 court, and therefore they were taxable for all purposes. However, the court also stated that the state could acquire lands for any purpose with the forest preserve counties – including non Forest Preserve purposes – so long as the deed specifically stated what that purpose was. So were State Campgrounds, for instance, then being developed at a rapid pace under the 1960-62 bond acts, Forest Preserve? It depends on the deed language ! Under the Hamilton County decision, some were deemed taxable, and others not. In Peter Bauer’s example, Prospect Mtn was purchased under a 1925 statute which stated lands bought under the statute “shall not become a part of the forest preserve.” Plainly an unconstitutional statute, but it has never been challenged and is still on the books. Therefore, the state has never paid full taxes on Prospect Mtn. However, for the state to avoid paying full taxes on Gore and Whiteface Mtn ski areas – always acknowledged to be forest preserve under the constitutional amendment allowing skiing and appurtenances – seems wrong and illegal.

  12. Will Doolittle says:

    I think few people would agree Keene has the best public school in the state. What is your measure? The academic offerings are limited, as they will be in a school that small. Take a look at the websites for some of the public schools on Long Island — multiple foreign languages, courses at every level. Their offerings are more like what you’d see at a college. The implication that tiny school districts in Adirondack towns with high percentages of state land can afford high-quality programs because of all the tax money they’re collecting from the state would come as surprising news to the families in those districts.

    • Paul says:

      Either way, the school there would not have any less money if the land was privately owned (even if it was under a conservation easement to prevent development) would they? The only difference is we as a state pick up the tab. In fact you could argue that the state would have more money to give the school if it didn’t have this tax bill to pay?

      • Alan Senbaugh says:

        You constantly use the money tag. OMG the Forest Preserve is so expensive! Costs us so much money! I think it’s the best tax dollars we spend!

    • Alan Senbaugh says:

      You would seriously prefer to raise your kid on Long Island and send them to a public school there than Keene? Have at it! I love living in a Forest Preserve town and very thankfull for all New Yorkers for it.

  13. Philip Terrie Phil Terrie says:

    Has anyone in this thread mentioned the fact that Forest Preserve lands require no services: no town or county road maintenance, no school bus service, etc.? When private-land owners pay taxes, they get something in return (whether what they get is equal in value to what they pay, of course, is arguable). When the state pays taxes, it gets nothing. This imbalance constitutes a net gain for the school districts and local governments.