Wednesday, February 7, 2018

State Land Tax Cap Could Cost Adirondack Communities

NYS capital buildingThe Cuomo Administration has proposed to cap Forest Preserve property tax assessments and change state law from the current system of locally assessed property taxes to a system of Payments in Lieu of Taxes (PILOTs) with a rate set by the State Comptroller.

The state is doing this to save money because Forest Preserve assessments and the PILOT for tax payments would be centrally controlled. This proposal raises issues about a likely decrease in state lands tax payments over time and subsequent tax shift to private lands in Forest Preserve communities in the Adirondacks and Catskills.

Forest Preserve taxes are a serious matter for local communities in the Adirondacks. Of course, payments differ town-by-town depending on the acreage of Forest Preserve. The state used to provide an annual tax payment estimate for Forest Preserve, conservation easements, transition assessment, and annual aggregate assessments, among other state lands property tax programs, but the Cuomo Administration ended this program so the last town-by-town data we have is from 2010. At that time, the State of New York was paying over $75 million for all state lands in the Adirondacks. It is likely that today, given acquisition of new lands and increasing property values, that this figure tops $80 million.

Some towns with high Forest Preserve land holdings reap great benefits. In 2010, Essex saw $1.9 million in tax payments from the state, Minerva $3.1 million, Newcomb $3.7 million, North Elba $1.8 million, North Hudson $1.1 million, Franklin $1.1 million, Harrietstown $2.3 million, Santa Clara $2 million, Arietta $3.6, Indian Lake $2.6 million, Lake Pleasant $1.8 million, Long Lake $3.1 million, and Wells $2.4 million, among others. Many other towns with smaller Forest Preserve holdings receive far smaller payments, such as Chesterfield and Crown Point in Essex County with around $100,000 each.

If one is a numbers-cruncher at the Budget Division, an $80 million program likely catches your eye when you’re tasked to come up with ways to close a budget gap. We’ve seen this before. This cap proposal is akin to efforts made by Governors Mario Cuomo, George Pataki and David Paterson. All these Governors looked at the issue as a way to reduce state spending. If the state set its own assessments on its own lands, then it could control costs.

If this goes through, it could be jarring for Adirondack communities in the years and decades ahead as the growth in assessed value of Forest Preserve lands is capped by the state and tax payments are regulated by a formula.

I’ve always looked at state payments of Forest Preserve taxes based on local assessments as an important part of the state’s annual management and maintenance of the Adirondack Park. State tax payments are a cornerstone of Park policy, something that helps make many Adirondack communities viable. The state has clearly invested heavily in a variety of essential Adirondack Park institutions, from Gore and Whiteface Mountain Ski Area and Olympic facilities, to support for museums, colleges, health care networks, and highways, among a variety of other programs and projects. This proposal seems like a radical change to a core part of the Park’s civic infrastructure, a breach of faith for all who believe in the Adirondack Park and want to see it succeed.

State law has long required state payment of taxes on Forest Preserve lands, but for decades the state assessed its own lands and this was controversial. In the 1980s, this resulted in a major lawsuit and decision. At that time, the State of New York, through the State Board of Equalization and Assessment, now long absorbed into the Department of Taxation, generated property value assessments for state lands, such as the Forest Preserve. The Town of Shandaken, home of Phoenicia, in the Catskill Park, sued the state in 1983-84, arguing property tax assessments were the rightful function of local governments citing the State of New York’s strong home-rule laws. Shandaken is a town of roughly 75,000 acres and in the mid-1980s, 45,000 acres were in the Forest Preserve.

The court case went to the New York’s highest court, the Court of Appeals, after Shandaken lost in the State Supreme Court in Ulster County and prevailed at the Appellate Division, Third Department, in Albany. The Court of Appeals decision rendered the primacy of local assessments for determining the value of Forest Preserve lands.

This decision had a ripple effect across Forest Preserve communities in the Adirondacks and Catskills. Many local governments at the time had long bristled at the state assessments, which they believed were too low, and wanted to conduct their own. In the wake of the “Shandaken” decision, the Adirondack Park Agency Local Government Review Board published a newsletter with the headline “There’s Gold in Them Thar Hills” that notified local governments about the decision and encouraged them to aggressively take over their assessments. As a result, assessments across the Forest Preserve increased.

Since the 1980s, property valuation and assessment across the Adirondacks have notably improved. Most towns now keep their assessments current and are at or near full value assessments based on regular revaluations of properties, though some like Stony Creek and Johnsburg have not revaluated their assessments in decades. The Office of Real Property Services, now within the Department of Taxation, also surveys Forest Preserve lands and performs assessments on a sample each year.

Forest Preserve lands, like private forestlands, are taxed according to a variety of factors, such as road frontage, interior roads, shoreline, accessibility of shoreline areas, and timber value, among other things. While it may sound strange, state foresters periodically cruise timber in places like the Seward Range or through the Silver Lake Wilderness. The state’s assessments are shared with local municipalities, which can then use their own assessments or the state assessments. It’s a rational process, though each year the state will grieve a few assessments that it considers egregious or obvious efforts to gouge the state. Generally, these are negotiated to an agreement, though periodically they end up in court, such as we saw with the Town of Clifton several years back.

The state claims that the proposed changes in the Governor’s budget will bring tax saving through administrative efficiencies and staffing reductions. In theory, it would also save some Adirondack communities significant resources as assessments on state lands would not be necessary. But there are real questions about long-term impacts from a possible shortchanging on Forest Preserve assessments, slowing in the growth of state tax payments on the Forest Preserve, and a tax shift to private lands.

This plan was rolled out as part of the budget and it will not be voted on separately but rather as a part of a massive state budget package. This plan was rolled out without analysis, projections, or details about all impacted programs. Something as important to the core of Adirondack Park management, such as state payments of local taxes on state lands, which could have serious long-term impacts on Adirondack communities and the Forest Preserve, should be undertaken only with sound analysis and data that are open for scrutiny and independent assessment.

It appears that one hand of the Cuomo Administration does not know what the other is doing. The Budget Division did not ascertain the potential impacts on programs of the Department of Environmental Conservation. If the Cuomo Administration is serious about undertaking these kinds of changes they should do so based on good studies that include projections of impacts. They should reach out to effected communities and hear their concerns. Undertaking major policy changes like this within budget negotiations does not make sense.

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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 and 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.

He lives in Blue Mountain Lake with his wife and two children and enjoys a wide variety of outdoor recreational activities throughout the Adirondacks.




15 Responses

  1. Smitty says:

    Wow. As a PA resident it may be none of my business but that’s quite surprising. It seems like a tremendous waste of state and local government resources to be going through assessments rather than a simpler process like payments in lieu of taxes.

  2. mike says:

    If the state can no longer afford to pay taxes at a fair market price then perhaps it is time for the state to stop buying / accepting new properties to manage. Just a thought.

  3. Scotty says:

    My guess is that local governments would use their power to veto future large purchases.

  4. Paul says:

    If the state does this the towns will not approve any additional state land purchases and the ones that already have lots of FP land are basically screwed.

    The amounts the state are paying in taxes for these parcels (even the ones that Peter describes as big) is paltry in comparison to what the tax base could be if the land was not is the states coffer.

    • Peter Bauer says:

      Paul,

      If you are comparing forest land to forest land then the state pays a good deal more acre by acre than private forest lands, much of which is in one of the Preferential Forest Tax Law programs 480/480a, which generate a tax exemption around 60-80%. If you’re comparing Forest Preserve lands to developed lands with roads and houses that’s not really a fair comparison. Also, the Forest Preserve requires few services, unlike developed tracts and neighborhoods. Last, “what the tax base could be” is highly speculative. Sure, 10,000 square foot homes ringing a lake would generate much higher tax revenues for local governments than vacant shoreline in Forest Preserve, but much of the Forest Preserve is inaccessible by conventional standards. On balance, Adirondack forestlands are much lower valued than forestlands in other parts of the country, like the south, southeast and west, that are experiencing greater development pressures than Upstate NY. On balance, Forest Preserve tax payments have been a very good deal for Adirondack communities and there are additional programs that provide even more state support with the transition assessments and annual aggregate assessments. It would be a mistake ti change what has worked well. Cheers.

      • Paul says:

        Peter, thanks for the reply. Yes, I am not comparing forest land to forest land I am talking about a look out into the future where land that is forest land is developed in a different way and how that impacts the tax base. As far as accessibility I have a boat access only camp on a lake so what one person sees as conventional is always up for debate around here. Islands are some of the most sought after real estate in the park. Look at Top Ridge – although they did eventually build a road out there. Let’s look at a place like the far side of Kiwassa Lake (coming in from the channel). They built a road into that shore of the lake and within a few decades the town of Harriets Town has at least 5 new multi-million dollar homes (and some of the most beautiful boathouses in the Adirondacks) added to its tax base. I could easily have seen that land being added to the FP because it was “inaccessible” and adjacent to other Wild Forest land. Not saying that we should develop everything like this, just noting what the consequences of some of these things are on the towns.

  5. Mick Finn says:

    I agree with Paul, and if the state decides to reduce payments, or defaults on payments, then the land should be returned to private ownership.

    Remember, the State “sold” this deal to the towns, basing their promises on IMPROVED economic gain to the towns in the way of tourism, and that has not happened. The forest products companies offered a lot of economic input, especially the private clubs.

    I understand that 200 cabins will be removed this year.

    The State must stand by its promises!

  6. Tim-Brunswick says:

    Sounds to me like both Paul and Mike are hitting a “Bingo”. For years the Towns have been in a downward economic spiral as more and more land was acquired by the State and Camps were out the window.

    Indian Lake had a Market….no more and hardly any place you can get a sit-down breakfast.

    Long Lake, same deal, their only semblance of a market is almost kaput………

    I understand the Blue Mountain Lake Club may lose their FP land/camps….a lot of them! 2018 is the last year for Polaris Club camps due to the Chain Lakes acquisition.

    Families who for many, many years have built/lived in their camps with relatives/friends visiting them are no longer part of the economy, spending money at markets, restaurants and many of the ADK tourist attractions.

    In essence the Adirondacks are gradually reverting to a “wilderness” due to economic starvation. It is a sad situation.

    Thank you

    • Mick Finn says:

      Tim, the Gooley Club spent over $500,000.00 per year in the local economy, and the Polaris club wasn’t too far behind. Private motorized recreation brought a lot of revenue into the area.

      It is a sad situation. Now the Governor needs to make good on his promises. That will be the day.

      Emergency legislation is needed to force the state to return the land to private title if it can’t or won’t pay its fair share to the economies it has damaged.

  7. Suzie Thaller says:

    As a small restaurant owner in Wanakena – already struggling with declining industry and not enough tourism venues – this proposal is one more nail in the coffin that is neither right, nor intelligent on Cuomo’s part. Small businesses and private land owners cannot afford any more…. how can we enjoy our own beautiful Adirondacks if we can’t afford to live or work here any longer? Closing down and moving out of state runs through our minds way too often, and that’s just plain sad to think about…

  8. Boreas says:

    “The state is doing this to save money because Forest Preserve assessments and the PILOT for tax payments would be centrally controlled. This proposal raises issues about a likely decrease in state lands tax payments over time and subsequent tax shift to private lands in Forest Preserve communities in the Adirondacks and Catskills.”

    Peter,

    I understand your concern. But using PILOT instead of individual assessments does look, at least on the surface, like a start to streamline the process. I am not sure why this necessarily would mean LOWER tax payments to individual Adirondack towns. I certainly would think any “formulas” used would need to consider factors such as location, forest health, environmental importance, importance to the community, etc.., etc.. If the computations do NOT include higher tax rates on more “developable” or “desirable” land, then it obviously is flawed.

    But we should be careful what we ask for. If indeed tax rates were increased for ADK communities, these same increased state tax rates would likely be reflected in increased private tax rates as well. Not all private landowners are good about paying their taxes on time – or at all. This also hurts local economies. If done correctly, this plan could have positive effects on communities, but it seems to be fraught with potential problems. I think we need more information.

  9. Charlie S says:

    “It appears that one hand of the Cuomo Administration does not know what the other is doing. ”

    Maybe he does know what he’s doing Pete! Maybe it’s all part of the grand scheme to get every last thing privatized so that nothing is in the public domain anymore. It sure feels like we’ve been leaning that way for quite a number of years now. Subtle changes, little increments here and there of ‘different’ … before you know it we’ll have the Trump Wilderness Area, or the Paul Ryan National Private Preserve. Where’s all that good water? It’s a waste to just let it flow through undisturbed…let’s bottle it! Cuomo would do quite well on the republican ticket.

  10. Paul says:

    Not sure that I would describe this as the towns “reaping great benefits” from these payments. The tax roll is determined each year based on the projected budget and what is required by each municipality. It is not like this is gravy or some pay out?

  11. George O' Connor says:

    If the State will not pay what they promised, despite Peter’s erroneous justifications for the State to pay a lower amount, I think that the State should start allowing timber harvesting on the FP to compensate and maybe grow the economies of the little ‘bergs that are getting screwed. I bet that will change the tune of people that are for NYS paying a PILOT.

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