A mixed bag of tax relief is coming to Southampton Town residents next year in the form of payments in lieu of taxes, or PILOTs, though taxpayers in the Hampton Bays School District will most likely see the biggest loss in funding.
In a unanimous vote on November 24, the Southampton Town Board adopted Supervisor Linda Kabot’s plan to pay $2.61 million to eligible taxing districts in 2010, a decrease from $3.5 million this year. The money will be distributed in the form of PILOTs, a program that is financed through the municipality’s Community Preservation Fund.
The Hampton Bays School District, which received $1.88 million in PILOTs this year, will qualify for only $670,122 in 2010, a nearly 64 percent cut in payments, under the adopted plan. As a result, homeowners in that district will most likely see their school property taxes increase more than the 4.1 percent that they were projected to go up under the district’s $42.6 million spending plan, which was approved by residents in May.
“How the revenues may change does not affect what the voters approved as their spending plan,” said Larry Luce, the business manager for the Hampton Bays School District, on Tuesday. “What it does mean is that more ends up getting picked up by the taxpayers.”
He later explained that property owners in his district will most likely see their school taxes increase 4.7 percent next year. Of that jump, 3.6 percent is due to the unexpected drop in PILOT revenue. Therefore, Mr. Luce said, an average school property tax bill for a homeowner will be $4,603—an increase of $160 over this year—for a home assessed at $500,000.
Mr. Luce also stressed that the decrease in PILOTs could impact future school budgets. “Certainly, the change in PILOT revenue does come into consideration when you are planning for the next budget,” he said.
Ms. Kabot said the lower payment to Hampton Bays, and other taxing districts in the town, are due to a review and reassessment of the town’s preserved lands. She also explained that there were a number of properties in Hampton Bays that were overvalued in previous assessments, which led to the correction.
“There were some preserved lands that were partially submerged underwater and unbuildable,” Ms. Kabot said.
The Riverhead School District, which includes the hamlets of Riverside and Flanders, will receive $1.38 million in PILOTs in 2010, a slight decrease from the $1.39 million it collected this year. The Eastport South Manor School District will receive $52,556 in PILOTs in 2010, compared to $40,861 this year.
The Flanders-Northampton Ambulance District will collect $55,980 in PILOTs in 2010, compared to $43,558 this year, under the adopted plan.
Ms. Kabot explained that the PILOTs are intended to offset the tax loss due to the preservation of land within school, ambulance and fire districts. Districts oftentimes benefit from development because it grows a community’s tax base, increasing revenue that is available for spending.
Originally, districts qualified for tax relief under the PILOT program if more than 25 percent of their properties were removed from the tax rolls. That rule was changed a few years ago and, as a result, other school districts, namely Hampton Bays and Eastport South Manor, can now also qualify for PILOTs as long as they are viewed as a “high or average need” district by the New York State Department of Education.
The CPF program has made more than $400 million in land acquisitions since its inception in 1998.
“Right now, these PILOT payments are enabling these districts to spend more money,” Ms. Kabot said. “It’s like a grant.”
The supervisor said the new assessments of the preserved lands within the districts were necessary in order to keep the tax relief payments fair.
“We had to go through a systematic review ... to put a value on [preserved lands] as if it were buildable and correctly identify the market value,” Ms. Kabot said. “The new value would be the basis for figuring out the actual loss in taxes to the school districts.”
She said the revised numbers for the Hampton Bays School District accurately reflect the value of the buildable properties that have been preserved in the district.
“We are not giving them what they got last year because we had new appraisers come back and review the parcels,” Ms. Kabot said. “Everyone agreed that the new values for these tax-exempt parcels were correct.”
Ms. Kabot added that the figures approved by the board on November 24 do not address the $2 million in overpayments made in 2007 that benefited taxpayers within the Southampton Town portion of the Riverhead School District. In 2007, the town mistakenly gave residents living in that district $3.1 million in tax exemptions when they were eligible for only $1.1 million. She said the $2 million should have gone to other eligible districts and has proposed a strategy to repay the funds.
Ms. Kabot has proposed a repayment plan, dubbed “Plan B,” which calls for a 10-year repayment of PILOT money, at a rate of $200,000 per year, to the other eligible districts. The $200,000 would be subtracted from the Riverhead School District’s tax relief from the PILOT program. The plan, if adopted, would begin in 2012.
“It’s like taking the whip cream off their pie,” Ms. Kabot said, referring to the Riverhead School District. “It’s going to other districts that should have gotten it in 2007.”
A public hearing on the town’s proposed corrective action plan will be held on Tuesday, December 8, at 1 p.m., at Southampton Town Hall.
Bryan Finlayson on Dec 2, 2009