IDA approve tax break for Afton saw mill
NORWICH – The possibility of keeping 27 jobs and creating nine more is worth giving a company a penalty-free tax break, members of the Chenango County Industrial Development Agency decided Tuesday.
However, according to a report released from former state Comptroller Alan Hevesi’s office in 2005, businesses getting tax breaks and other financial incentives – totaling over $6 million in relief – from the Chenango IDA have a history of not producing jobs.
In fact, as of 2004, the IDA’s 13 project companies have netted a loss of 20 jobs based on their employment figures before and after receiving tax breaks. IDA officials say that’s a result of the economy and not their practices, which are economically “beneficial.”
But as a standard practice, the companies aren’t held to any performance standards, the IDA admits, and don’t have to repay any money if they decide to cut jobs, divest in the business or close their doors.
“We probably don’t check back on them like we should,” said Wayne Outwater, one of five members on the IDA board. “We probably need to do a better job following up on these projects we put out there.”
At a special meeting Tuesday, four members of the IDA voted unanimously to award Wagner Lumber a 10-year, 50 percent tax reprieve – referred to as a payment-in-lieu-of-taxes (PILOT) agreement – that will save the company upwards of $161,000 in sales and property tax for purchasing a saw mill in the Town of Afton.
The vote came one week after Afton residents offered up a heated debate at a second public hearing on the subject. During that hearing, a handful of residents voiced their support of the Wagner PILOT, saying the company would keep and create jobs by taking over the currently-struggling Pomeroy Lumber saw mill, and be an asset to the community based on the company’s track record of operating successful lumber mills in Tioga and Schuyler counties. A host of residents, however, criticized the un-elected IDA for not making businesses meet job creation and investment requirements in exchange for tax exemptions, failing to adequately involve members of the Afton public in the IDA process and giving financial breaks to rich companies that don’t need them.
“If the IDA can give exemptions without verification, performance standards, transparent procedures, clawback provisions, and public oversight,” said Afton resident Mike Bernhard Tuesday night, “what distinguishes its operation from simple cronyism?”
As a result of the Wagner deal, Afton residents would see a .31 per 1,000 increase overall in school, town and county taxes combined in the first year of the 10-year agreement.
Town of Afton Supervisor Robert Briggs said that number would be offset, considering an expected reduction in town and county taxes.
“Supervisor Briggs said at the public hearing that since the county tax rate was falling by $.25 per $1,000 of taxable value, and town taxes were also going down by $.04 per $1,000, that the net effect was that taxes would rise by by a measly $.02 per $1,000 to make up for the abatement to (Wagner Lumber owner) Les Wagner,” Bernhard said. “That means the IDA’s decision has given the total tax decrease due to all of Afton’s property-owners – and then some – to one man.”
Wagner claims his purchase of the Pomeroy mill, located in Nineveh near the Broome County border, depends on receiving this tax break.
Chairman Hugh Kearney was the only IDA board member in attendance at last week’s public hearing to take comments for and against the proposal. As a result, Outwater and fellow board member Betty Bytheway initially said they would feel uncomfortable voting “yes” Tuesday on the Wagner PILOT, having not read beforehand the report of public comments given by Afton residents at the hearing.
“They (Wagner) have got a seller who’s chomping at the bit,” IDA Attorney James Downey notified the board. “They need a decision out of this board today.”
After reviewing the comments for several minutes, Outwater and Bytheway voted with Kearney and board member Thomas Knapp to grant the tax break to Wagner.
“It sounds like if we don’t do this, it (Pomeroy) will become an empty lot,” said Bytheway, just prior to the vote, after asking if the exemption could be scaled back to appease critics, with no action taken.
“I’m not sure I understand all the comments,” said Outwater. “But I certainly don’t want to lose 37 jobs.”
Knapp added that Wagner has helped at Pomeroy after it was damaged in June 2006 flooding.
“If it weren’t for this individual (Les Wagner), Pomeroy wouldn’t be in business today,” said Board Member Tom Knapp, who did attend the first Wagner public hearing. “I think he has shown he has good intentions and demonstrated that he has a good track record.”
“I’m pleasantly surprised he wants to invest in Chenango County” Knapp added. “Over the next 10 years, will the company do what it says it will do? I think it will. But there are no guarantees.”
As for not granting the PILOT and the possibility of losing 27 jobs, Knapp said: “I’m not willing to take that risk.”
As 2004, the 13 IDA projects had lost 20 jobs, dropping from 1,278 to 1,258. Those projects had received a total of $6,090,000 in tax breaks, and had only paid back $304,326 in taxes to school districts and municipalities.
Commerce Chenango President Maureen Carpenter could not immediately provide 2005 and 2006 performance data, admitting that IDA data prior to her involvement in 2005 was “screwed up.” The Hevesi report claims that incorrect reporting of data was common among IDAs statewide.
Hevesi’s suggested reforms call for IDAs to standardize application criteria and require applicants to provide more objective information about their projects.
“The criteria by which IDAs evaluate potential projects are not always clear and/or consistently used,” the report states. “And IDAs do not always seem to make an attempt to evaluate the potential success of proposed projects.”
If they choose, IDAs can recapture previously granted benefits by implementing “clawback” provisions in PILOT contracts, the report adds.
“These provisions also provide pressure to project owners to meet performance measures and provide related information to their IDA,” the report adds. “Many IDAs have adopted these provisions, but others have not.”
Chenango IDA does not have clawback provisions.
However, according to a report released from former state Comptroller Alan Hevesi’s office in 2005, businesses getting tax breaks and other financial incentives – totaling over $6 million in relief – from the Chenango IDA have a history of not producing jobs.
In fact, as of 2004, the IDA’s 13 project companies have netted a loss of 20 jobs based on their employment figures before and after receiving tax breaks. IDA officials say that’s a result of the economy and not their practices, which are economically “beneficial.”
But as a standard practice, the companies aren’t held to any performance standards, the IDA admits, and don’t have to repay any money if they decide to cut jobs, divest in the business or close their doors.
“We probably don’t check back on them like we should,” said Wayne Outwater, one of five members on the IDA board. “We probably need to do a better job following up on these projects we put out there.”
At a special meeting Tuesday, four members of the IDA voted unanimously to award Wagner Lumber a 10-year, 50 percent tax reprieve – referred to as a payment-in-lieu-of-taxes (PILOT) agreement – that will save the company upwards of $161,000 in sales and property tax for purchasing a saw mill in the Town of Afton.
The vote came one week after Afton residents offered up a heated debate at a second public hearing on the subject. During that hearing, a handful of residents voiced their support of the Wagner PILOT, saying the company would keep and create jobs by taking over the currently-struggling Pomeroy Lumber saw mill, and be an asset to the community based on the company’s track record of operating successful lumber mills in Tioga and Schuyler counties. A host of residents, however, criticized the un-elected IDA for not making businesses meet job creation and investment requirements in exchange for tax exemptions, failing to adequately involve members of the Afton public in the IDA process and giving financial breaks to rich companies that don’t need them.
“If the IDA can give exemptions without verification, performance standards, transparent procedures, clawback provisions, and public oversight,” said Afton resident Mike Bernhard Tuesday night, “what distinguishes its operation from simple cronyism?”
As a result of the Wagner deal, Afton residents would see a .31 per 1,000 increase overall in school, town and county taxes combined in the first year of the 10-year agreement.
Town of Afton Supervisor Robert Briggs said that number would be offset, considering an expected reduction in town and county taxes.
“Supervisor Briggs said at the public hearing that since the county tax rate was falling by $.25 per $1,000 of taxable value, and town taxes were also going down by $.04 per $1,000, that the net effect was that taxes would rise by by a measly $.02 per $1,000 to make up for the abatement to (Wagner Lumber owner) Les Wagner,” Bernhard said. “That means the IDA’s decision has given the total tax decrease due to all of Afton’s property-owners – and then some – to one man.”
Wagner claims his purchase of the Pomeroy mill, located in Nineveh near the Broome County border, depends on receiving this tax break.
Chairman Hugh Kearney was the only IDA board member in attendance at last week’s public hearing to take comments for and against the proposal. As a result, Outwater and fellow board member Betty Bytheway initially said they would feel uncomfortable voting “yes” Tuesday on the Wagner PILOT, having not read beforehand the report of public comments given by Afton residents at the hearing.
“They (Wagner) have got a seller who’s chomping at the bit,” IDA Attorney James Downey notified the board. “They need a decision out of this board today.”
After reviewing the comments for several minutes, Outwater and Bytheway voted with Kearney and board member Thomas Knapp to grant the tax break to Wagner.
“It sounds like if we don’t do this, it (Pomeroy) will become an empty lot,” said Bytheway, just prior to the vote, after asking if the exemption could be scaled back to appease critics, with no action taken.
“I’m not sure I understand all the comments,” said Outwater. “But I certainly don’t want to lose 37 jobs.”
Knapp added that Wagner has helped at Pomeroy after it was damaged in June 2006 flooding.
“If it weren’t for this individual (Les Wagner), Pomeroy wouldn’t be in business today,” said Board Member Tom Knapp, who did attend the first Wagner public hearing. “I think he has shown he has good intentions and demonstrated that he has a good track record.”
“I’m pleasantly surprised he wants to invest in Chenango County” Knapp added. “Over the next 10 years, will the company do what it says it will do? I think it will. But there are no guarantees.”
As for not granting the PILOT and the possibility of losing 27 jobs, Knapp said: “I’m not willing to take that risk.”
As 2004, the 13 IDA projects had lost 20 jobs, dropping from 1,278 to 1,258. Those projects had received a total of $6,090,000 in tax breaks, and had only paid back $304,326 in taxes to school districts and municipalities.
Commerce Chenango President Maureen Carpenter could not immediately provide 2005 and 2006 performance data, admitting that IDA data prior to her involvement in 2005 was “screwed up.” The Hevesi report claims that incorrect reporting of data was common among IDAs statewide.
Hevesi’s suggested reforms call for IDAs to standardize application criteria and require applicants to provide more objective information about their projects.
“The criteria by which IDAs evaluate potential projects are not always clear and/or consistently used,” the report states. “And IDAs do not always seem to make an attempt to evaluate the potential success of proposed projects.”
If they choose, IDAs can recapture previously granted benefits by implementing “clawback” provisions in PILOT contracts, the report adds.
“These provisions also provide pressure to project owners to meet performance measures and provide related information to their IDA,” the report adds. “Many IDAs have adopted these provisions, but others have not.”
Chenango IDA does not have clawback provisions.
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