State land PILOTs would undo governor’s Adirondack progress
Dear Governor Cuomo,
We write to ask that you amend your proposed state budget and legislative proposals in order to restore existing provisions of Real Property Tax Law sections 532, 534 and 542 that annually authorize the payment of ad valorem taxes to Adirondack and Catskill local government and school taxing districts hosting the New York State Forest Preserve.
The Executive Budget proposes to change the current ad valorem tax assessments on Forest Preserve lands, which are currently calculated by local assessors into state calculated payments in lieu of taxes (PILOTs) at 2017 amounts. See Article VII Language Bill — Revenue, Part F — Taxable State Land. This Executive Budget property tax proposal imposes a tax cap on any increases in state tax payments at the lesser of the prior year’s inflation rate or 2 percent. In legal and practical effect, the state would be taking over the function of assessment of the value of state Forest Preserve land from local assessors and substituting a state-imposed tax cap on the taxes it pays to communities.
This PILOT and tax cap proposal represents a radical and unlawful departure from the current method of determining the amount of real property taxes paid by the state for the 3 million acres of Forest Preserve in the 16 Forest Preserve counties. Section 542 of the Real Property Tax Law (RPTL) states that the assessment of value of state forest lands made by the town assessors was binding and conclusive on the State Board of Equalization and Assessment (SBEA) in the same way that it would be binding on private property owners.
See Section 542 of the RPTL and Town of Shandaken v. State Bd. Of Equalization and Assessment (3rd Dept., 1983) 97 A.D. 2d 179, affirmed 63 N.Y. 2d 442 (Court of Appeals, 1984). Section 542 and the Shandaken decision clearly limits the role of the SBEA in the valuation and assessment of state lands to “determination that the assessment made by the local assessors is in conformity with the applicable equalization rate. Authority for determination of valuation is vested in the local assessors.” See Town of Shandaken, 63 N.Y. 2d 442. The Court of Appeals opined that nothing in RPTL sections 532, 534, and 542 granted initial or final valuation authority to the State Board (SBEA). See 63 N.Y.2d at pg. 447.
The executive tax freeze and proposed abandonment of ad valorem taxes on state Forest Preserve, state reforestation lands, conservation easements and the largest state parks statewide and the proposed “tax cap” on the state imposed PILOTs is a complete departure from current statutory and case law. We believe that only the Legislature can enact such a radical change in the way real property taxes are determined for some 5 million acres of state Forest Preserve, state reforestation lands, conservation easements and state parks in over 50 counties in the state. Local government leaders are unified in their belief that this will cost communities statewide millions of dollars in state tax payments and a massive shift of property tax levies on private property owners in those counties.
In 1885-1886, a legislative compromise was made to allow for the creation of the Forest Preserve, which was the passage of a law in 1886 that provided for all lands then or thereafter included in the Forest Preserve to be “assessed and taxed at a like valuation and at a like rate as those at which similar lands of individuals within such counties are assessed and taxed.” This was the predecessor of RPTL Section 542, which itself was upheld in the Shandaken tax case by the Court of Appeals. I believe that it is unlawful for the Division of the Budget to now attempt to abrogate the key elements of the 1885-1886 legislative compromise that enabled the Forest Preserve to be created, namely local assessment and valuation and treatment of state lands and tax treatment of Forest Preserve lands in the same manner as private lands. If DOB has its way, the state will hereinafter determine how much it is willing to pay. This was not what the state agreed to in 1885-1886 and not how the Court of Appeals ruled in the Shandaken case in 1983. See Laws of 1886, Chapter 280, Section 78.
Since 1886, the RPTL has authorized the state to pay taxes on its Forest Preserve as if it were privately owned. Since all New York state residents benefit enormously from these “forever wild” state forests, it was thought then, as now, that all New York state taxpayers ought to share in full taxes to the hundreds of affected small towns and school districts in the Adirondack and Catskill Mountains.
Your proposal to cap these taxes at current levels, to increase the payments only according to a state determined growth factor and to consider these annual payments in lieu of taxes, not an ad valorem tax for all purposes, will shortchange many Adirondack and Catskill communities. Many of these communities are comprised of more than 50 percent Forest Preserve. Fifty percent or more of their tax payments come from the state land. In that eventuality, private landowners will invariably be asked to make up the difference through tax shifting.
Governor, you have made great progress in gaining the confidence and support of local government leaders to accept and even support the purchase of public lands as an economic benefit to their towns and counties. This very ill-considered proposal by the state Department of Tax and Finance and the Division of Budget represents a great threat to all that you have accomplished.
We respectfully request that you direct the Division of Budget to delete this PILOT and tax cap proposal from the Executive Budget’s Article 7 language.
Neil F. Woodworth, based in Albany, is executive director and legal counsel for the Adirondack Mountain Club. He recently sent this letter to Gov. Andrew Cuomo.