Relates to reductions of payments in lieu of taxes

BILL NUMBER:S1488

Title of bill

An act to amend the real property tax law, in relation to payment in lieu of taxes agreements

Purpose

This bill requires businesses that make payments in lieu of taxes (PILOTs) to local governments and school districts to spread the negative impact of a reassessment over a ten year period.

Summary of provisions

The real property tax law is amended by adding a new article 3-A to require businesses that make payments in lieu of taxes (PILOTs) to provide local governments and school districts to spread the negative impact of a reassessment over a ten year period. Ten year phase out period would only come into affect if the negative financial impact

Justification

Many businesses have been enticed to areas through a development program known as a PILOT, payment in lieu of taxes. The program exempts certain businesses from property taxes in exchange for payments to the county, towns and school districts where they are located. Some PILOT agreements have provisions that allow the business to challenge property tax assessments and win a credit against future payments if found to be a valid challenge.

A successful challenge would create a substantial and potentially crushing reduction in revenue to a locality and school district that relies on PILOT payments. The potential impact to a school district or locality could be devastating. Localities and school districts, in these most difficult financial times, should be allowed to spread the impact over a ten year period if the reduction would constitute 5% or more of total revenue. Such a phase out would allow for planning and budgeting decisions to be made that would reflect the reduction in PILOT payments and lessen the impact on the taxpayer.

Legislative history

S.5872 of 2011/12.

Fiscal implications

None.

Effective date

This act shall take effect immediately.