Establishes an energy system tax stabilization reserve fund in the Lowville Central School District to lessen or prevent increases in the real property tax levy

Summary of provisions

Section one: The legislative findings section recognizes that the school district's current receipt of significant PILOT payments from the wind farm will at some point either terminate, or significantly decrease, which could result in a massive destabilization of the district's tax base and the amount of its tax levy to meet current budget levels.

Section two: This section makes definitions of important terms in the bill, including providing that PILOT payments may mean either PILOTS under Real Property Tax Law 487 (RPTL Section creating municipalities to enter into PILOT agreements for wind energy systems) or Subdivision fifteen of § 858 of the General Municipal Law (authorizing IDA created PILOTs) and adopting the definition of wind energy systems already found in Real Property Tax Law § 487.

Section three: (a) This subsection permits the school district to create a tax stabilization fund by paying into such funds the amount of PILOT payments received which is not required to prevent an increase from the real property tax levy over the preceding budget year.

(b) This subsection permits the deposit of PILOT payments already accrued into the stabilization fund.

(c) This subsection provides limitations on the ability to withdraw from the stabilization fund as follows (1) no withdrawal may be made in any year in which PILOT payments receivable equal or exceed those from the preceding year; (2) for any year in which the amount of payments is less than the preceding year, a withdrawal may be made in the amount of the decrease; (3) for any fiscal year in which no PILOT payment will be made, a withdrawal may be made in an amount not to exceed the PILOT payment for the preceding year plus the amount, if any, authorized to be withdrawn in such preceding year.

Other provisions require withdrawals for any other purpose would require voter approval submitted as a separate proposition and applies existing controls and reporting requirements over expenditure of district money.

Section four: Makes requirements for information concerning the fund, deposits into, expenditures from it, and the affect on the tax levy

for purposes of the property tax report card under subdivision seven of § 1716 of the Education Law.

Section five: Makes provisions with regard to the real property tax cap so that use of the fund does not facilitate avoiding such cap.

Section six: Should this act take effect after the last date for submission of the district's real property tax report card to the Department of Education, this section makes provision for public notice of a statement concerning payment into the fund and the effect on the tax levy.

Section seven: provides for an immediate effective date.

Existing law

A similar tax stabilization fund was established for the Oswego community as a result of large PILOT payments from a nuclear energy facility. (See Chapter 202, Laws of 2001).

Justification

The Maple Ridge Wind Farm in Lewis County, one of the largest and most successful wind energy enterprises in the United States, pays an annual PILOT payment of around $8.9 million to municipalities and school districts which host wind towers. This PILOT payment has been one of the leading causes for wide community acceptance and support of this important alternative energy project.

The Lowville Central School District receives about $3.9 million of this amount each year. The district has employed this money prudently, using about $2.7 million each year to keep the tax levy level and allowing the balance to accrue in fund balance. The PILOT agreement started in the 2006-2007 school year and will end in 2021-2022. At that point, the PILOT will either terminate completely or be replaced, perhaps by an IDA sponsored PILOT which would not be as generous. The result would be that the PILOT at that point would cease to be a windfall and its loss would become the source of wrenching dislocation in the district's finances.

The district requires the approval given in this bill to accumulate a tax stabilization fund which will one day be equal to the task of smoothing the transition that will be required by ramping up the tax levy over a period of time. Absorbing all of the loss or decrease in the PILOT in one or two years would cause a severe spike in the tax levy, dramatic slashing of programs or both. The bill contains significant safeguards to insure the dedication of PILOT funds for this purpose.

Legislative history

2011-12 S. 6835 - Passed Senate/A. 9859 - Real Property Taxation Committee.

Fiscal implications

None for the State of New York. Positive impact on the district's fiscal and tax levy stability.

Effective date

Immediate.