PILOTS (Payment in Lieu of Taxes)
Dear Valley Stream District 30 Residents,
On Dec. 19, 2017, Valley Stream District 30 officials received the New York State Comptroller’s final audit report of the Green Acres Mall payment in lieu of taxes (PILOT). We are pleased to report that months ago the District took action, which is now being recommended by the comptroller, and reduced its 2017/2018 tax levy by approximately $1,800,000. This amount represents every dollar the District received in excess of its estimate of PILOT revenue from the Green Acres Mall for 2016/2017 and fulfils a promise we made to our residents that any excess revenue would be returned. As a result, the average home in Valley Stream District 30 received a decrease of $382 in their school taxes on their October 2017 School Tax bill.
The District’s administration and Board of Education appreciate the time and work of the State Comptroller’s Office in examining this critical issue that has affected the entire Valley Stream community. Of particular note, the audit report found that the Town of Hempstead Industrial Development Agency (TOHIDA) did not develop policies and procedures assessing the indirect tax impact of PILOTS which resulted in increased school taxes. Prior to granting the PILOT, TOHIDA determined the Mall was likely to succeed in its pending tax certiorari proceedings based solely on an analysis from the attorneys for the Mall indicating it was worth only $169,633,708. Unfortunately absent from the audit is the reality that TOHIDA failed to consider that the Mall had been purchased for $500,000,000 just a year before receiving the PILOT. This lack of due diligence unnecessarily shifted an additional tax burden of at least $6,500,000 (an average of $574 per household) per year onto the residents of Valley Stream. While we applaud the recommendation that TOHIDA conduct tax impact studies in the future prior to awarding a PILOT, It is unfortunate that neither the Mall, nor TOHIDA has returned a single penny of the tax increase attributable to their actions.
It is also unfortunate that the audit does not fully address the complexity of this matter, or the considerable uncertainty that existed in 2016. This uncertainty lingers as the litigation over the Town of Hempstead’s action of revoking the Mall’s PILOT agreement remains, to date, unresolved. The report also neglects to address the litigation which was commenced on behalf of the District and which resulted in a favorable decision from the Nassau County Supreme Court which will ensure that the Nassau County “Guarantee” will serve to make the District whole for deficiencies in the Mall’s PILOT payments. In other words, the District has taken action to protect itself and its residents from even greater tax increases in the future should the Mall successfully challenge its assessment and seek more tax breaks.
The District also strongly disagrees with the characterization of its estimate of PILOT revenue as inaccurate. Under the tax cap, school districts are obligated to engage in a process of developing a reasonable and good faith estimate of PILOT revenue prior to setting the tax levy. Until tax rates are set, it is not possible to know definitively how much PILOT revenue a school district will receive. The findings in this audit do not appear to have considered the detailed analysis of the PILOT agreements the District undertook in developing its estimates or the fact that in at least one other instance, the District received significantly less PILOT revenue than it should have following the successful resolution of tax certiorari proceeding. The audit also does not address that the portion of the tax increase attributable to school districts’ estimating of PILOT revenue was split between District 30 ($150) and the Central High School District ($164).
The District remains committed to sound fiscal practices as evidenced by our compliance with the New York State tax cap since its inception, and reduction of our tax levy over the past five years. As always, the District will continue to support its educational programs through strong financial oversight and collaborative budgeting and fiscal planning based on the law.
Your Board of Education and Administration