Next Tuesday taxpayers will have an opportunity to sound off about the proposed amended PILOT (Payment In Lieu Of Taxes) agreement between Tompkins County and AES Cayuga, the county's biggest taxpayer.  By the terms of the amended agreement local tax revenues from the power plant will decrease by an estimated 490,000.  On Wednesday county officials held an information session to explain the terms of the amended PILOT and how they arrived at it.

"This has really been a tough negotiation for everybody," said Tompkins County Legislature Chair and Industrial Development Agency (IDA) Chair Martha Robertson.  "This is not just the plant's problem.  It's the community's problem.  The plant has been supportive of the schools and the county and town for all these years.  It's been a tremendous asset.  That also means that when things don't go as well it's a real problem for those of us that have depended on that income."

Robertson said that the format of Tuesday's public hearing is such that people can express their concerns and opinions about the PILOT, but IDA and power plant officials will not be able to reply.  She said that last Wednesday's meeting was scheduled to give residents the information they would need before the public hearing.  She, County Administrator Joe Mareane, Tompkins County area Development President Michael Stamm, and Director of Assessment Jay Franklin presented a Powerpoint explaining the facts and impacts of the new version of the PILOT.

A PILOT agreement takes a commercial property off of the standard tax roles, and presets the value of the property over the course of several years.  While a property may be valued at more or less than its market value at any given time during the life of the agreement, knowing the taxable value ahead of time is supposed to provide stability in planning both for the business and for taxing authorities.  But the history of this PILOT has been anything but stable.

When the PILOT was originally negotiated in 2008 the value of the power plant was set to rise over the course of its 20 year period.  It increased the taxable value of the plant from from $142 million in 2008 to $160 million in 2009, $180 million the following year, and was supposed to increasethe value by $25 million per year until 2013 when the value would reach $255 million.  It was projected that AES Cayuga's total property tax burden would increase in this initial term by approximately $2,900,000 from $3,700,000 in 2008 to $6,600,000 in 2013.

But last year plant officials invoked a clause that allowed them to renegotiate under extraordinary circumstances.  The result of that negotiation substantially lowered the value of the plant, and the current renegotiation, which took place over the course of nearly 10 months, lowers it still more.  School officials in particular challenged the process used by the IDA to arrive at the reduced value.  Superintendent Stephen Grimm hired consultant Mike Coles, an expert in corporate valuation, and they, along with Town Councilwoman Kathy Miller attended sessions in the second renegotiation.


That was not enough to bring the value of the plant up.  A combination of rising coal prices and lower demand in a still-troubled economy lowered the value still more.  Grimm told the school board in a recent meeting that the value would have been lower still, and that good research and tough negotiating got it to the current level.

The proposed revision will reduce the 2011 value of the plant from $120 million to $112.5 million.  According to Lansing school officials every $5 million decrease amounts to $92,400 district taxpayers must make up somehow, assuming the tax rate remains the same.  District officials say that it is the tax equivalent of 37 and a half $200,000 homes suddenly disappearing from the district.

If the IDA does not approve the new amended agreement, last year's first amended agreement will remain in force, reducing revenue for the School District by $180,000, the County by $60,000, and the Town by $20,000. 

With the new agreement the Lansing School District will receive about $320,000 less than last year.  Tompkins County will receive $110,000 less, and the Town of Lansing $30,000 less.  If the budgets and all other income sources remain the same, taxpayers will have to make up the difference.  The only other option is to make program cuts, with state mandates being untouchable in the cutting process.

Renegotiation points are built into the PILOT, and whether the IDA agrees to pass this amended version or not, negotiations are scheduled to begin again this summer.  Meanwhile, the four AES New york plants are up for sale.  Of those, only two -- the Lansing plant and a plant in Barker (between Rochester and Niagara Falls) -- are producing electricity.

Normally when a property sells the selling price becomes the taxable fair market value, making it very easy to determine taxes.  But Robertson says that if the four plants sell as a package there may not be a way to know exactly what the value of the Lansing plant is, which will necessitate further painstaking research and negotiations like the one that just concluded.

"Unless AES Cayuga is bought by itself we probably won't have an exact number for the part that is AES Cayuga," she said Wednesday night.  "Even with the sale we might still have to be making judgments without an exact number."

The public hearing is scheduled for this Tuesday, April 12 at 7pm in the Lansing Town Hall.  The IDA will vote on whether or not to approve the new version of the PILOT on April 20.

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