What is a payment in lieu of taxes?

Jay Matteson

A Payment in Lieu of Taxes or “PILOT” is an economic development tool that may mean the difference between a business locating in your community or locating somewhere else in New York State or the United States. The use of a PILOT brings about a gain in the tax base and usually more jobs. A PILOT helps grow the local economy by helping an existing business grow or a new business to start up in a community. 

    The PILOT works by allowing for a “managed” increase in taxes for the business. Let’s use an example to make this clear. A new business comes into the community and buys an acre of land. Prior to the business opening its doors, the acre of land brings $1,000 of tax revenue to the community. After the business opens its doors, let us say the full taxes on the higher-valued property is $20,000. To help the business get started and better manage its initial startup expenses, a payment in lieu of taxes (PILOT) agreement is negotiated. The PILOT may last for 15 years, under which the business would pay 25% of the higher tax assessment for the first 5 years (an additional $5,000/yr.), 50% ($10,000/yr.) for the next 5 years, 75% ($15,000) for the last five years, and then ramp up to the full tax of $20,000 in year 16. This is all new money for the community. The business started out on year one paying more in taxes than was collected before the business opened it doors. More tax revenue for the community. By year 16 the company was paying full taxation on the property. If the PILOT had not been employed, the business may not have started or may have decided to locate elsewhere which equals no increase in the tax base or local jobs. 

    This was a simple example of how a PILOT may be set up. The PILOT helps the company manage its tax increases over a negotiated number of years. The following is a real example of a PILOT negotiated with Great Lakes Cheese Company in Adams in 2007 when they began considering building a new cheese plant. Great Lakes was considering moving the plant to western New York and was receiving pressure to do so. Jefferson County Economic Development stepped in and helped the company by negotiating a 20-year PILOT because of the size of the project and the number of jobs created. As you review the graph, you’ll see the taxes paid by Great Lakes Cheese went up $35,000 the first year of their project and then over 20 years the taxes have gone up in a manageable manner. Great Lakes Cheese built their $86 million dollar plant next to their old plant in Adams. This created jobs, brought new revenue into the community and supported the dairy industry in Northern New York. 

    The Jefferson County Economic Development is responsible for managing the tax incentive tools such as a PILOT. Jefferson County Economic Development staff will work with affected municipalities, such as Jefferson County, a local school district and other municipalities to negotiate the PILOT with the project developer. The goal of Jefferson County Economic Development is to create a win – win situation for everyone involved. The community wins by supporting the expansion of the existing business and adding jobs or through bringing in a new business creating new jobs, new opportunity and a stronger tax base. 

    PILOTS may be employed to assist with traditional business start-ups such as manufacturing and service industries., as well as to attract renewable energy projects – all of which can bring thousands of dollars to local communities. In Jefferson County PILOTS are not available to small retail business, retailers, or food establishments. PILOTs are a good tool to use to grow our local communities. 

Soy Bean Foreign Affairs: New tariffs create changes in crop production

SYDNEY SCHAEFER/NNY BUSINESS
Ronald Robbins, owner of North Harbor Dairy and Old McDonald’s Farm, observes his soybean crops in one of his soybean field located in Hounsfield.

[Read more…]

August 2016: Agribusiness

Come grow with us in the north country

Jay Matteson

Jay Matteson

If you are driving on Interstate 81 in the Watertown area, you may have noticed two very large Holstein dairy cows watching you drive by. Their faces are almost 11-feet tall and nearly 8-feet wide. That’s a large Holstein by any standard. [Read more…]

July 2016: Agri-business

One man’s junk is another’s necessity

Jay Matteson

Jay Matteson

It is not unusual to encounter situations where farms keep old equipment and materials that may appear as “junk” to the non-farm public. Old tractors, farm machinery, and building materials may be kept by the farm for later use as replacement parts or building materials. Old tires may be kept for use to hold down plastic film placed on bunk silos storing animal feed. Farmers have always been masters of the three “Rs” of waste reduction: reduce, reuse and recycle. The three Rs apply when they keep old equipment to use for parts or to make devices to help complete daily farm chores. [Read more…]

July 2016 Feature Story: Agri-business

Farmers get social with marketing

By Nora Machia, NNY Business

A growing number of north country farmers are taking to social media to sell their products, or in some cases, just increase awareness of them. [Read more…]

June 2016: Agri-Business

JeffersonCountyAgriculture.com goes live

Jay Matteson

Jay Matteson

Mark D. Waterhouse, president of Garnet Consulting Services, Pleasant Valley, Conn., spoke at the Jefferson County Economic Development Forum on May 18. Mr. Waterhouse is recognized within the economic development community for his success in helping communities attract new development and grow existing business. During Mr. Waterhouse’s commentary, he discussed effective marketing techniques to attract new business. His remarks and the data he presented demonstrated the needs for improved efforts and support for some of the actions we’ve taken to improve our presence. [Read more…]

May 2016 Cover Story: Economic Development

Securing a stronger future for the north country

COR Development’s Mercy Health Center Redevelopment project is set to begin its first phase of construction this summer on 30,000 square feet of commercial space and 108 apartments. Overall, the project will house 168 units and a community center on the grounds of the former Mercy Hospital in Watertown. Photo by Stephen Swofford, NNY Business.

COR Development’s Mercy Health Center Redevelopment project is set to begin its first phase of construction this summer on 30,000 square feet of commercial space and 108 apartments. Overall, the project will house 168 units and a community center on the grounds of the former Mercy Hospital in Watertown. Photo by Stephen Swofford, NNY Business.

Despite workforce challenges, regional economic development continues to power positive growth across Northern New York

By Karee Magee, NNY Business

A rural and historically challenged region where economic development was often stagnant, the Great Recession dealt a significant blow to New York’s north country as its counties saw a spike in unemployment and manufacturing jobs disappear, including about 600 from Jefferson County alone. [Read more…]

April 2016: Small Business Success

Resources for small business funding

Jennifer McCluskey

Jennifer McCluskey

In our local area, there are several different avenues a business owner can use to fund a start-up or growing small business. I touched on a few resources in a previous column, but there are several others you might want to be aware of. Depending on the needs of the business, the type of business and the size of the project, one funding resource might be better than another. At the Small Business Development Center, we can help direct business owners to the best fit for a project. [Read more…]

Local experts discuss north country’s economic outlook at Chamber event

The Economic Forecast event featured a panel of five speakers discussing the economic trouble spots and assets in the north country.

The Economic Forecast event featured a panel of five speakers discussing the economic trouble spots and assets in the north country. Photo by Stephen Swofford, Watertown Daily Times.

Trying to get a glimpse of the local economic future is more like staring into an opaque globe than a crystal ball, noted Donald C. Alexander, chief executive officer of Jefferson County Economic Development. [Read more…]

January 2016 Cover Story: Economic Outlook

Slow and steady
growth wins the race

OUTLOOK 2016 / MILITARY: A soldier salutes during the presentation of the colors last year in an activation ceremony for the 10th Mountain Division Divarty. As the post avoided major cuts in 2015, Fort Drum officials remain positive that 2016 will be a healthy year for one of region’s top economic sectors. Photo by Amanda Morrison, NNY Business.

OUTLOOK 2016 / MILITARY: A soldier salutes during the presentation of the colors last year in an activation ceremony for the 10th Mountain Division Divarty. As the post avoided major cuts in 2015, Fort Drum officials remain positive that 2016 will be a healthy year for one of region’s top economic sectors. Photo by Amanda Morrison, NNY Business.

Despite a few challenges, experts say the region is on pace for a positive year in 2016. Six sectors of the north country’s economy are ripe with opportunities for growth.

By Karee Magee, NNY Business

A grim fate cast a pall over the north country in early 2015, as federal budget sequestration threatened to cut up to 16,000 personnel from Fort Drum in an effort by the army to trim its active duty force from 490,000 to 450,000 by fiscal year 2017. [Read more…]