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. 

Leadership Honored at 9th Annual 20 Under 40 Awards

The 2019 20 Under 40 Award Recipients pose for a portrait at the luncheon on Friday in Watertown. Julia Hopkins/NNYBusiness

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The Experience Economy: An opportunity for business

Brooke Rouse

Summer always brings people out; locals, snowbirds, visitors. It’s an exciting time to enjoy our great outdoors, art, culture, events and more. Some people have the gear, the know how and the ability to experience a lot of what is available, and others don’t – partially because they can’t access the opportunity. 

    You may find yourself saying, “I want to paddle that river, but I don’t have a boat, or really want to own a boat or have a place to store it. But I’d really like to go out on the Grasse River.” You may hear about the bike paths and ATV trails and say ‘Hey – I want to try that’, or attend an art festival and say, ‘Wow – I would love to try painting again, with a little instruction.’ Business is about finding solutions, the solution here is the ability to create and offer an EXPERIENCE. 

    The Experience Economy is growing by leaps and bounds, year over year, with the most significant growth in the 18-34 year old population. Still 50 percent of this audience is 45 years or older. This is an opportunity. The term Experience Economy was first introduced in 1998 as an argument that “businesses must orchestrate memorable events for their customers, and that memory itself becomes the product: the “experience” (Pine & Gilmore). 

    Online shopping has become the number one threat and concern to many retail establishments and brick and mortar businesses and attractions. Business owners are constantly seeking ways to stay competitive in the retail market, typically honing in on tremendous customer service that equates to an EXPERIENCE that cannot be found online. Organizations like the Frederic Remington Art Museum in Ogdensburg have increased their focus on experience, not only for a museum tour, but for the unique opportunity to do yoga in the gallery or learn how to paint. Increased awareness of the museum through events and experiences has ensured greater exposure in new markets and a stronger relationship with patrons. 

    St. Lawrence County has welcomed two new ‘Experience Businesses’ for recreation this year. Seaway Outfitters in Ogdensburg rents bikes, SUP boards, kayaks, rollerblades and offers ATV tours. Grasse River Adventures offers fully guided and outfitted hunting, camping, hiking and canoe trips. This type of service allows people to experience things they may not get to otherwise, reduces risk, and allows for adventure without the hassle. These experiences can be booked on the internet, but are offered and experienced here, on the ground by local businesses. 

    Experience comes from and is shared by passion. Allow yourself to pursue local experiences…if there is not a business offering it, consider creating one or recruiting a friend of family member to do it. Business development assistance is available by local Chambers and Small Business Development Centers. 

    As the Tourism Promotion Agent for St. Lawrence County, we are constantly marketing (and bragging) about our tremendous opportunities to discover things here that even locals don’t know about. We are always seeking more opportunities to refer a business to make the experience happen for visitors and residents. 

From The Battle Field To The Cattle Field

CHRISTOPHER LENNEY/NNY MAGAZINES
Tucker family is he heart and soul of of the Tucker Black Angus Ranch, back, from left, Hunter, Kelly, and Justin, front from left, Addie Dayton and Carson.

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Reeling In The Big One: Netting the figures

PHOTO PROVIDED BY BASSMASTERS

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Capitalizing On Recreational Fun

CHRISTOPHER LENNEY/NNY MAGAZINES
The St. Lawrence Centre’s new Sports Complex is seamlessly attached to the mall, and provides a year-round safe and fun environment for a wide array of activities.

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In Pets We Invest: Household spending rises in NNY

Photo provided by SUNY CANTON

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Inaugural ‘Celebration of Leadership’ Tuesday night in Canton

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