Recently several people have been calling in to the WRCR Morning Show with Steve Possell to voice concern as to why there seems to be a lack of development in several locales where businesses have closed down or moved away.
Neither the callers nor Possell himself seemed to understand that there are two types of property taxes in Rockland County – one on homeowners (the homestead property tax) and the other on businesses (the non-homestead tax). Homestead is a dwelling of a one, two or three family house. Non–homestead is over three families and commercial.
On November 08, 2013 in New City Patch an article titled ‘2014 Clarkstown Budget Increases Taxes 3.5 Percent’ explained the 2014 property tax increases and the Town Board’s unanimous decision to over-ride the tax cap. Unfortunately the article headlined only the homestead tax increase of 3.5% when the principal tax increase was the crippling 17-18% increase in the tax to be paid by Clarkstown’s business owners.
The Clarkstown Town Board unanimously voted to override the state property tax cap and to pass a $140 million budget. The Board approved an override of New York State’s two percent property tax cap and the board members approved the proposed 2014 budget of $140 million. The 2014 budget will increase homeowner or homestead property taxes by approximately 3.5 percent. Commercial or non-homestead property owners will see their taxes jump by 17 to 18 percent.
Two business people who attended the meeting said tax hikes are hitting them hard this year. This year’s Clarkstown School District’s property tax increase for non-homestead taxpayers was approximately 21 percent.
Alice Lenna, the manager of New City Bowl & Batting Cages, said, “This is a disgrace on top of the 21 percent.” Roxanne Perrone, owner of Peronnuci’s Deli, said, “My question to everybody is what business in town can afford to raise their prices by 20 percent?” She said business owners cannot raise prices 20 percent and wind up taking a 20 percent hit. “I don’t know how many businesses can sustain this,” Perrone said.
Steven Levine of Congers said the town’s budget increases were out of control. “We can’t keep going like this,” he warned. “We’re going to wind up a ghost town.”
Council member George Hoehmann said the budget did not reflect real cuts. “I’m having real difficulty with passing the 3.5 percent increase along,” he said. Hoehmann said they must look creatively in the next budget cycle for ways to cut through consolidation, decreasing expenditures or fixed costs. The councilman said residents told him throughout the campaign that the ever-increasing cycle of spending must stop. “I will not vote to override the tax cap next year,” he promised. “We need to get our budget in line. We’re not doing enough.” Hoehmann said higher taxes will force more people to leave Clarkstown because they cannot afford it. “Not only are our seniors not going to be able to stay here, I’m not going to be able to stay here,” he said.
The time has now come for action as both the Town of Clarkstown and the County of Rockland are about to enter their 2015 budget planning processes. We are about to find out just what the Town and the County are going to do about property taxes in 2015 and if they are going to vote unanimously to exceed the tax cap once again.
The reason listeners calling in to WRCR could not understand why people are reluctant to invest in Rockland is that they may have been unaware of the outrageous 17-18% tax increase that was placed on businesses in Clarkstown through the non-homestead tax in addition to a 21% increase the businesses also received in their Clarkstown School’s non-homestead tax bill.
On Monday, July 21, 2014 this issue came up during Supervisor Gromack’s weekly town update on WRCR after I had called Possell earlier in the morning to inform him of the two types of property taxes that exist in Rockland County.
Here is a transcript of his discussion with the Supervisor.
Possell: People are calling about The Hub Shopping Center on Route 59 where Stop & Shop is closed along with Drug World and a medical supply store and it was suggested that Trader Joe’s go in there. What is going on with that shopping center? Do you have any information?
Gromack: Not really – I have spoken with the owners over the last 2 months and all they would say is that they are in negotiations with a number of potential tenants and that they are looking for something that is long-term, not short-term. That is pretty much the nature of a lot of these owners – they can certainly get someone on a short-term basis but they would rather wait a bit and get a long-term.
Possell: As much as the people would like to see something there the Town has no say at all? It’s all up to the owner of the property?
Gromack: Steve, the owner has to figure out who they want, the kind of lease, how much money they will get for the amount of square footage that they are marketing so it is owner driven. The Town can play a role if they have to do any type of building renovations. Sometimes we can certainly suggest something like a Trader Joe’s but in the end it is up to the owner of the property and the type of renter they want and the type of lease that they work out and sometimes they will go with a different tenant who will give them a longer lease.
Possell: A gentleman called and said that the Homestead / Non-Homestead system is very imbalanced especially in Clarkstown where the taxes went up approximately 3.5% for the residents and about 17% for businesses. He said that the owner of New City Bowl and Batting Cages said that was unjustifiable. Do you have any comment on that? Why is there that disparity.
Gromack: Many years ago, probably in the 80s, Supervisor Holbrook and others decided to go to a Homestead / Non-Homestead formula which is done in 3 or 4 of the other Towns. It is weighted to give the homeowners more of a residential tax break. The reason in Clarkstown why it had a dramatic shift this year was primarily because of the Tax Cert case with the Palisades Mall. That loss of value (i.e. $20 million in tax revenue which had to be returned to the Mall and in future years it will pay substantially less in taxes) was shifted to all of the businesses in the Town and not the homeowners. It worked the way it was supposed to. It didn’t negatively affect the residential homeowners but it did shift and redistribute that loss to the businesses. So that primarily is what Homestead / Non-Homestead is all about. It gives long term stability to the residents that live here and there can be fluctuations for businesses.
Now when there is a large business like the Palisades Mall for which the tax cert loses value that loss has to be spread among the other businesses. But it also works the reverse – when a big business comes in like the Palisades Mall that will drop the business number dramatically. With the Shoppes At Nanuet going on line over the next few years you will some of that value recaptured and there will be some evening-off (leveling) of the business tax.
Possell: Do you think this is a deterrent for businesses like Trader Joe’s. Would this not be a deterrent for other businesses to come in here when they see how this Homestead / Non-Homestead works?
Gromack: I don’t think so because again it is in the four other towns and I think Clarkstown is still a desirable town to live and grow a business. You know our Planning Board is busy every time they meet so there is a lot of interest. Obviously, the Shoppes in Nanuet would not have made that investment if they did not believe that Clarkstown was a desirable place to have a business. You’ve got the Panera Bread across from the Palisades Mall that is opening up. So we see businesses every day renovating and opening up. Look at Main Street in New City there is talk about the renovations of those stores. We see a lot of applications and a lot of owners of property coming in talk about new businesses and renovated businesses in spite of the Homestead / Non-Homestead situation. So I think they realize that once they get over this little bubble of this anomaly of the Palisades Mall it will even out and for the long term it will be a benefit to them.
Possell: You reached a resolution of the tax cert case with the Palisades Center Mall?
Gromack: Yes – that was about a year ago. We finalized that tax cert case with them and there will be tax stability with them for the next 7 to 8 years. So we are in a very positive position going forward.
Two things stand out in this discussion. First, when the Palisades Mall was being built the taxpayers of Clarkstown were promised that ‘manna from heaven’ would forever fall from the Palisades skies into the coffers of the Clarkstown Central School District.
But what happened?
After spending over $1million dollars in legal fees and having the now convicted former tax cert attorney for the Town of Clarkstown, Bronx GOP Chairman Jay Savino, “sit in on the proceedings”, the Town lost the case and $20 million dollars of property taxes had to be returned to the owners of the Mall.
Second, Supervisor Gromack offered that tax loss as his reason why Clarkstown had to increase the non-homestead property taxes on the other local businesses in Clarkstown by 17-18%. What he failed to point out, however, was that of the $20 million paid back to the mall only $5 million came from the Town of Clarkstown’s budget; the remaining $15 million came from the Clarkstown Central School District’s budget.
That payment of $15 million put the Clarkstown School Board (not the Clarkstown Town Board) into dire financial straits by the disastrous depletion of its reserve fund. In its 2015 budget the School Board has been forced to close schools and lay off teaching staff.
Meanwhile Supervisor Gromack could not come up with the Town of Clarkstown’s $5 million from its depleted cash reserves and thus he decided to borrow that amount in the form of a long term bond. Those paying the homestead property taxes will be paying this debt off with interest long after he has gone into retirement.
The Town of Clarkstown’s deficit spending problem can not be blamed on the Palisades Mall. Clarkstown has been deficit spending for many years and depleting its reserve fund to make up the difference. A 3.5% tax increase for 2014 was as much as the members of the Town Board figured the homestead owners would accept without gagging. They placed the rest of the tax burden on the local small businesses by raising their non-homestead taxes by 17-18%.
Supervisor Gromack has a penchant for Panglossian thinking but he outdid himself when he told Possell that once our local businesses “get over the little bubble of this anomaly of the Palisades Mall it will even out and for the long term it will be a benefit to them.”
I’m sorry to have to tell the Supervisor and Mr. Possell that a 17+% tax increase is not a “bubble” and is not a “benefit” to any business. All businesses and most homestead taxpayers understand that a 17% increase in the non-homestead tax and a 3.5% increase in the homestead tax continue year after year like a wave rolling on to the distant horizon.
This tax “bubble” is one that businesses do not expect to see burst in the foreseeable future. Because of that uncertainty they are unwilling to invest long-term in Clarkstown lest they be caught in Supervisor Gromack’s web of “beneficial bubbles”. As Mr. Levine of Congers aptly remarked, the town’s budget increases are out of control.
“We can’t keep going like this,” he warned. “We’re going to wind up a ghost town.”
Picture Credit: http://media.bizj.us/view/img/1671581/taxes-taxation-600*304.jpg