At its December 2024, quarterly meeting (the “Meeting”), the NYS Public Subsidy Board (the “Board”) continued its May 20, 2024, public hearing on calculating the value of future tax savings, such as tax abatements, tax credits, tax exemptions, payments in lieu of taxes or any savings realized from the involvement of a public entity. Projects which receive public funding, including tax savings, in excess of 30% of the total construction cost are “covered” for purposes of New York Labor Law § 224-a(2)(b).
Specifically, in the on-going hearing, the Board is considering:
- When and how to use Present Discounted Value (“PDV”) in calculating Future Tax Savings
- The average annual increase in property taxes in NYC vs NYS
- How to calculate the value of tax savings from PILOT programs.
In advance of the Meeting, the Board solicited and received eight further comments on the above questions, and thee specific questions relating to PILOT agreement compliance and rescindment, and tax valuation in New York State. Three commentators spoke at the Meeting: Alex Heil, an economist; Ryan Silva, the executive director of the NYS Economic Development Council; and Michael N’dolo, director of Economic Development at MRB Group; each urged the Board to utilize a PDV method in calculating future tax savings for multi-year benefit periods.
The commentators posed various suggestions on the appropriate discount rate to utilize in the PDV calculations. Heil suggested the long-term bond yield for municipal and state entities, or, alternatively, a rate of two to three percent, adjusted for inflation. Silva suggested the Board defer to local IDAs, most of which already utilize a discount rate in each project’s statutorily required cost-benefit analysis. N’dolo suggested the Board annually adopt a list of implied discount rates by project type, ascertained by quarterly national surveys.
The Board noted the difficulty it faces in trying to reach any real consensus due to the competing interests of the board members and the ambiguity of the law itself. The hearing remains open, and board members were instructed to come with proposals to the next regularly scheduled meeting on March 19, 2025. The Board further alluded to initiating another public hearing in the near future to define “total construction project cost.”
Harris Beach Law Clerk Elizabeth C. Hughes contributed to this legal alert.
Harris Beach’s Public Finance and Economic Development Practice Group is closely watching this and related issues. If you have questions, please reach out to attorney Andrew E. Pawenski at (716) 200-5150 and apawenski@harrisbeach.com; attorney Robert G. Murray at (716) 200-5180 and bmurray@harrisbeach.com; or the Harris Beach attorney with whom you most frequently work.
This alert is not a substitute for advice of counsel on specific legal issues.
Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as Washington D.C., New Haven, Connecticut and Newark, New Jersey.
