PILOT Loss Could Blast $3.5M Hole In City Budget

We're getting out of here just at the right moment. Hear that sucking sound? That's King Johnny and his cronies siphoning money out of your wallets via tax increases. Good luck to those who remain...you'll need it.

Isn't this the same scenario that the City faces EVERY SINGLE YEAR? PILOT money is never something to rely on when planning a budget and yet the City always does and then blames the state when there is a deficit. But that's John's way - blame someone else when there's a problem because it certainly couldn't be his incompetency!

Mayor:

Two days ago you were crowing about the dramatic increase in PILOT eligible construction in New Haven, how this was going to force an increase in our PILOT dollars. How did you not see this coming? This is what happens when you are a dependent of the state and when you're development plan revolves around building more PILOT projects.

City Hall Watch,

I don't know how the Mayor would answer your question. But here is my answer and I hope you read to the end and look forward to any comments you may have afterwards:

1) Creating jobs for people in the City, at a time when unemployment has remained stagnant despite nascent signs of recovery, is admirable and should be encouraged in whatever way possible. Finding ways to put people back to work, no matter where the work comes from, is important.

2) New Haven is currently home to PILOT eligible enterprises that attract other businesses and lead to city improvements. Growing these institutions, the workers that come with them and the need for these institutions to invest in the community, benefits the City in the long term.

For example, a Yale run but taxable property ownership group spent money to reinvigorate Chapel Street and Broadway. They pay tax on these properties and they pay more tax because the property values rise with improvement. Perhaps this will happen in other areas where there has been expansion.

3) People who are attracted to these new jobs, be they at the Yale research facility in West Haven who might prefer to live in an urban setting downtown, or workers who have now-steady jobs and may buy a foreclosed, fix it up and make it their own, can rejuvenate our neighborhoods and grow our tax base. It is surprising to me that you ignore the 3% grand list growth the Mayor discussed in your attack and focus on PILOT. I would guess upon further study that you could find correlation between PILOT development and grand list growth.

This was a long post, but in short, I think you are being myopic in your view about PILOT and assailing development of any kind in this economic climate is quite silly. Talk about inequalities in taxation across CT, the property tax as a sub optimal form of tax to begin with, the need for a graduated income tax in the state or any other ways that the state could responsibly act to increase revenue equitably and distribute it to municipalities. Don't attack hardworking people who are brining jobs to residents, using our comparative advantage and thinking about the future.

David

PILOT increases from this years GL will be reflected in next year's payments. The state is always a year behind.

David:

Your defense of PILOT eligible projects is admirable and insightful. But I wasn't attacking PILOT projects or the people who work to make them happen. I agree there are many good things about such development, particularly the two entities that I support - YNHH and Yale.

It's more the rank hypocrisy of the mayor who routinely, endlessly whines and complains about PILOT reimbursement rates - a program specifically designed to shovel money to CT's large cities. As he complains, he builds and encourages even more PILOT, some on potential Class A real estate, even as he knows the state rate is not what he wants and is not likely to get where he wants it to be. Ever. So, while he uses the State of the City speech to crow about the dramatic increase in PILOT eligible property, the inference is that growth will result in a large increase in PILOT payments. Meanwhile, the PILOT pot doesn't grow, and in fact is now diluted even further, "blasting a hole in the budget." Predictably, this brought a howl from his honor. Unless PILOT is increased next year which is far from likely with a multi-billion hole already, then the pot will be diluted even more.

I left off the 3% grand list growth because I thought it was a bit picky to bring it up. But since you did, our 3% is the same percentage increase Branford just reported. Again, the implication from the mayor is that this is an extraordinary result. It seems that's not the case and if you count the real value of our homes which are down at least 30%, it's not particuarly outstanding.

CHW,

If home values are declining 30% because of the recession yet the grand list continues to grow, all the more reason to talk about the 3% increase. Why is this impressive for New Haven? Because Branford doesn't face the same kind of foreclosure pressure that New Haven does, reducing its tax revenue. Finding new sources of revenue by growing the grand list is critical to raising revenue and is something the Mayor has done.

Your entire argument seems predicated on the belief, ill-formed and blinded by hatred for the Mayor no matter what he does, that he pushes PILOT eligible development because it will gain PILOT funding. I pulled the text of the State of the City and think it would be instructive to take a look at what the Mayor actually said:

1) The line that indicates a potential increase in PILOT is as follows "Add to that an increase of nearly $500 million in the exempt portion of the list, of which $421 million is [PILOT] eligible." So sure, in a fair system (more on that later) we would gain more PILOT money. Note there is no declarative statement saying we will get it or should get it. Just that the eligible amount has risen.

2) Now let's see if we can find another argument to increasing PILOT eligible development other than PILOT transfers. The Mayor said: "our economy is ever increasingly growing the direction of university based, especially life science based, jobs and occupancies." He continues to say, "These buildings [Science Park, FUSCO & 300 George] are home to the dramatically growing cluster of private, for profit, business built on the science coming out of the university. Not university, but university generated, private and for profit economic activity."

I think this speaks for itself, but I'll summarize: You invest in what you have, university expansion because it is your advantage and it further drives for profit development, adding jobs and increasing revenue. The Mayor understands this, the Mayor said this, yet you ignore it.

You should focus you anger and energy in reforming a system that punishes municipalities for developing PILOT eligible resources. PILOT does not exist to "shovel" money to municipalities a transfer for no work, but rather to recognize that PILOT eligible buildings are critical to the fabric of our city and state and their home municipalities should not be punished in their revenues for housing them. I bet if you asked Hartford or Bridgeport if they wanted a place like Yale driving expansion in their city, they would say yes, because of the growth it creates. Not wanting to expand that because the state PILOT program is broken is wrongheaded.

Work to elect a governor and legislators who will reform PILOT and put the State on more sound economic footing. Don't turn your ire to a Mayor using what New Haven has to make it better.

David

David:

You are mistaken on a couple of fronts. First, I don't hate the mayor and I'm not blinded by it. I dislike how he governs and the inherent dishonesty associated with his rhetoric, his policies and politics.

Second, PILOT eligible projects are a favorite precisely because they are PILOT eligible. To think otherwise is naive. This was confirmed by his previous spokesman Derek Slapp. Here's a reality check: Only a handful of states even offer a state backed PILOT and none of them reimburse cities as high as Connecticut does. The mandated amount is 77% and while the state rarely hits that number, the Pequot Funds are distributed according to the PILOT formula which when combined with the regular PILOT, come pretty close, within a point or two of the mandate. That sounds to me like the state is shoveling money to the large cities. And contrary to your assessement, the program is not broken. It's operating just fine and as intended.

What's broken is the record of the mayor, who endlessly claims the problem with the city's revenue is PILOT, the plethora of non-taxable property and not expenses. If that were true, he'd encourage more free market construction paying full bore on property taxes and less tax exempt. Not true - he spends enormous energy adding tax exempt property, and even when we get a free market builder, provides such favorable terms on taxes and fees, the benefit is greatly diluted. A friend of mine at Yale told me once, the whole effort to demonize PILOT is a myth. The city actually makes more money off of PILOT than it would if the tax exempt property were taxable. Regardless, the state already pays half the cost of operating our city. We have become a permanent dependent. That is a sobering thought.

CHW,

This will be my last response because you have refused to address my points clearly outlining that the Mayor articulated alternative desire to develop PILOT eligible property precisely because it leads to the development of non-PILOT eligible property. But quickly:

1) You dislike how the Mayor governs and his "hypocrisy" but don't hate him. Fine. Calling the kettle black is all I was trying to do.

2)I have showed you and quoted the full reasons for bragging about PILOT eligible property and you have ignored them.

3)Your dependency argument is odd to me. Do elderly people living on Medicare and Social Security have a frightening dependency on the Federal government? I'm not sure you would say so. States routinely distribute money to municipalities because they have a larger tax base in the same when the Federal government does to the states. Nothing new, nothing bad.

David