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A City In Need Of Additional Revenue Could Look To Tax-Exempt Properties

For a city looking for ways to generate more revenues to lessen the burden on taxpayers, more than one-third of the properties in Jamestown are tax-exempt.

According to Kevin Okerlund, city assessor, 36.68 percent of the total assessed property value in the city is tax-exempt. According to the 2017 executive budget summary, there are 51 legal property tax-exempt categories in play that provide 8,392 individual exemptions on 14,730 property parcels, which has removed $387,313,378 from the city’s tax rolls. An additional $8.8 million in additional revenues — based on the 2016 tax rate of $23.59 per $1,000 assessed value — could be generated through tax-exempt properties.

In 2016, the city experienced a small increase of $1,291,874, or .2 percent, in taxable assessed property. The city’s total assessed property is $666,586,989. Sam Teresi, Jamestown mayor, said the state Constitution provides that exemptions from real property taxation may be altered or repealed by legislative action, except in cases where properties are used exclusively for religious, educational or charitable purposes and defined by law. He said the majority of properties that are exempt are government owned buildings or ones used for religious, educational or charitable purposes. However, Teresi said there are some properties that should be taxed that are receiving an exemption.

 

”Doesn’t mean owned by. It has to be owned and used exclusively for that purpose,” he said. ”It is dicey when (religious, educational or charitable organizations) start owning other real estate holdings and aren’t using it for (religious, educational or charitable) purposes. The law and state Constitution says those properties should not be exempt and that those properties should be taxed. The intent of the law is clear.”

For too long the responsibility for defining the scope of property tax exemptions has been conceded by the state legislature to the court, Teresi said. This has resulted in the steady expansion of organizations receiving exemptions from property taxation, including those having a questionable or only marginal link to religious educational and charitable purposes

The mayor said the recent statewide growth in and impact of tax-exempt entities severely erodes the tax bases of local governments and school districts, unfairly transfers the tax burden to remaining homeowners and businesses, and further compromises New York’s position as a fair and competitive environment in which to live and invest.

”What needs to happen is the state Legislature needs to get on top of the situation and clarify matters and stop allowing local trial courts to make exemptions that are eating away at the tax base of local communities,” he said. ”Things get muddled when you have court challenges that properties should be removed from the tax rolls. They need to get it up-to-date, stop conceding to the courts and tighten down on the abuse out there.”

One example of a high assessed property in the city that is tax exempt that isn’t used for religious, educational or charitable purposes is the Northwest Arena. Teresi said a legal determination was made to exempt the arena, with a assessed value of $15,000,000. According to the city assessor’s office, the owner of the arena is the County of Chautauqua Industrial Development Agency. The mayor said it is his understanding that because the IDA is considered the owner of the arena, the property is exempt from paying taxes.

”Someone above my pay grade made that decision,” Teresi said. ”The law says not the owner, but the use. (Under the law) a nonprofit or tax exempt organization doesn’t mean all the property they have is tax exempt.”

In some cases the city receives a payment in lieu of taxes from some organizations with tax exempt properties. For example, the BPU will fund the city budget $3,739,000 in 2017. The BPU also makes a PILOT payment to the Jamestown Public School District, which was $1,335,241 in 2015.

Teresi said Lutheran Social Services, which has the ninth highest exempt property at $4.5 million, makes a volunteer contribution to the city for the services they consume.

”We do get some (volunteer payments) Not as much as we would like, but some churches step forward on a periodic basis. The Chautauqua Region Community Foundation makes a voluntary contribution,” Teresi said. ”We are appreciative to those who do, and it is important and it has value.”

Teresi said, if you really examine the situation, there is no such thing as a tax-exempt property.

”The burden just gets transferred to someone else to pay. They are still consuming the services, but the burden is transferred to someone else to pay for it,” he said.

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