A peace of sorts has been achieved in an ongoing property tax fight between IBM and the town of Poughkeepsie that will reduce Big Blue”™s property tax valuation by $50 million or just more than 30 percent over three years on the assessment of the IBM facility on Route 9.
The settlement of a tax-assessment lawsuit brought by IBM does not call for any refund of taxes paid in the past to the town by IBM.
Town Supervisor Patricia Myers said that absent the agreement the town would have faced the prospect of refunding $1 million to IBM.
The agreement creates a “Payment in Lieu of Taxes” (PILOT) agreement that will run from 2011 to 2026.
“I’m very happy that it’s settled,” said Myers. “It was a very good settlement for IBM and the town. It gives us stability for a change instead of facing a tax suit year after year.”
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The town of Poughkeepsie tax base was $5.1 billion in 2008Â and IBM”™s former assessment was $159.7 million, representing about 3 percent of the total. The new assessment cuts $50 million from that total in three stages, reducing it by $20 million in 2009 and an additional $20 million in 2010, and completing the remaining $10 million in 2011.
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Data at the town’s tax office show IBM this year paid combined town of Poughkeepsie and Dutchess County taxes of $2.1 million for the parcels covered by the settlement, plus another $79,444 for five other parcels not in the suit.
Myers particularly lauded the fact that although IBM”s suit challenged assessments for 2007 and 2008, the deal does not contain any refunds for past years. And she also expressed relief that the PILOT deal is likely to end assessments on lawsuits from IBM. “It gives us a stable base. We know exactly what the taxes are that they will be paying,” Myers said.
She said it was too early to determine what effect the settlement would have on other property taxes paid in the town, which uses a homestead tax, where business owners such as IBM and other commercial properties pick up 58.3 percent of the tax bill, while residential tax payers contribute 41.7 percent. “It”™s definitely too soon to know,” she said.
Myers said that besides IBM”™s new assessment other changes in the tax base have been experienced in the town, particularly a decline in the level of new home construction.
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Despite her satisfaction with the settlement, overall she decried the situation facing municipal budgets “Its horrible.”
She also said the town will have to pay the MTA for what she called “the marvelous mobility tax.” She noted the provision is retroactive to last year, so that the town in effect owes $40,000 and will pay for the current year somewhere around $70,000. “That is over $100,000 that certainly was never budgeted for,” she said.
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She said the town also faces increased costs for health care while experiencing reduced mortgage tax receipts and sales tax receipts. And she noted these effects will hit taxpayers on every level of government, state, county and local.
The taxing jurisdiction to be most affected by the IBM settlement is the Spackenkill Union Free School District, within which the IBM parcels are located. IBM paid the district $4.7 million for 2008-2009.
Assistant Superintendent for Business Kevin Geoghan said the change would be negligible in school taxes. He said the school tax rate for homesteads will be $14.49 per thousand of assessed value.
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Commercial and nonhome payers pay a higher rate, which would be $34.08. Actual tax bills would be 3.48 percent more for homeowners and 3.65 percent more for commercial properties. Thus, for a homeowner that paid $100 last year in school taxes, they would pay $103.48 in the coming tax bill.
“The settlement with IBM was good for everyone I think,” said Myers. “It was negotiated and designed very well. It will be phased in over three years so there is no monumental impact on anybody”
