Presentation on MV IDA tax abatements given at Board of Education meeting

Board Trustee Dr. Chris McDonough and Tom Scapoli, an attorney for Ingerman Smith LLP, gave a presentation about the cost of Mount Vernon’s industrial development tax abatements at the Mount Vernon Board of Education meeting on Tuesday, March 18. These abatements, called payments in lieu of taxes (PILOTs), are issued by the Mount Vernon Industrial Development Agency (MV IDA).

Click here to view the full presentation.

IDAs are designed to promote industry and commerce in cities by offering tax incentives to businesses. These incentives can exempt companies who complete projects though an IDA from real property taxes, sales taxes and mortgage recording taxes. They can also grant tax exemptions from school taxes without the District’s consent. 

While the purpose of the IDA is outlined as promoting and developing business, the MV IDA has issued PILOTs to residential buildings for affordable housing projects, which can influence the District’s tax revenue. Since these buildings are adding students to the school district, exemptions from school taxes have a greater impact than a business receiving tax exemptions.

The District has objected to the exemptions from school taxes on PILOT agreements for residential properties, but the MV IDA has continued granting the exemptions. 

Anticipated revenues from PILOT agreements are factored into the tax levy cap, which limits the District’s ability to raise taxes. A larger concern is that the exemptions shift the tax burden from wealthy developers to the remaining taxpayers for up to 30 years – the length of some PILOTs. 

In 2022, the MV IDA gave out $6.6 million in tax exemptions. It negotiated a little over $2 million in PILOT payments. This is a net tax exemption of over $4 million. 

The District filed several lawsuits against the MV IDA during the previous City of Mount Vernon administration. After settlement discussions, the City agreed to give the District a non-voting seat on the MV IDA Board. Trustee McDonough serves in that role and participates in discussions on IDA matters. 

Housing projects with tax abatements create a tax gap because local taxes pay about $9,381 per student, yet the PILOT made by the developer is much less than the amount of property taxes that would have been paid. So, if a building has 31 students, the local taxes required to educate those students are $290,796. If the developer only paid a $25,592 PILOT, there is a tax gap of $265,204. 

Seventy percent of MV IDA projects receiving PILOTS in 2024 were for housing (14 out of 20), creating a school tax gap of $1.18 million.

The Mount Vernon Board of Education has recommended the following resolution:

“The MVCSD believes that no state or local agency, IDA board, municipal or county government, or any other political sub-division besides a school board should be allowed to abate school tax revenues.

“The MVCSD should be given full, sole control over its own tax base with strict caps on how much or how long they can abate.

“Without equivocation, the school share of local property taxes should be shielded from abatement by the MV IDA.” 

The Board encourages the community to support this resolution by:

• Contacting the mayor and the IDA and asking them to stop granting school tax exemptions to wealthy developers while shifting the tax burden to other taxpayers
• Attending MV IDA meetings and making your voice heard
• Contacting state legislators and asking them to pass legislation giving school districts the ability to determine whether school tax exemptions should be granted