School district starting talks with AvalonBay

On the heels of the Village of Rockville Centre announcing that it is working on an agreement with AvalonBay, the Rockville Centre school district has said that it is also looking to meet with the developer to iron out details about PILOT payments, which could help reduce the school tax levy borne by residents.

Rockville Centre Mayor Mary Bossart announced last week that the village was working on finalizing an agreement with AvalonBay regarding the payments it would make to the village for its proposed 349-unit apartment complex. AvalonBay is applying to the Town of Hempstead Industrial Development Agency (IDA), and if its application is accepted, it will be making Payments in Lieu of Taxes (PILOTs) to the village, which are generally lower than property taxes.

“We’ve made it known that we were in favor of a PILOT from the very beginning, back when it was Signature Place,” said school board President Mark Masin. “We started to hear that the village may have reached some sort of agreement, and we wanted to see what kind of solution that we can come up with between ourselves and AvalonBay and the IDA.”

The district is meeting with AvalonBay on March 3 to work on two issues: the first of which is the amount of the PILOT that AvalonBay would pay, which the district hopes will be close to what the property taxes on the development would be (the school district didn't say how much money it was seeking so as not to weaken its bargaining platform with AvalonBay). Second, the district hopes that, in the event that many children move into the AvalonBay apartments, the developer will pay for needed expansions on the Riverside Elementary School, which AvalonBay is zoned into.

“We’ve always talked about that property being designated to go to the Riverside School, which could require us to add an additional classroom,” said Robert Bartels, the district’s assistant superintendent for business. “So if there was any belief that we would have a significant number of students, we’d want to make sure that that would be funded by AvalonBay.”

The village and the school district were on different sides of the issue in regard to AvalonBay making PILOT payments instead of property taxes — the village was against the PILOTs while the district was for them — mainly due to the ways in which the two entities collect taxes.

Town of Hempstead Supervisor Kate Murray came out against AvalonBay's IDA application when it was first filed last year. Murray, along with Councilman Anthony Santino, said then that they "unequivocally oppose the granting of this application," for many of the reasons that the village did at the time — namely an increased burden on village services and the low revenue the village would receive from a PILOT. However, Town of Hempstead communications director Mike Deery said that the town defers heavily to village administration in cases like this and, going forward, could conceivably change its position. Nassau County officials declined to comment on the issue.

The crux of the difference in opinion between the village and school district is in the way the two entities classify the properties from which they collect taxes — the village has one property class while the school district has four: Class 1 are homeowners, Class 2 are apartments, Class 3 are utilities and Class 4 are commercial. As the Board of Education explained in a letter, "A PILOT provides revenue, lowers taxes for all," (March 26, 2009), when the school district announces what its tax levy will be during the budget process, it’s the county that decides which property class will be paying what percentage of the budget. And usually, it’s the homeowners that foot most of the bill—to the tune of over 70 percent.

If AvalonBay were to be paying property taxes, it would be paying whatever percentage of the tax levy that the county decided Class 2 homeowners had to pay.

“What happens is that Class 2 apartment owners would see a decrease [in their tax bills] because there would be this large influx of an assessment in that class of property, whereas the homeowners, the Class 1 properties, would see no savings at all,” said Bartels. “So it would not benefit the Class 1 homeowners, or Class 3 and Class 4 businesses.”

A PILOT payment to the school district circumvents the classes and is a direct source of revenue. That additional revenue, instead of being diluted into one property class, would affect all property classes by reducing the overall increase in the tax levy. The money would be injected straight into the district’s revenue stream.

“So the business owners will see a savings, the homeowners will see a savings, the apartment owners will see a savings — everybody will see a piece of the savings because the overall tax levy will be less because this additional revenue directly reduces the tax levy,” Bartels said. “It affects everybody equally — it doesn’t affect any one property owner. And it actually provides relief for homeowners.”

The village, however, only has one property class, according to village spokesman Jeff Kluewer. While the village does receive other PILOTs from other entities — the Water and Electric Departments — all its revenue is condensed into one stream. So if AvalonBay were to pay the village a PILOT that was less than what the property taxes would be, the village would be losing money.

In the deal that the village is finalizing with AvalonBay, the developer will pay a PILOT, and will pay additional money to make up the difference between the PILOT and what the property taxes would be, meaning extra money for the village — an amount that the village and AvalonBay have yet to determine.

“As long as we’re able to reach an amicable agreement with the IDA and AvalonBay, great,” said Masin. “All we know is that if a kid shows up on our doorstep, we’re going to educate them. It’s a very simple rule.”

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