Judge orders stop to tax payments on state land

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December 7, 2007

By KIM SMITH DEDAM The Press Republican Sat Dec 08, 2007, 01:00 AM EST

ELIZABETHTOWN -- A court decision in Chautauqua County two weeks ago ordered New York to stop making all payments on state lands.

This could be disastrous to Adirondack communities.

The decision by Judge Timothy J. Walker, acting Supreme Court Judge, claimed the "jumbled" approach to state land taxation is "a hodge podge' of statutory provisions devoid of any consistent rationale for taxation."

The order responded to a lawsuit brought by John C. Dillenburg III, supervisor of the Town of Arkwright, a small community of about 1,124 people near Lake Erie.

Dillenburg has been trying for years to get the state to pay taxes on about 2,000 acres of Department of Environmental Conservation property in that town for hunting and recreation.

In his order, Walker "enjoined" the state, from "paying taxes and/or (PILOTs) on state-owned land to counties, municipalities, school districts, or special districts while not making payments on state-owned land situated elsewhere in New York state."

Stayed pending appeal

The judge also ordered a stay of his decision, pending appellate review.

Attorney Michael Bobseine, with the small firm Brautigam & Brautigam LLP in Fredonia, brought the lawsuit to court.

"All we asked for is, look, if you could just take care of one community, we'll go away; we'll pretend this Rube-Goldbergian system doesn't exist," Bobseine said in a phone interview Friday.

But the truth is, he said, it does exist.

"We came back this third time and the state told us we could not ask just for relief it's all or nothing."

And the judge ruled against the entire state-land payment system.

Council outraged

The Adirondack Council is outraged.

"That's about $170 million per year on the total forest preserve, not including easements," said John Sheehan, spokesman for the council.

"Since the park was created in 1886, (state land tax) agreements have become such an orgy of legislative power; it's so broken they can't fix it. The legislature has known about this (issue) for 10 years and done nothing about it."

If the state stopped paying taxes, towns here would not survive.

"It would put an insurmountable burden on the private landowners in the park," said Noel Merrihew III, chairman of the Essex County Board of Supervisors.

Would lose $1 million

"Newcomb would lose $1 million tomorrow."

Newcomb, population 483, is 42 percent state-owned land.

In the Saranac Lake Central School District -- the largest in the state formed of seven towns over an area the size of Rhode Island -- the numbers are mind-boggling.

District business manager Mike Kilroy ran a what-if scenario.

Of the total $16 million school tax levy, $3.7 million or about 22 percent comes in the form of state tax payments.

"Here's how much the school tax rates would go up if the state didn't make any payments," Kilroy said, his calculator whirring in the background.

"Harrietstown would go from $9.07 to $11.60 (per thousand of assessed value); Brighton would go from $9.15 to $11.67; Franklin (town) would go from $12.35 to $15.80; Santa Clara would go from $7.94 to $10.12; North Elba would go from $8.13 to $10.40; St. Armand would go from $8.40 to $10.72; and Black Brook, which only has a few parcels in the district, would go from $7.94 to $10.11."

Not assessed the same

But the real question is whether the state is actually paying their fair share for nearly 3 million acres of "park."

"Some taxpayers claim state land is not assessed the same rate as everybody else and people are upset about it," Kilroy said. "If you own say 400 acres of private land in the Adirondacks, that land is assessed higher than the same 400 acres of state land right next to it."

Merrihew raised the same point.

"The real issue is that state forest lands are supposed to be at uniform valuation with all other parcels."

Instead, acres of "accessible" state land are valued at about $576 per acre, Merrihew said, with "remote" acres at about $390.

"By law, when we do a (triennial) revaluation, it has to include state land," Merrihew said. "We set the rate, then the state comes back and says no; they dictate what the rate will be. We have to make a model of private acres using that. We know those (state) acres are worth $1,000 or $2,000 or more for waterfront per acre, all day long."

Question of easements

And then there is the question of easements, with thousands of acres in quasi-public ownership.

"Who is responsible to assign value of easements?" Merrihew asked.

Fred Monroe, executive director of the Adirondack Local Government Review Board, who sits on the Adirondack Park Agency Board of Commissioners, is watching the Dillenburg case carefully.

"This decision has yet to be upheld on appeal," Monroe said. "If the state's response is to cease or reduce payments, it would devastate local governments and school districts in the park."

The Attorney General's Office has appealed the decision, Bobseine said.

"What we'd really like to see happen is, first, a hold-harmless for communities legally bound with state land laws; and second, an equitable agreement for communities who haven't been allowed to tax state land inside their boundaries."

Bobseine said Judge Walker's order calls attention to a broken system.

Got to see problem

"It will make a difference if, in fact, the Legislature sees we've got a problem here, and says let's open this up for discussion."

After the Appellate Division of the State Supreme Court hears arguments from both sides, Sheehan said, the case will likely go to preliminary hearings in Albany.

"We encouraged the attorney general to appeal. Certainly we don't want to see the chair pulled out from under the economy of towns in the park. In the meantime, we're going to work with legislators to make sure a legal remedy is ready to go should this move forward."

The attorney general's office did not return phone calls with a response to questions for this article.