Amherst Town leaders were skeptical when owners of two senior apartment complexes asked that the tax breaks they received for some three decades be renewed for another 30 years.
The town’s reluctance, however, turned to annoyance when it recently realized the owners hadn’t qualified for the tax breaks for the past 17 years, but continued to take them anyway. More than $2 million.
“To take tax breaks that they were not eligible for for 17 years, and then come back to ask for 30 more years is chutzpah,” Amherst Supervisor Barry A. Weinstein said.
Now, the question is whether any or all of the estimated $2.5 million in lost taxes to the town, county and schools can be recouped from apartment owners M.J. Peterson Corp. and the Related Companies.
“We have outside counsel who has notified the county and school districts,” Town Attorney E. Thomas Jones said. “We’re going to talk about how we proceed from here.”
But hold on.
M.J. Peterson and Related say they informed Amherst in 1996 that their business status had changed and they were no longer eligible for payments-in-lieu-of-taxes on their Brewster Mews and Peppertree Heights apartments.
Amherst never took action, so the apartment owners continued to accept the tax breaks.
“My clients made the payments they were told to make,” attorney Paul T. Nesper told the town in a letter.
“The town, and not my clients, was mistaken in continuing to accept the PILOT payments instead of putting the properties back on the assessment rolls,” he wrote.
It’s an intriguing development in an already convoluted case involving the intricacies of financing, a billionaire NFL owner and a long-forgotten letter.
In the late 1970s, the Amherst Town Board awarded 30 years of tax breaks for the 216 units at Brewster Mews on Robin Road and 101 units at Peppertree Heights on Peppertree Drive.
Brewster pays out $119,000 a year in taxes; Peppertree $55,000.
M.J. Peterson and Related returned to the town in September proposing a renewal of the 30-year agreement with 2.5 percent annual increases in the payments.
The partners said they want to spend several million dollars updating the low-income senior apartments, but need the tax breaks to help keep rents low and make financing for the project work.
Amherst officials were wary.
They raised numerous questions about the project, the financing and the fairness of the tax breaks, pointing out that Related Chairman and Founder Stephen M. Ross is also the billionaire owner of the Miami Dolphins.
A closer look by the town’s attorneys also showed the companies had changed their “limited profit” status in 1996, which at that point should have prevented them from qualifying for the tax exemptions provided under state housing law.
No one disagrees.
M.J. Peterson and Related acknowledges that fact and even produced the letter it sent to then-Supervisor Thomas J. Ahern in 1996 explaining this very scenario.
In fact, town attorneys found the letter last week and said that, over the years, it somehow got overlooked by Town Hall, allowing the tax breaks on Brewster and Peppertree to continue for 17 more years.
“That’s a multimillion-dollar mistake,” said Councilmember Mark A. Manna. “Where is the oversight?”
Manna suggested the town needs to review its protocol for keeping track of tax-exempt properties.
But like Weinstein, Manna also pointed a finger at the apartment owners.
“I never met a company that’s going to willingly pay more taxes than they’re going to be charged,” Manna said, “but in this case, I wish they would have been more forthcoming to the taxpayer.”
Nesper did not return a phone call seeking comment.
His letter to the town, however, indicated that the affordability of the low-income apartments would be affected without the tax breaks.
There is, in fact, still a way for M.J. Peterson and Related to legally qualify for the housing tax breaks with some help from the Amherst Industrial Development Agency.
The companies were hoping the town would approve the tax exemptions by the Town Board’s final meeting of the year on Monday.
But Weinstein and Deputy Supervisor Guy R. Marlette, a vocal critic of renewing the tax breaks, anticipated taking no action.
“Under the current circumstances,” Marlette said, “I don’t see how the town could move forward with it.”