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PILOTS aid connected, hurt other taxpayers

We can all sympathize with the plight of AES Somerset [which reached an agreement last week on a tax grievance that will lower what it pays to three local taxing bodies]. Property taxes are oppressive, demand for services has diminished and costs have gone up.

Case in point: We in Niagara County "enjoy" one of the highest property tax levies as a percentage of property value in the United States. We in Niagara County have an unemployment rate hovering around 9 percent, and have you checked the price of gasoline lately?

Unfortunately, none of these problems originate in Niagara County, nor can they be solved in Niagara County by local unelected officials catering to a privileged and well-connected few at the expense of all. If a Payment in Lieu of Taxes (PILOT) were the solution, Niagara County and New York State would be at the top of the heap economically instead of finding themselves at the bottom.

A PILOT must be recognized for what it is: a shift in taxes to those not politically connected and an erosion of the local tax base. Further, those not privileged enough to "enjoy the benefits of a PILOT" find themselves at a competitive disadvantage.

The current AES Somerset PILOT is an example of this. The PILOT in its original form resulted in millions of dollars in revenue being lost by the Town of Somerset, Barker school district and Niagara County. Taken to court by the town, and upon appeal, the original AES Somerset PILOT was thrown out, generously rewritten and subsequently signed off.

Now, barely a year into this new five-year agreement, AES Somerset has requested a modification. The promises of "tax certainty," job retention and job growth have evaporated and the existing PILOT is being used as a forum for an additional request for tax relief, therefore guaranteeing "tax uncertainty" for property owners in Niagara County.

This is the third try to negotiate an acceptable PILOT with AES Somerset. Perhaps the Niagara County Industrial Development Agency and our elected officials should explore another way that will guarantee that AES Somerset will hold up its end of a bargain for the full term of that bargain. It is difficult to do business with an organization that does not live up to its agreements.

The financial problems AES Somerset face are not unique to them. We all face them in these difficult times. AES Somerset was a hugely profitable operation in the recent past. The solutions to its dilemma, and ours, lie in Albany, in Washington and at the White House.

Rewriting the existing PILOT for AES Somerset will only shift the burden of taxation to residents of Niagara County that are unemployed, underemployed, retired and those with substantial losses in their IRAs and 401Ks. Surely, this is not the way to go. A profitable multinational corporation should honor for its full term an agreement that was signed off by all in good faith.

James C. Hoffman


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