May 31, 2011; Source: Evening Sun | To make the point that many nonprofits make: The tax-exempt sector is hardly the only sector that receives tax abatements – or makes payments in lieu of taxes – as a result of local government decisions. This brief article describes the plan of Tecnofil S.A., a Peruvian corporation, which plans to purchase the Sherburne Metal Products factory, which has been closed since 2009.
The Peruvian firm plans to invest $2.5 million to acquire the Sherburne company (including the 15.87 acre site of facility) and make needed repairs and upgrades. The plan will create 24 full-time jobs in the first two years with hopes that an additional 70 would be created by the end of 10 years. The payroll for the 24 jobs would be over a million dollars – roughly $42,000 a job.
We guess it is a good deal, since the Chenango County Industrial Development Agency seems to be on board promoting it.
What is there to promote? Tecnofil won’t buy and invest unless it gets tax concessions, including sales and use tax exemptions and an agreement to make a payment in lieu of taxes (PILOT) in place of a regular property tax bill. While the Evening Sun article doesn’t explain exactly how much of a concessionary tax package the Peruvian firm wants, it should be obvious that many nonprofits that own a nearly 16-acre facility probably generate 24 or more jobs that may pay as well or better than the average salary planned by Tecnofil.
As local governments are trying to exact more money from nonprofit property owners – that are also probably decent employers – nonprofits should realize that local governments are frequently handing out PILOT deals to for-profit developers.—Rick Cohen