“We are asking for some limited property-tax relief on the first floor so that the project can stabilize,” he said.
Health Quest is seeking to use its nonprofit status to not pay taxes permanently. Because Health Quest leased the property to Kirchhoff and is renting the space in the building, it would have to pay property taxes if it isn’t allowed the PILOT.
The developer will incrementally transfer ownership to Health Quest. By the 35th year, the building will be completely gifted to the hospital, Kane said.
“If the PILOT is not approved … then we would have to take a look at how we could afford to do this and it could put things on hold again,” said David Ping, senior vice president of strategic planning for Health Quest.
Phelan said that a loss of tax revenue in an era of tax caps and tight budgets would have some impact on the district.
“It will obviously have an impact on both taxing entities because it essentially gives the developers a tax break on that property for a period of time,” the superintendent said.
The town, village, school district and the Dutchess County Industrial Development Agency must all approve the PILOT. Town Supervisor Tom Traudt did not respond to a request for comment.
IDA Chairman Charlie Daniels III said PILOT plans provide incentives for commercial development, increase the tax base and create jobs. While he wouldn’t comment on the Kirchhoff proposal before the municipalities make their decision, he said towns run the risk
of a developer investing elsewhere if they don’t grant a PILOT.
“In my own experience, I feel the benefit of offering a PILOT far outweigh the potential costs of not offering it,” he said.
Daphne Kenyon, a visiting fellow for Lincoln Institute of Land Policy in Cambridge, Mass., and co-author of “Payment in Lieu of Taxes,” acknowledges the benefits, but only if the construction is dependent on a PILOT plan. She said most plans don’t work out in favor of the municipality.
“Giving a tax break is really the same as spending money,” she said.