What’s a PILOT, anyway?
How tax breaks shape New Paltz — and who’s left holding the bill
Lately, PILOTs have become the talk of the town. Letters to the editor rail against them. Local boards are voting to suspend or reject them. And the alphabet soup of development incentives — PILOTs, IDAs, abatements — can seem like something designed to confuse…and in some ways, they are!
So let’s unpack it. What is a PILOT? Why does it matter in New Paltz?
What is a PILOT?
PILOT stands for Payment in Lieu of Taxes. It’s a deal made between a developer and an Ulster County Industrial Development Agency (UCIDA), to reduce the developer’s property taxes for a fixed period — usually 10 to 15 years but in some cases like Harmony Hall (affordable housing) up to 40 years! In exchange, the developer agrees to make annual payments, which are normally lower than full property taxes and gradually increase over time.
The idea is to attract projects that might not otherwise happen, like hotels, senior housing, or manufacturing facilities. And while the tax discount might seem steep, IDAs argue that the net benefit to the community — in jobs, sales tax, and local spending — outweighs the cost.
At a February 2025 public session hosted at SUNY New Paltz, IDA representative Nichols explained that under a PILOT, the developer “will be responsible for previous property taxes only, typically for ten years,” while the IDA temporarily holds the title. This means there is no loss of tax income for the town or village, just no incremental taxes for the new property or development. Once the PILOT program ends, the property returns to the full tax rolls. The county development agency claim that for every dollar in tax incentive yields $26 in economic impact. That may be true but it ignores one simple fact that many of these incremental taxes(e.g. Sales, Occupancy (hotels), income taxes etc.) go not directly to the people providing the services that the building owners and residents expect.
Who gets PILOTs in New Paltz?
Several local developments have benefited from PILOT agreements:
Woodland Pond, the senior living community on North Putt Corners Road, received a significant PILOT at its founding. It is also planning future developments and is negotiating an additional PILOT. We know that from the previous PILOT that the first negotiations underestimated the high volume of EMT calls — and therefore had to be paid for by local taxpayers. Our local representatives have to ensure this is not misjudged a second time.
Harmony Hall, a senior affordable housing project in the Village, was supported by a PILOT and other subsidies that makes the 100% tax exempt for 40 years.
The New Paltz Way Hotel, newly approved in 2025, also received IDA support, despite concerns from some officials about parking, police, traffic impacts without any compensation from increased sales or occupancy taxes.
In each case, the project brought benefits: housing, jobs, or hospitality revenue. But in each case, property taxes were reduced, leaving the developers and operators with increased profits while the rest of us are left holding their tab.
The burden on host communities
Here’s where things get more complicated.
PILOTs reduce property taxes, which fund essential services — fire protection, police, roads, EMS. When a PILOT-supported property increases the number of calls to emergency services, the incremental costs don’t go away. They just shift onto the people still paying full property tax: local residents and small businesses.
And while these developments may generate other revenue — like sales tax or hotel occupancy tax — that money doesn’t come back to the town or village who provides these essential services. The same is true for utilities such as water and sewer. These PILOT supported properties want access to the water, sewer infrastructure and expect it to work perfectly, but they do not contribute to the repair and replacement of an old and already stressed system. Again, these costs fall on local residents and businesses who end up paying more property taxes.
Let’s take sales tax as an example:
According to Mayor Tim Rogers, New Paltz generates an estimated 4.6 million in sales tax revenue (avg. 2023/24).
But under New York State law, only counties and cities negotiate how that money is divided.
Towns and villages get no seat at the table.
According to recent data:
Ulster County keeps 84% of the local sales tax.
The City of Kingston keeps 11.5%.
The remaining 4.5% is split between 20 towns and 3 villages, including New Paltz.
And yet, the Village of New Paltz receives only 2% of its total budget from sales tax — less than $100,000 annually.
It’s even more lopsided when you consider the SUNY New Paltz campus:
SUNY’s assessed value ($399 million) is greater than the entire Village’s taxable value ($312 million).
But SUNY pays no property taxes at all — and the state doesn’t reimburse towns and villages for their services.
We’re a host community, but without host-level compensation for the services we provide to businesses who are incentivised to locate in our town.
What the Village and Town Boards are saying
In September 2025, the Village Board proposed a resolution opposing a pilot for a recent development. The Town has historically (2018) considered a moratorium on PILOT programs but unfortunately do not really have the power to prevent them. Pilot programs are established at the County level and although it is considered “normal practice” to involve local municipalities in the negotiations, there are several examples of PILOTs where neither the town or the village had a say.
New Paltz is facing a constant drain properties that are not paying their fair share of taxes — PILOTS, open space conservation, religious tax exemptions, farm exemptions, and the state university all shrinking the tax base, PILOTs become just one more leak in and already leaky bucket.
The bottom line
PILOTs aren’t inherently bad. They are a useful tools to incentivise development. They don’t reduce the tax base, because the developer continues paying the taxes that were already due on the property. But we need to make some changes to our financial and tax distribution systems. Where PILOTs are agreed, then our officials need to negotiate a fair distribution of other tax revenues to cover the increased demand for services. Where large developments like SUNY and Woodland Pond benefit from tax exemption, some local compensation needs to be made to ensure the existing infrastructure is maintained and resilient. If we’re going to use PILOTs, we need strong leadership, more aggressive negotiations and new laws at the county level that ensure that local service providers (the town and village) have the power to approve or veto PILOTs that put undue strain on already strained infrastructure. (There’s something to talk to your representatives about before the November 4th Election!).