IDA considers PILOT for Butternuts


By Patsy Nicosia

Under a 10-year tax package being considered for Butternuts Brewery, PILOTs-payments in lieu of taxes-would be just $62,000 a year for the first five years.
Longhouse Holdings, sister company to Butternuts, is buying the former Guilford Mills facility for $2.5 million with $5,000 down but expects to invest $1.6 million in repairs and improvements before they ship a single bottle of beer, owner and brewer Chuck Williamson said Monday at a Schoharie County Industrial Development Agency hearing on the proposed PILOT and other tax incentives.
"Instead of putting the money into the purchase price, we're putting it into the building," Mr. Williamson said; if they should walk away, he said, the improvements will remain.
The building is essentially a shell, gutted by the previous owner and stripped of $.5 million in metal alone, an electrical substation worth $.75 million, and a pretreatment water system, said County Attorney Mike West.
Under the agreement with the county, the purchase price would drop by $15,000 for each job above 10 positions the company creates, up to a maximum of 110 jobs or $1.5 million.
Those long-term jobs, Mr. West said, is one reason the county's so interested in the project; Economic Development specialist Sarah Blood said "no one else is even close to being a promising buyer."
Under the proposed tax agreement, after five years at $62,000, the PILOT would increase to $77,754 in year six, $94,634 in year seven, $120,674 in year eight, $131,909 in year nine, and top out at $152,375 in year 10.
Longhouse Holdings also hopes to take advantage of other IDA benefits, including a sales tax exemption during construction, a mortgage tax abatement, and a possible $5 million IDA loan.
Longhouse will be using just 60,000 square feet of the 460,000 square-foot building, said Doug Gulotty, a consultant for the contract brewer.
Mr. Gulotty said their business plan doesn't support higher payments-either as a PILOT or taxes--and the proposed PILOT is based on the income value of the property.
"Some could make the argument that the $2.5 million assessment is too high," he said, considering the fact that the former Guilford Mills was on the market for eight years.
Assessors can chose any one of a number of methods of setting a value, Mr. Gulotty added, but "I think the most appropriate one today is the income approach."
The PILOT would be split between the Cobleskill-Richmondville Central School District, the Town and Village of Cobleskill, and the county.
Ron Filmer, IDA director, said standard procedure is to start at 50 percent and work upward.
PILOTs can vary and be creative, he said, but all taxing entities would have to agree.
C-R Superintendent Lynn Macan argued that as proposed, the PILOT would be too costly for the district.
"Our financial standing has been deteriorating over the past five years," Ms. Macan said, largely due to cuts in state aid.
"The quality of our school system is part of any economic revitalization plan. Every time you reduce taxes, you hurt the school."
C-R is in the second of three years of being "made whole" by the county for unpaid back taxes at the mill, receiving $100,000 a year based on a $4 million assessment.
Cobleskill Supervisor Tom Murray said the town hasn't "received a dime."
"I haven't missed what I haven't had," he said, but he's uncertain if other supervisors would be willing to give up the county's share of the PILOT to help out C-R.
Mr. Filmer said a decision on the PILOT and other incentives will likely be made in April or May.