10 N.Y.3d 445 (2008)
In Nassau County, deficits incurred by taxing jurisdictions due to property overassessments under payments-in-lieu-of-taxes (PILOT) agreements are a county charge under Nassau County Administrative Code § 6-26.0 (b)(3)(c).
Summary
This case concerns whether Nassau County is responsible for deficits incurred by school districts due to reduced property assessments under PILOT agreements. Goya Foods and Pall Corp. entered into PILOT agreements with the Nassau County Industrial Development Agency (IDA), making payments instead of taxes. Both companies successfully challenged the county’s property assessments, resulting in credits against future PILOT payments owed to the school districts. The school districts argued that these credits should be a county charge, not a reduction in their expected PILOT revenues. The Court of Appeals held that under NCAC § 6-26.0 (b)(3)(c), deficits resulting from assessment reductions are a county charge, even in the context of PILOT payments. This ruling prevents the County from shifting the financial burden of assessment errors to the school districts.
Facts
The Nassau County IDA acquired properties later leased to Goya Foods and Pall Corp. Because the IDA’s ownership rendered the properties tax-exempt, Goya and Pall Corp. entered into PILOT agreements with the IDA, where annual payments were tied to the County’s assessments. The agreements gave Goya and Pall Corp. the right to challenge these assessments. Both companies successfully challenged the assessments, resulting in significant overpayment credits.
Procedural History
Goya and Pall Corp. successfully challenged their property assessments in separate tax certiorari proceedings. The Bethpage and Port Washington Union Free School Districts intervened, arguing that NCAC § 6-26.0 (b)(3)(c) applied to PILOT payments, making the deficits a county charge. In both cases, the Appellate Division ruled in favor of the school districts, holding the County responsible for the deficits. The Court of Appeals granted leave to appeal and affirmed the Appellate Division’s orders.
Issue(s)
Whether Nassau County Administrative Code § 6-26.0 (b)(3)(c), which makes deficits resulting from assessment reductions “a county charge,” applies to payments-in-lieu-of-taxes (PILOT) payments.
Holding
Yes, because the purpose of the NCAC and the financial arrangement between the County and the companies, intended for the benefit of the school districts, compels the conclusion that the deficits in these cases are “a county charge.”
Court’s Reasoning
The Court of Appeals reasoned that while PILOT payments are contractual, the core issue is the assessment of the property. The County argued that NCAC § 6-26.0 (b)(3)(c) doesn’t apply to PILOT payments since they are contractual, not taxes. However, the court highlighted that the statute is triggered by erroneous assessments, regardless of whether the payments are direct taxes or PILOT payments. The PILOT agreements themselves recognized the right to challenge the County’s assessments. The court emphasized that assessments directly impact the pecuniary interests of the companies making PILOT payments. The Court noted the legislative history of the NCAC shows the intent to hold local districts harmless from the County’s assessment mistakes. When the responsibility for assessments shifted from towns to the County Board of Assessors, the