If you are considering a
construction, renovation, or expansion project or other economic development
activity in Ulster County, you should begin with a call the Ulster County
Industrial Development Agency (IDA).
The IDA actively promotes,
encourages, attracts and develops job and recreational opportunities,
economically sound commerce and industry in cities, towns, and villages
throughout Ulster County. It does so by
providing various types of financial
assistance in connection with the development of a project, including:
- Real estate
- Sales and use
tax exemption; and
recording tax exemption.
The IDA may also issue tax exempt bonds for projects on behalf of
hospitals, universities, and not-for-profit corporations which qualify as
Section 501(c)(3) organizations under the Internal Revue Code and to finance
certain manufacturing facilities (under $10,000,000), retirement facilities,
solid waste disposal facilities and multi-family housing facilities.
Real property owned by the IDA, or under the jurisdiction and control of
the IDA, is exempt from real property taxes.
Customarily, the IDA requires a project proponent to enter into a
payment in lieu of tax agreement (“PILOT”).
While real property owned or controlled by an IDA is not subject
to ad valorem real property taxes it is still subject to special assessments
and user fees. The IDA typically offers a ten-year real property tax incentive formula
that can save the applicant property tax costs.
Another benefit of financing a project through the IDA is that materials
purchased by or in the name of the IDA and incorporated into the project are
exempt from sales and use tax. Also
financing a project through the IDA will exempt a mortgage from the mortgage
The IDA also promotes economic growth through “straight lease” or
“sale/leaseback” transactions. In this
type of transaction, a company will transfer title to real property on which a
project is be constructed to the IDA and the IDA will then lease back or sell
the property back to the company. The
company uses conventional bank financing to finance the cost of the project and
the IDA joins in the mortgage to exempt it from mortgage recording tax. In addition, in straight lease transaction,
a company may also obtain a PILOT and sales tax exemption.
For more information about the tax benefits and financial
savings available through the IDA contact Peter Gallagher of UCDC at 845-338-8840
or visit www.ulsterny.com