Westchester County Airport (KHPN) deal saves neighboring schools from tax threat

You know the deal struck by a company servicing corporate jets and Westchester County Airport is unusual — and complicated — when it brings relief to 1,500 students in the Blind Brook-Rye schools.

Signature Flight Support agreed to extend its lease at the county-owned airport another 10 years at high rates in return for the opportunity to take over at least one neighboring business that provides similar services.

The company also agreed to stop fighting its tax bills with a lawsuit that could have forced the county, Rye town, Rye Brook and the Blind Brook-Rye schools to repay $4.5 million.

“I think this is a win for everybody,” said county Legislator MaryJane Shimsky, chairwoman of the infrastructure committee. “Obviously it’s a win for the airport.”

Shimsky stressed that the legislators had to make their decision based on what was best for the airport, not the tax case.

Signature Flight Support is one of several “fixed-base operators” at the airport offering hangar space, lounges, de-icing service and fuel for private jets. The company argues that its services, like those of its tax-exempt fellow operators Panorama, Jet Systems and Million Air, amount to a “public use” on government land, exempting it from municipal taxes.

Such an exemption could have forced the Blind Brook-Rye schools to refund as much as $3 million in property taxes the company paid over five years, said Mark Tulis, an attorney for Rye town and the county in the negotiations.

That sum equals more than 7 percent of the district’s entire $41.3 million budget for the current school year. What’s more, the district would have lost a major taxpayer: The company pays about $600,000 a year in school taxes.

Schools Superintendent William Stark said the exact payment, if any, would not have been known until the court case was resolved. But he said the district was happy with the outcome.

“School taxes are a significant portion of people’s property-tax responsibilities and therefore we are obviously impacted disproportionately,” he said.

He spoke in favor of the deal at the legislature’s March 24 meeting, when the board approved the agreement 13-4. Board of Education President Nancy Barr and PTA Co-President Debbie Handler also encouraged the legislators to approve it.

Rye Brook, a village of about 9,500 residents, could have been hit hard, too. It could have been forced to repay about $880,000, about 6 percent of its current $14.3 million budget.

“I think it turned out well for all parties involved,” said Mayor Paul Rosenberg.

Westchester County’s share could have been more than $410,000; Rye town’s, more than $10,000.

While Signature’s rent will be reduced by $200,000 to $1.9 million, it will end up paying more over the next decade because it would increase 5 percent annually rather than 3 percent. Also, the company agreed to extend its lease 10 years past its previous 2016 expiration, rather than renegotiating at potentially lower rates.

Over the life of the lease, Signature will pay about $30 million, perhaps almost $4 million more than if the previous deal had run its course and been renegotiated at market rates in 2016, Tulis estimated.

The money goes to the airport fund, which sustains itself without taxpayer funds.

Signature Vice President of Operations Planning Larry Jorash said the rent is higher than similar neighboring businesses and other airports in the region.

“A lot of time, effort and resources were exhausted to reach this legislation,” Jorash said at the hearing. Signature officials did not respond to requests for comment for this article.

The agreement gave Signature the county’s permission to absorb two other businesses — Jet Systems and Million Air — but appears likely to only take over Jet Systems.

Combined with Landmark Aviation’s recent takeover of Panorama Flight Services, the deal will leave three fixed-base operators at the airport instead of five.

John Johnston, president of the Westchester Aviation Association, said he did not feel pilots who use the airport would be greatly affected.

“I don’t believe that there’s going to be a large impact on general aviation,” he said.

Source:    http://www.lohud.com