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SCHENECTADY
Nonprofits must pay tax bills Failure to file annual form could cost thousands
BY KATHLEEN MOORE Gazette Reporter

    The taxman has come for 13 nonprofi ts who didn’t follow state rules last year.
    Thirteen local agencies, including Carver Community Center and the Loyal Order of the Moose, are paying five-digit tax bills this year because they didn’t tell the city they were nonprofits by last year’s deadline. Even though that rule has been around for decades, none of them is happy about the consequences of ignoring it.
    Several, including Carver, have appealed to the Schenectady City Council to erase their taxes. Many have refused to pay any of the bill.
    Carver Community Center has so far paid none of its $24,429 bill. Already, the agency that provides after-school activities for youth has racked up $534 in interest charges, according to city tax records.
    Former Carver Executive Director A.C. “Budd” Mazurek asked Councilman Joseph Allen to defend the agency’s tax-free status. But Allen was quickly knocked down when he raised the issue at Monday’s council committees meeting.
    By law, every nonprofit must confirm its status annually by filing a form with the local assessor’s office, Corporation Counsel L. John Van Norden said. If they don’t, he added, there’s no leeway in the law.
    The forms are due by March 1 each year. It’s not clear why Carver and others missed the deadline in 2007, but the assessor’s offi ce went above and beyond to urge the agencies to follow the law, Director of Operations Sharon Jordan said.
    The taxable status form is sent to every nonprofit on Dec. 1 each year. Last year, the assessor’s office also sent a reminder to every agency that hadn’t applied by early February. Thirteen agencies ignored the letters, offering no reason why they shouldn’t get a 2008 tax bill.
    They offered a quick response when they got their first bill this January, but by then it was too late. The city can’t go back and change the tax roll after the deadline, Van Norden said.
    This year, the city tried even harder to help nonprofits avoid paying taxes, according to officials. After the reminder was sent, Jordan called the nonfiling agencies personally. That seemed to help. Only three organizations skipped the paperwork this year, and one of them seems to be defunct, Assessor Patrick Mastro said.
    That’s why the law must be followed every year. Some nonprofi ts move or go out of business, which sends their building back onto the tax roll. Case in point is the Broadway United Methodist Church, which folded in December 2005.
    When Mastro sent out his reminder notices this spring, the letter was returned with no forwarding address. That was his fi rst clue that the building is no longer eligible for tax-free status.
    “That is a good example of why we do this,” he said. “You have ownership changes. And we need to examine their income statements to make sure they’re nonprofit. To just give them the status would be unlawful.”
    He added that before he took over as assessor in 2005, it’s possible the assessor’s office quietly offered exemptions to nonprofits even if they didn’t file.
    “I don’t know what the process was prior to me coming here,” he said. “But are they legally required to file? Yes.”
    The issue is no longer Mazurek’s concern. He has left Carver Community Center to become executive director of the Saratoga County Rural Preservation Corp., which oversees a shelter for homeless veterans and other housing programs.
    Mazurek will remain active in city politics though, and has so much support on the council that he was given a ceremonial resolution when he switched jobs early this month.
    Mazurek will also keep his position as chairman of the Civilian Police Review Board and will still live in the city.
    “I’m not going anywhere,” he said when he received the resolution thanking him for his service. “I will continue to serve as long as they want me on the police review board.”
    Councilwoman Denise Brucker quickly answered, “We’ll never let you go.”
    A week later, Allen brought up Carver’s tax issue, although city officials did not support rescinding the agency’s bill.
    Mayor Brian U. Stratton also firmly resisted a similar request from the Loyal Order of the Moose, which owes $19,000 in taxes after it didn’t file for a nonprofit exemption on time. That agency must pay its taxes too, he said.

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EDITORIALS
Legal, but no way to treat a nonprofit

    This page has been critical of the Stratton administration over the years for uneven enforcement of city laws. We have also opined in favor of the mayor’s effort to get certain — e.g. well-heeled — tax-exempt organizations to voluntarily give the city money to compensate it for some of the services it provides but can’t charge for. Thus it is with some hesitance that we oppose the city’s effort to strictly enforce a legal requirement that every tax-exempt organization in the city annually file a form confi rming its continued tax-exempt status.
    As a story in Thursday’s Gazette revealed, 13 nonprofits failed to do so last year despite a written reminder from the city assessor a month before the March 1 deadline. Some complained like crazy when they got tax bills earlier this year — including Carver Community Center, whose bill exceeded $24,000, and the Fraternal Order of the Moose, which owed $17,000 for failing to file in two successive years — but so far, the city has refused to budge.
    Doing so at this point would be technically illegal, insists the Law Department, but it seems that if the city wanted to, some kind of accommodation could be made: Money, after all, is fungible, and if the city council wanted to, it could simply agree to “pay” the organizations an amount equal toward their tax bill for the services they provide the city.
    Unfortunately, such a maneuver would probably blow a hole in the city’s budget, so it’s understandable that the mayor and council might not want to play ball. Again, these organizations were given fair warning. (On the other hand, they appear not to have had to renew their status annually under previous assessors. And in most cases, it’s hardly as if the city had reason to doubt the organizations’ continued status as a bona fide tax-exempt.)
    On balance, it seems counterproductive to these organizations’ missions to be paying property taxes, and contradictory to the city’s long-term interest in keeping such useful charitable, religious and fraternal organizations around.
    Perhaps a reasonable compromise would be for the city to agree to make these organizations whole in next year’s budget for the amount of the taxes they pay this year.

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SCHENECTADY
Legislation exempts 6 nonprofits
Others failing to file exemptions remain on the hook
BY KATHLEEN MOORE Gazette Reporter

    Six nonprofits are off the hook for property taxes this year, despite failing to file the right forms with the city to prove they were tax-exempt.
    The city taxed 12 nonprofits this year, ranging from longtime fraternal organizations to churches and social services agencies. Their nonprofit status normally spares them from paying the taxes, but it took a special act of the state Legislature to set things right when the nonprofits skipped the paperwork they must file to preserve their tax-exemption every year.
    In the closing days of the session, the Senate and the Assembly quickly passed six bills that individually freed each organization from their city tax bills.
    “Beautiful. That’s a relief,” said Home Furnishings Program Administrator Ron Cromer. “We were afraid that would put us out of business.”
    The faith-based program collects used furniture and gives it to needy families, including fire victims. While the 40-year-old agency usually files its exemption on time, the administrator died just before the deadline and no one else knew that the paperwork was due, Cromer said. Making matters worse, a final warning letter never got to Cromer because the city sent it to the program’s warehouse — which has no mailbox.
    (The city sent the tax bills to that address as well. Eventually an offi - cial taped those notices to the door, Cromer said.)
    Of all the delinquent nonprofi ts, the furnishings program had one of the lowest tax bills, at $4,000. But the expense was overwhelming to the small agency.
    “We operate our whole program on a $35,000 budget,” Cromer said.
    Of that, $12,000 goes to insurance and $18,000 pays his salary. The final $5,000 covers gasoline, heating, telephone charges and other expenses, leaving only pennies in the account at the end of the year. The agency asked for special donations to cover the taxes, but had only scraped up $1,000 by mid-year. Meanwhile, the city started tacking on interest charges for the unpaid balance.
    The state legislation is retroactive, which means Cromer might get that $1,000 back. But he’s not holding his breath.
    “I don’t suppose they’ll give us back what we’ve already paid. That might be pushing it,” he said.
    But, Councilman Mark Blanchfield was lobbying his colleagues to pay the nonprofits back next year, even if the state legislation hadn’t passed.
    “That’s money I don’t want,” Blanchfield said, adding that no nonprofit should be taxed even if they file late.
    “It’s a no-brainer in my opinion,” he said. “It’s too bad we had to go through such an involved process for these nonprofits to get what they’re entitled to. To have to get an extraordinary act of the Legislature is just unfortunate.”
TROUBLE BREWING
    The issue has been brewing for half a year, ever since the first tax bills hit in January. Some nonprofits, including Carver Community Center, refused to pay five-digit tax bills. Others started fund drives and said they might be forced into bankruptcy. Many begged the Schenectady City Council for help, but Assessor Patrick Mastro said the city did not have the legal authority to retroactively exempt the nonprofits. Corporation Counsel L. John Van Norden said it could also set a dangerous precedent, leading to sweeping retroactive exemptions for veterans, seniors and anyone else who didn’t file their paperwork on time.
    However, the state legislation says the city did have a legal way to help out the nonprofits.
    According to legislation sponsored by Assembly Minority Leader James Tedisco, R-Schenectady, the state Real Property Tax Law allows assessors to use their own discretion in cases involving nonprofi ts. If they observe that the nonprofi t is still operating as a tax-exempt agency, they can choose to continue the exemption.
    Tedisco’s legislation criticizes Mastro for not taking that option, saying his insistence on timely paperwork “result[ed] in impossibleto-pay tax burdens on churches and charities.”
SOME LEFT OUT
    However, the legislation doesn’t cover all 12 of the active nonprofi ts that didn’t file their exemptions. Only six were included because the city did not respond to Tedisco’s requests for a full list of the affected nonprofits, communications director Joshua Fitzpatrick said.
    “We sent a letter out on May 30th asking for information and telling them what names we had,” Fitzpatrick said. “We didn’t hear back.”
    Nonprofits that weren’t in the legislation include several churches, the Loyal Order of the Moose and the Schenectady Civic Players.
    Corporation Counsel L. John Van Norden said he passed on the names of any nonprofit that complained to him about the exemption issue.
    “If they did not approach us, we did not refer them,” he said.
    Members of the Loyal Order of the Moose appealed to the Schenectady City Council for help at a public meeting, but Van Norden said that didn’t count.
    “They complained to the mayor. I’m not sure they approached the mayor,” he said.
    Mayor Brian U. Stratton added that he feels the Moose are “deliberately delinquent” because they took on a building in 2005 after the fi ling deadline, refused to pay the $8,200 tax bill, and then missed the 2006 filing deadline.
    He added that the other nonprofits don’t have any excuse for missing the filing date.
    “They all had several notices. We’ve bent over backwards accommodating them,” he said.
    Van Norden acknowledged that he could have asked Mastro for a complete list of late-filers to give to the state so they could be included in this week’s legislation. When asked why he did not do that, he said, “Look, these nonprofits have certain obligations. They received a number of warnings and they didn’t file.”

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Nonprofits that weren’t in the legislation include several churches, the Loyal Order of the Moose and the Schenectady Civic Players.
    Corporation Counsel L. John Van Norden said he passed on the names of any nonprofit that complained to him about the exemption issue.
    “If they did not approach us, we did not refer them,” he said.
    Members of the Loyal Order of the Moose appealed to the Schenectady City Council for help at a public meeting, but Van Norden said that didn’t count.
    “They complained to the mayor. I’m not sure they approached the mayor,” he said.

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“They all had several notices. We’ve bent over backwards accommodating them,” he said.
    Van Norden acknowledged that he could have asked Mastro for a complete list of late-filers to give to the state so they could be included in this week’s legislation. When asked why he did not do that, he said, “Look, these nonprofits have certain obligations. They received a number of warnings and they didn’t file.”

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SCHENECTADY
Moose cry foul over tax bill
Some nonprofits getting a break
BY KATHLEEN MOORE Gazette Reporter

    Members of the Loyal Order of the Moose are fuming because they still have to pay taxes on the lodge’s property while the mayor helped six other nonprofits get off the hook.
    The mayor is now trying to mend fences with the Moose, but they say they’ve been attacked and insulted. Now they’re talking about organizing all of the nonprofits that they believe were treated unfairly by the city this week — and they say that those agencies represent thousands of votes.
    The issue began when 12 nonprofits, including the Moose, failed to file their annual paperwork to preserve their tax exemption. The city taxed each agency, handing out bills that some agencies said pushed them to the edge of bankruptcy. The situation was finally resolved this week when state legislators passed a special law restoring their exemptions.
    But city officials did not give the state all 12 agency names. Only six nonprofits got the special retroactive exemption.
    The Moose, whose members had brought the issue to light when they publicly complained at a City Council meeting, were left off the state list. When city officials were asked to explain how that happened, Corporation Counsel L. John Van Norden said he chose to hand over only the names of agencies that “approached” the city about the issue.
    As for the Moose, he said, “They complained to the mayor. I’m not sure they approached the mayor.”
    The mayor added that the Moose were “deliberately delinquent” and said nonprofi ts must file their paperwork on time or pay the consequences.
    Ken Montgomery, a representative of Lodge 251’s board, responded, “We are givers, not takers. The Loyal Order of the Moose has donated over $20 million to worthwhile charities, to which the city and the residents of Schenectady greatly benefit.”
    He said the mayor was attacking the Moose Lodge.
    “We take great offense,” Montgomery said. “We’re a strong body of volunteers and we work hard for this city.”
    Mayor Brian U. Stratton insisted Friday that he hadn’t meant to offend the Moose. But, he said, lodge members bought a commercial building and did not pay the taxes owed on it, as well as missing the fi ling date for a tax exemption the next year.
    “There has to be some responsibility on the part of the nonprofits,” he said. “They chose by their own volition not to pay those taxes because they needed the cash flow for other things … I support them as a wonderful, charitable organization but there was a financial obligation attached to the building they chose to move into.”
    Stratton also said he wanted the Moose included in the state legislation, although he could not explain how they were left out. State officials said they asked for every agency name but got no response.
    “I think it was a rushed process,” Stratton said. “I’m not saying the Moose are more guilty than anyone else.”
    Moose members were not appeased. They said they plan to organize all six agencies that were left off the list to make sure they are included in new state legislation.
    “We are reaching out to all of them. They represent thousands and thousands of votes in this area,” Montgomery said.
    A spokesman for Assembly Minority Leader James Tedisco, R-Schenectady, said it’s likely the state Legislature will restore those agencies’ 2008 tax exemptions. But the Legislature can’t act now — the session ended this week. The next regularly scheduled session isn’t until January.
    In the legislation passed this week for the other six nonprofi ts, the city was directed to refund any taxes those agencies had already paid. Those who must wait until next year say it will be a struggle to stay afloat until then. Some have decided to simply not pay the tax.
    The Schenectady Civic Players is one of the few that has already paid its taxes but was left off the state legislation. President Thomas Heckert said the allvolunteer theater company was taxed “tens of thousands of dollars” because key leaders left and no one else knew to file the tax exemption paperwork on time.
    “We’ll be the first ones to say it was totally our fault,” Heckert said. “It’s a lot of money, but we’ve paid.”
    He said the company’s attorney has been discussing the situation with the city since February, but Van Norden said he only heard that the company was involved this month. He said he has passed on the company’s name to the state for future legislation.
    Heckert said he doesn’t understand why the company wasn’t included in the first legislation, but he was careful not to criticize the city.
    “It’s unfortunate that it happened,” Heckert said. “We are trying to work with the city to rectify that. It is an issue … in these economic times, entertainment dollars are certainly being stretched. We are feeling the crunch. If we would have to continue paying taxes like we did, we would not be able to last much longer.”

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EDITORIALS Sch’dy should treat nonprofits all the same

    When a handful of Schenectady’s nonprofi t organizations failed to dot their I’s, cross their T’s and file the proper forms to maintain nonprofit status last year, city bureaucrats sent them tax bills and insisted they be paid. There was really nothing they could do, officials said. But of course there was, and, as best they could, Assemblyman James Tedisco and Sen. Hugh Farley took it upon themselves to do it — by speeding bills through their respective legislative chambers that retroactively exempted the specific nonprofits from having to pay. Phew! Except the bills only applied to half the affected organizations.
    For some peculiar reason, Corporation Counsel L. John Van Norden decided to provide state legislators with only the names of delinquents that bothered to complain to him personally about their tax bills. (In one case, a group complained to the mayor, but that didn’t count.) Thus, only six of the 12 that got sent bills were granted relief in the waning hours of this year’s legislative session. The others are stuck, at least for the time being, as victims of one of the most unevenly and absurdly enforced tax policies imaginable.
    Legitimate nonprofit organizations like churches, fraternal organizations and private welfare agencies serve an invaluable function in a city like Schenectady. A policy so hostile that it threatens their very existence is selfdefeating: If you make these outfits pay taxes, they’ll have less to spend on their good deeds, their programs that benefit the community, scholarships, etc. And if you put them out of business or drive them out of town, what have you accomplished?
    The city’s financial situation is no longer such that it has to behave so desperately. Nonprofits are often run by volunteers who deserve to be cut some slack if they don’t adhere so strictly to every rule. Granted, the city went to great lengths to warn some of them, but it still seems hardhearted to take such an unwavering approach. And to agree to provide relief on such an arbitrary and capricious basis only adds insult to the injury.
    Councilman Mark Blanchfield is right to want to make amends and pay these nonprofits back next year. Here’s hoping the rest of the council will go along.

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SCHENECTADY
City aims to resolve nonprofit tax flap
Some officials say matter handled poorly
BY KATHLEEN MOORE Gazette Reporter

    Saying the matter was handled poorly, the Schenectady City Council is now trying to sort out the mess in which a dozen nonprofi ts were taxed because they did not file their tax-exemption paperwork in time.
    Half of those nonprofits will get their taxes refunded, thanks to a special act of the state Legislature last month, but the other half weren’t included. Councilman Thomas Della Sala said that was unfair and directed city offi cials to come up with a complete list of the affected nonprofits, so they could be exempted by the state. Each of the nonprofits failed to file their annual statement telling the city that they were still a nonprofit and therefore tax-exempt.
    “I have no problem with holding the nonprofits accountable if they haven’t filed their paperwork on time,” Della Sala said at Monday’s council committees meeting. “I am having a problem with the situation where half of them are forgiven.”
    Councilman Mark Blanchfi eld said the city should never have taxed the nonprofits in the first place.
    “The filing date has been appropriately used by assessors to weed out fraud,” he said. “That’s what it’s for.”
    He said the assessor should have checked on the 13 nonprofits that didn’t file. He would have found that only one — a church in Bellevue that had closed — was no lon- ger a nonprofit. Instead, Assessor Patrick Mastro simply added all 13 to the tax roll.
    Then, when some of them complained and were told to ask their state legislators for help, the city did not give the state a list of all 12 affected agencies.
    Corporation Counsel L. John Van Norden said Sen. Hugh Farley’s staff has repeatedly asked him for a full list, but he doesn’t have it.
    “I can’t tell you who they are,” he told the council.
    Della Sala told him to get the list from Mastro and give it to Farley.
CREATING ANIMOSITY
    Councilman Gary McCarthy said the entire issue, which has dragged on for six months now, should have been handled better.
    “We’re now creating animosity in the community,” he said. “It should have been handled differently internally. If they’ve had that exemption for the last 20 years, what do we have to do to make them equal with the ones that are more vocal or seen as having more stature in  the community?”
    Blanchfield added that the city should just not collect taxes from any of the legitimate nonprofits.
    “We know they’re operating as a nonprofit. Let’s give them what they’re entitled to and move on,” he said. “This has been a huge waste of time.”
    Most of the council is opposed to broadcasting those meetings, although the voting sessions are already broadcast live.
    The two most vocal opponents to the broadcasting, Councilman Joseph Allen and Councilwoman Denise Brucker, were initially dismissive of the sound system idea.
    “Summer’s almost over,” Allen said.
    Brucker added that the inaudibility isn’t a serious problem.
    “It doesn’t seem to affect too many people,” she said.
    Blanchard disagreed, saying the meetings violate the Open Meetings Law if the audience can’t hear what their representatives are saying.
    She got the council’s support for the microphones by agreeing to legislation that would involve just that purchase, not the addition of broadcasting the meetings.
NEW SOUND SYSTEM
    In other business, council members warily agreed to buy microphones and speakers for the committees room, where the council’s public discussions are usually inaudible over the drone of the air conditioners during the summer.
    The sound system would cost $3,200, including installation, according to an estimate from SACCTV. That’s far less than the $10,000 estimate the city received from a for-profit company last year.
    C o u n c i l w o m a n B a r b a r a Blanchard has been championing the issue, but her colleagues have not been enthusiastic because she wants to hook the microphones into a camera so the committees meetings can be broadcast on SACC-TV.