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Promises or Projections?
Skate Time 209 Tax Fight Focuses on Wording

ACCORD – The crux of the question over whether Skate Time 209 has been fulfilling its obligations to receive tax breaks or not is something only lawyers, billing by the hour, can love: did Len and Terry Bernardo promise a certain number of jobs, or simply project them? And should statements made on the application for a payment in lieu of taxes be weighed as much as the statements in the final PILOT agreement?

While the amount of money the Ulster County Industrial Development Agency is looking to shave off of the PILOT's benefits is a small percentage — $8,000 out of two to three hundred thousand dollars, according to IDA chairman David O'Halloran — the process is politically charged by reason of the players. Len Bernardo, CEO of TLB Enterprises, which owns the skate rink, ran for county executive in 2007, and questions about the PILOT helped his opponent, Mike Hein, take the job. TLB's president is Len's wife Terry, chairman of the county legislature and outspoken critic of Hein's management style.

"What Hein did [in 2007] overstepped the bounds by singling out one application," said O'Halloran, who managed Bernardo's campaign for the executive's seat. The IDA under his chairmanship has striven to create policies which neutrally identify projects which are falling short of what's expected, he explained. Those policies, he said, "We consistently applied to all active applications. I didn't know who would be caught by the policy."

The red flag for Skate Time 209 was the response to a question on the application. That question asks "...will the Project preserve permanent, private sector jobs or increase the overall number of permanent, private sector jobs in the State of New York?" The response was "yes," and in the space for an explanation the applicant wrote, "We will create 26 new jobs upon opening."

Last week's article referred to that number as "job promises," but Mr. Bernardo didn't agree with that wording. "The application made job projections — they were not job promises," he advised by email. And those projections were actually exceeded, he pointed out, saying, "We opened with 43 employees," and that the rink had 28 on staff "for a long time" after that.

The recession which began in 2008 saw reduction in staff at Skate Time 209, as with many businesses. It also gave the IDA few project applications to review, and O'Halloran said that 2009-10 were spent revising policies, largely due to pressure from state officials to ensure compliance and "air our dirty laundry" by posting the results of application reviews online. Newer agreements include "clawback" provisions, entitling the IDA to actually take back tax breaks for past years if the applicant doesn't comply, and formalize job projections made on the applications.

But applications made prior to that, like TLB Enterprises', weren't subject to such stringent rules. For those older active applications, the IDA created a policy which allowed it to ask underperforming applicants to give back a portion of future savings voluntarily, or risk having the remainder of the agreement cancelled outright. O'Halloran said "five or six" businesses were found to be underperforming after a review of all the active applications. That review focused on criteria including the number of jobs (promised or projected) on the application, since those data were what was used to approve the PILOT agreement in the first place.

The actual agreement doesn't mention jobs, a fact which O'Halloran acknowledges. However, he maintains that the closing documents, including the PILOT agreement, are signed only after the IDA approves the application, making the application itself the key piece of paper. The entire case appears to hinge on the statement, "We will create 26 jobs upon opening," and what that actually means. Bernardo maintains that those jobs were never claimed to be full-time, which would be difficult as the rink isn't even open 40 hours a week, and that he has documentation that they exceeded that number upon opening and for some time thereafter.

The IDA believes that those jobs should have been ongoing, and wanted a reduction of benefits to reflect the fact that the rink has "4.5 jobs this year, with 26 promised," according to O'Halloran, basing that position on the notarized application.

Bernardo points to the signed PILOT agreement, which doesn't mention jobs, only tourism benefits.

That's why the requested cut, $8,000 was relatively small, says O'Halloran. The rink draws people to the area, and he called it a "wonderful experience for our youth. It's a serious amount of money, but not devastating to the organization," he said. "Our goal is to keep [Skate Time 209] operating."

But the cost rose when TLB didn't make the voluntary agreement, and O'Halloran confirmed that Skate Time 209 "has been put back on the tax rolls 100%."

While there have been claims about the process being politically motivated, O'Halloran is one of those who denies the allegation. "Communities must know there is a process, and if the promises are not kept they will not get all of the benefits," he said.

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