The agency created to lure new business to Peekskill with various incentives, including property tax breaks, underbilled two of those companies by more than $700,000 over a six-year period.
The Peekskill Industrial Agency (PIDA), a government body separate from Peekskill city government, discovered the errors when a new financial professional was brought on board in mid-2023.
The PIDA’s board of directors can grant PILOT (payment in lieu of taxes) agreements that reduce the property taxes a developer pays for a set period of years before the tax resets to its normal rate. In theory this brings in more revenue than the city would realize if a project never happens and creates jobs and more business.
But for two projects, the Holiday Inn Express on John Walsh Boulevard and the Drum Hill Senior Living Community on Ringgold Street, the already-reduced yearly payments were billed far lower than they should have been.
“Past PILOT management and review practices were discovered not to have been adequate and have been enhanced,” Matthew Rudikoff, the executive director of the PIDA, told The Herald in an email. “These enhanced financial management controls are now Board-approved and fully operational.” The billing problems were disclosed by Rudikoff at several IDA board meetings this year.
By New York law, the City of Peekskill is responsible for collecting all the property taxes owed to various tax districts and then distributing the money. A tax bill from Peekskill includes payments for the Westchester County Solid Waste district, the Library Fund, Peekskill City taxes, Westchester County property taxes, the Peekskill City School District and the County Sewer District. The city distributes the money and has to cover the payments from its own funds.
Holiday Inn, Drum Hill underbilled by $702,416
According to Rudikoff, the IDA’s review of billing practices disclosed that the developer of the Holiday Inn Express on John Walsh Boulevard was underbilled by $496,797. Of that amount, $276,000 has been collected and the remaining $220,797 will be paid by this September, Rudikoff said.
The PILOT agreement for the project (Hotel LLC) dates back to 2012 and is set to expire in 2027. Entries in the city’s budget that detail each year’s revenue breakdown seem to clearly indicate that something was wrong in the billing.
In 2016, the city budget states that the Holiday Inn PILOT payment collected was $29,797. In the following years the payments drop without an explanation.
The annual payments plummet to $2,540 in 2017, $2,537 in 2018, $2,500 in 2019, $2,800.13 in 2021, $8,642.20 in 2022 and $3,038.73 in 2023. The current 2024 budget anticipates collecting $52,100 in PILOT payments for the Holiday Inn project this year.
According to records from the Peekskill Finance Department, the full market value of the Holiday Inn is $12,552,301. The PILOT agreement states a total tax exemption of $303,032.39.
In the case of the second underbilled PILOT that Rudikoff disclosed, the developer owes the PIDA $205,619. That amount is scheduled to be paid in connection with a refinancing the developer is currently pursuing with its lender, he said. The Herald has learned that project is Drum Hill.
Rudikoff is a full-time employee of Peekskill as the city’s economic development director. He is paid a fee to serve as PIDA executive director.
Phone calls left for the developers of the Holiday Inn (George Liaskos) and Drum Hill (John Saraceno) were not returned.
Finding and fixing the billing mistakes
The PIDA hired an outside financial professional, Abisoye Oridedi of Ruki, LLC, to oversee its finances last year. Previously a city employee was paid extra to do PIDA work in addition to their regular duties. Oridedi has also managed Peekskill’s DRI-funded Downtown Redevelopment Fund.
“[The IDA] engaged an outside firm to be CFO to enforce the IDA’s commitment to consistently and accurately managing contracts and revenues in the ever-evolving and increasingly regulated Agency financial management environment,” Rudikoff told the Herald.
“That involves building in enhanced financial management controls including a more detailed monthly PILOT Receivables Ledger; an enhanced multi-level PILOT billing approval system; and a detailed PILOT Invoice Template setting forth the PILOT Agreement and established PILOT payment amount due.”
The Peekskill IDA is audited annually by an outside accounting firm. That firm, PKF O’Connor Davies LLP, did not uncover any of the billing errors over a multi-year period. A phone call to Chris Kopf of the firm requesting comment was not returned.
Tax breaks granted by IDAs are under attack in Albany by more than 20 unions, school district lobbyists, and government watchdog groups that want to ban reductions in school property taxes through IDA PILOTs. They argue that the school districts have no say in negotiating the breaks but are harmed financially by the resulting loss in revenue.
An analysis by the watchdog group Good Jobs First claims that New York’s public schools shared in the loss of at least $1.8 billion in local tax revenue in 2021 due to tax abatements granted by local IDAs. Peekskill was listed as one of the districts that lost the most school revenue.
