Town can profit from arcane tax law

CORNWALL — An odd, old property assessment option has once again become a boon for town coffers.

Cornwall is one of the last towns in the state to harbor “10 mill property.� It is difficult to find any official information through the state on this unusual assessment designation. It seems the nearly obsolete concept is left to local assessors to handle.

Cornwall Assessor Barbara Bigos offered a basic explanation.

Decades, ago, maybe as early as the 1920s, the state sought to protect large tracts of farmland with legislation that allowed towns to give big tax breaks. Farms were going out of business. Families were given an option that allowed many to hold onto the land, rather than sell it off by the acre.

Some believe that the mass deforestation by iron industry charcoal makers prompted the incentive.

The plan was simple. The property would never be taxed at more than 10 mills.

There were a few catches. The property can never be developed or deforested. A property owner electing to drop the 10 mill protection is liable for a penalty based in part on how long the reduced assessment applied and on the change in market value. As soon as the property is sold or split, a penalty applies.

“It’s a complicated formula,� Bigos said.�But since these properties have been 10 mill for a long time, and property values have increased so much, the penalties are huge.�

The latter is the key. Property has become so valuable in most cases, driven in large part by the desirability of living in Cornwall, they can be sold at prices that can be worth the penalty.

Bigos noted the sale of the Nash property on Popple Swamp Road in 2006. The penalty amounted to almost $87,000.

A more recent sale of 10 mill property incurred a penalty of more than $260,000.

“The seller can negotiate with the buyer to accept the restriction, but in this case, the new owners didn’t want it,� Bigos said. “The law requires the seller pay the penalty.�

One hundred acres were protected as forest land, and Bigos said the property is already back on the market.

The town agreed to a 5-year penalty payment plan. The first payment of $33,330 was paid this year. The upcoming budget includes an expected penalty payment of $43,330.

The timing, economically speaking, couldn’t be better for the town. The revenue is helping hold the line on budgeted spending when it is needed most. But, the land is removed from protection.

On the other hand, Cornwall still has 18 properties designated as 10 mill. They add up to 1,687 acres out of nearly 30,000. That’s about 5 percent. Three large properties are owned by the Hollenbeck Club and another three by the state. It’s a good bet those properties, which include a lot of acreage not suitable for development, will remain as is.

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