Albany

The two leading Democratic candidates for mayor say there's no separating Gov. Andrew Cuomo's sweeping new tax break proposal to lure new businesses to New York from the state's continued refusal to pay the city for hundreds of acres of existing tax-exempt land.

Cuomo's Start-Up NY program, which could be voted on by the Legislature as soon as Friday, would grant extensive property, sales, property and business tax breaks to companies that relocate to state university campuses, their affiliates and nearby land — as well as income tax breaks for employees.

The legislation could have wide-ranging implications for Albany, where finances are already hobbled by more than $3.6 billion in tax-exempt state land and where the 330-acre Harriman State Office Building Campus next to the University at Albany represents the city's largest opportunity to lighten homeowners' load by bringing tax-free land onto the rolls.

The bill's impact on Harriman is still not clear, in part because university officials would be required to consult with local leaders on which properties beyond the college campuses would be included in the tax-free program. And the amount of off-campus space would be capped at 200,000 square feet, a fraction of the massive Harriman footprint.

Mayor Jerry Jennings has praised Cuomo's proposal as a bold plan to draw new industries to New York.

"With businesses come people who need to rent or buy homes," Jennings said. And his administration has also signaled that the program — first branded as Tax Free NY — may bolster Albany's long-standing case that the state should be paying it for revenue lost on the more than $660 million worth of state-owned Harriman land.

City Treasurer Kathy Sheehan, a Democrat running for mayor, seconded the call for renewed focus on the Harriman payment.

But while she praised Cuomo's intent, Sheehan cautioned the tax-free plan is thin on details explaining exactly how it would help a city where the commercial tax base — the part that draws on businesses, not homeowners — is already 80 percent tax exempt.

Billions in tax-free commercial property combined with a state-aid scheme that shortchanges the state capital compared to other upstate cities forces Albany to rely disproportionately on residential property taxes, Sheehan said. That reality, she said, could drive newcomers drawn by new jobs to settle in the surrounding suburbs instead.

"What we need to have a conversation with the state about is what it takes for that benefit to come to the city of Albany and not just the region in general," Sheehan said. "We've got to recognize that is our challenge. How do we capture that value?"

Former Councilman Corey Ellis, a fellow Democrat also running for mayor, echoed the need for the state to finally commit to a Harriman payment, known as a payment in lieu of taxes, or PILOT.

A bill that would have paid $11 million annually was vetoed by Gov. David Paterson in 2008. A new PILOT bill backed earlier this year by Assembly Democrats Patricia Fahy and John T. McDonald III, who both represent the city, has languished in committee.

"We can't afford just to continue to have no taxes," Ellis said of the tax-free plan, which was amended this week to include a prohibition on new businesses in tax-free zones competing with existing businesses nearby and a cap on the number of new workers exempted from income taxes at 10,000 statewide.

Fahy noted she and others with concerns about the bill lobbied to have language included to prioritize "underutilized properties" being included in the plans.

Ellis said he was comfortable with lawmakers approving Cuomo's proposal so long as it comes with assurances that Albany's unique situation will be addressed in the future.

"We understand the need to be competitive," said Ellis, who is vice president of the Capital District Black Chamber of Commerce, "but how does that affect our city?"

jcarleo-evangelist@timesunion.com • 518-454-5445 • @JCEvangelist_TU