Part 1 of a 4-Part Series
Series Introduction
This is Part 1 of a four-part series examining PILOTs in Mount Vernon — what they are, how they work, and why they matter to every resident and taxpayer. Over the next four installments, we will explore the mechanics of tax breaks, the impact on schools and city services, the patterns of political influence, and what can be done. This series is written for ordinary residents, not policy experts. If you pay property taxes or care about where public money goes, this affects you directly.
We didn’t set out to write this series because the IDA is obscure. We wrote it because the IDA’s obscurity is the problem. Most Mount Vernon residents have never heard of the Industrial Development Agency. They’ve never attended one of its meetings. They’ve never been told that a board they didn’t elect has been giving away tens of millions of dollars in tax money — their tax money — to developers, for decades. This series puts those decisions in the open.
For more than 50 years, IDAs across New York have operated in the shadows of local governance. They are not mentioned in city budgets. Their meetings are rarely advertised. Their approvals are seldom explained to the public. And when residents do discover what’s happening — when they learn that a developer has been handed a decades-long tax break without public debate — they often ask the same question: How is this legal? The answer is uncomfortable: it is legal because the state legislature made it so, and because no one is watching.
What an IDA Is Supposed to Do
In 1969, New York State created Industrial Development Agencies under Article 18-A of the General Municipal Law. The concept was straightforward: communities needed help attracting business. Factories were closing. Commercial corridors were emptying. Traditional government was too slow and too bureaucratic to compete for investment. So the state created a new kind of entity — a quasi-independent public benefit corporation — that could move faster.
The cities were struggling. Factories were closing or leaving for cheaper locations. People and businesses were moving to the suburbs. Federal money that had propped up urban renewal was drying up. The usual tools, zoning changes and building permits, were too slow and too rigid to compete for investment. Cities needed to move faster, offer real incentives, and have some leverage when negotiating with developers. The IDA framework was designed to do all three.
IDAs were given real power. They could negotiate directly with developers. They could acquire property. They could issue bonds. And critically, they could offer tax exemptions — property tax breaks, sales tax exemptions, and mortgage recording tax waivers — to businesses willing to invest in their communities. The idea was that these subsidies would be temporary. A business gets a break for a defined period, gets on its feet, creates jobs, generates economic activity, and eventually pays full taxes. Everyone wins.
The model contained built-in assumptions. First, that tax breaks would be used sparingly and strategically — only for projects that would genuinely transform a community but couldn’t happen without the subsidy. Second, that the temporary nature of the break was real — meaning that at some point, five years or ten years, the subsidy would end and full taxes would resume. Third, that job creation would be verified and meaningful. And fourth, that local voters and taxpayers would have visibility into these decisions and some control over how they were made.
Today, New York State has 107 active IDAs — more than any other state in the country. Collectively, they hand out approximately $1.1 billion in annual tax subsidies. That’s not a rounding error. That is $1.1 billion every year that does not go to schools, fire departments, police, road maintenance, or any other public service. It goes, instead, to subsidize private development.
The Mount Vernon IDA is one of those 107 agencies. It was created by the state legislature specifically to serve the City of Mount Vernon. Its board is appointed by the mayor. Its meetings are technically public, though few residents attend. And over the past two decades, it has quietly reshaped the city’s tax base in ways most residents have never been shown and never consented to. Those decisions may happen out of sight – but residents live with the consequences every day.
What a PILOT Really Is
PILOT stands for “Payment In Lieu Of Taxes.” Strip away the jargon and here is what it means: it is a tax break, a developer pays less in taxes than they would otherwise owe. The difference doesn’t vanish. It becomes a bill that everyone else in the city pays.
Here’s the normal process: A developer builds a new building. Once it’s complete, the property gets assessed at its new value. The owner pays property taxes on that assessed value — taxes that flow to the city, the school district, and the county. Those taxes fund police, fire, sanitation, roads, parks, and most importantly, public schools. That’s the basic deal of property ownership: you build, you pay, everyone benefits.
A PILOT changes that deal. Instead of paying full property taxes, the developer negotiates a reduced payment — sometimes as low as 10% or 25% of what they’d normally owe. These reduced payments are locked in for a fixed period. In Mount Vernon, that period is often 30 years. Thirty years of paying a fraction of full taxes. Thirty years during which the city, the school district, and the county receive less revenue than the property would normally generate.
And here’s the part that rarely gets said clearly enough: the services still have to be provided. When a new building goes up, it doesn’t exist in a vacuum. Residents call 911. Garbage gets collected. Roads wear out. And if the building is residential — as most Mount Vernon PILOT projects are — children enroll in schools. Special education services are needed. Buses run. Buildings need heat. Teachers need salaries. All of this costs money. In a normal development, those costs are paid for by new property tax revenue. A PILOT breaks that link.
Consider a concrete example. Suppose a developer builds a 300-unit residential building in Mount Vernon. The property is assessed at $50 million. Normally, that owner would pay approximately $1.2 million per year in property taxes: roughly 60 percent ($720,000) to the school district, 20 percent ($240,000) to the city, and 20 percent ($240,000) to the county. Over 30 years, that would total $36 million in revenue.
Now suppose the IDA gives the developer a PILOT that requires only 25 percent of normal taxes ($300,000 per year). Over 30 years, the school district loses $21.6 million, the city loses $7.2 million, and the county loses $7.2 million. And at the same time, those 300 new units generate enrollment in Mount Vernon schools — children who need teachers, special education services, counselors, and transportation.
Here’s what that looks like in practice: Between 2016 and 2025, Mount Vernon’s IDA gave out over $60.4 million in tax exemptions to 21 entities. In return, they collected only $15.9 million in PILOT payments. That’s a net tax loss of $44.4 million in ten years. The school district alone lost $26.7 million. The city lost $13.3 million. The county lost $4.4 million.
These are not theoretical numbers. These are dollars that did not reach classrooms, did not fund police patrols, did not fix roads. They went, instead, to reduce the tax burden on developers — many of whom are building projects financed almost entirely with public debt, including federal Low-Income Housing Tax Credits. The developers bear minimal financial risk. The taxpayers bear all of it.
The “But-For” Test — and How It Gets Gamed
In theory, there is a safeguard built into the system. Every PILOT is supposed to pass what’s called the “but-for” test. The question is simple: Would this project happen “but for” the tax subsidy? If the answer is yes — if the developer would build the project anyway, even without the tax break — then the PILOT isn’t justified. The city would be giving away revenue for nothing.
In practice, the but-for test is a rubber stamp. Here’s how it works: A developer submits an application to the IDA. They include financial projections — often prepared by their own consultants — showing that the project “needs” the tax break to be financially viable. The IDA board reviews the application. And seems to approve them every single time.
No one independently verifies whether the developer’s projections are realistic. No one asks whether the developer would have built anyway at a slightly lower profit margin. No one examines whether the “need” for the subsidy is genuine or manufactured. The IDA has no staff economists. It usually just adopts the developer’s own numbers — and then approves based on those numbers.
The but-for test is meant to answer a crucial question: Does the subsidy actually change behavior, or is it just a gift? A project that would have been built anyway is a gift — pure and simple. The developer keeps the full value of the tax break as profit. The public gets nothing it wouldn’t have gotten anyway. But when you ask a developer whether a subsidy is necessary, the answer is nearly always yes. Why would a developer say no? There is no downside to claiming necessity. The costs of lying are zero.
This isn’t a Mount Vernon problem. It’s a statewide problem. State Senator James Skoufis, who chaired a major investigation into IDAs in 2023, found that across New York, IDAs routinely approve subsidies for projects that would have been built regardless. The investigation documented case after case where the “but-for test” was treated as a formality — a box to check, not a genuine inquiry.
But in Mount Vernon, the problem is compounded by something else: the IDA’s own record-keeping is abysmal.
When the New York State Comptroller audited the Mount Vernon IDA in 2014, the findings were devastating:
- No consistent standards for approving projects
- Missing or incomplete records for approved PILOTs
- Board members who didn’t even know their own agency’s Uniform Tax Exemption Policy existed
- $415,483 in unpaid PILOT payments that the IDA had failed to collect
- A shortfall of 671 jobs — the IDA promised 1,471 jobs from its projects and delivered only 800
- Job verification was based on “informal phone calls” to developers, not documented monitoring
That audit was over a decade ago. As we’ll show in Parts 2 and 3, nothing has fundamentally changed. The IDA still lacks independent capacity. The but-for test is still a formality. And the records are still abysmal.
Who Actually Pays
PILOTs don’t create money. They don’t generate revenue. They don’t produce wealth. They redistribute burden. When a developer pays less, someone else pays more. And in Mount Vernon, the someone else is you.
The school district takes the hardest hit. From 2020 to 2024, developers in Mount Vernon would have owed $19.675 million in school property taxes. Instead, through PILOT agreements, they paid only $5.822 million. That’s a loss of $13.85 million in school revenue in just five years. The city lost an additional $6.762 million in foregone taxes over the same period.
Think about what $13.85 million means for a school district like Mount Vernon’s. That’s teachers. That’s aides. That’s special education services for children who need them. That’s building maintenance for aging schools. That’s after-school programs. Mount Vernon is not a district with money to burn; it is the most fiscally distressed district in New York State.
The fiscal consequence is not subtle. When PILOTs suppress $13.85 million in revenue over five years, that’s roughly $2.77 million per year that does not arrive in the school district’s budget. For context, $2.77 million per year would fund roughly 17–20 teacher positions, including benefits, or about 30–40 special education aides, or approximately 15–20 school counselors in a district like Mount Vernon.
This is not a small accounting adjustment. This is legal corruption — a wealth transfer from public services to private developers, blessed by law and rubber-stamped by local officials. A Reinvent Albany and Cornell Policy Crossroads report documented how these harms fall unevenly — with districts serving higher proportions of students of color among those losing the most revenue per student.
Mount Vernon fits that pattern precisely. The IDA has directed significant subsidies toward residential development that brings students into schools already straining under budget constraints. The students are there. The costs are real. The services are needed. But the revenue to support them has been given away.
Why This Should Make You Angry
The numbers alone should be enough. But there is a deeper problem: the structure of the IDA itself invites exactly the kind of self-dealing, concentrated power, and political favoritism that turns a public agency into a private tool.
If PILOTs are meant for industrial development and job creation, why is Mount Vernon’s IDA handing out 30-year tax breaks to low-income housing developers who already receive substantial federal subsidies? If the board is supposed to provide oversight, why is it the smallest in the state, chaired by the mayor, and staffed by people whose livelihoods depend on remaining in the mayor’s good graces? And if the but-for test is supposed to protect taxpayers, why is it a rubber stamp?
These aren’t rhetorical questions. They have answers — answers that involve governance failures, campaign money, structural conflicts of interest, and a political machine that has learned how to use a public agency for private benefit.
The IDA structure itself creates perverse incentives. A mayor appoints the board. Developers who get breaks contribute to the mayor’s reelection. The board then approves more breaks. The contributions increase. The mayor’s power grows. This is not necessarily illegal. It is not necessarily a crime. But it is unethical and represents a system designed to concentrate power and distribute public wealth to private actors. It is a form of legal corruption — the kind that happens not in shadows, but in plain sight, blessed by statute, and defended by those who benefit from it.
In Part 2, we’ll explore what makes Mount Vernon’s IDA different from every other comparable IDA in the state — and why that matters.
*Numbers and data analysis are from mountvernoncitizen.org. Chris McDonough and mountvernoncitizen.org are not affiliated with the Civic Integrity Project.