HORTONVILLE, NY — The Delaware Town Board has a lot to think about this budget season. It has to weigh upcoming capital projects—like a new wastewater treatment plant—against the long-term impact of things like inflation and the rising cost of health insurance.

Something else altogether is foremost in the board’s conversations: an approximately $80,000 hole in the budget left by a recent court decision.

Delaware’s budget woes

Town of Delaware supervisor Scott DuBois explained the situation at an October 12 budget meeting.

The town has to pay the Villa Roma, a resort and conference center located within the town’s borders, around $401,000 to make up for past mistakes in its property assessment. DuBois plans to take around $250,000 from the town’s fund balance, drawing that fund down by around half, and to let around $150,000 go back to the taxpayers.

Doing it all in one year, without borrowing any money, will rip the Bandaid off, said DuBois. Taxes will go up this year—by approximately $56 per $100,000 in assessed value—but then taxes will go back down, and the town will be done with it.

Once past the back taxes, the town still has to work around a tax roll that’s around $80,000 under what it used to be, a consequence of the Villa Roma’s assessment being corrected. That’s a problem for a town as small as Delaware; according to DuBois, $17,000 moves the town one percent in either direction.

The town plans to absorb the $80,000 through budget cuts, not tax increases, according to DuBois. Discussed at the budget meeting were several ways of doing that, including reducing personnel in the highway department as members retired.

Improperly assessed

The Villa Roma “is strongly positioned as one of the leading businesses in our community,” according to its website. The resort boasts over 400 full-time employees and over 200,000 visitors per year.

The Villa Roma went to the town to grieve its tax assessment in 2017. The town had assessed its properties as being worth $23,348,000; the resort disputed that assessment, claiming it was worth much less at $9.9 million.

The legal case dragged on for years, during which time the resort faced financial hardship: according to income statements made during the trial, the Villa Roma’s properties operated at a combined loss in 2018 and 2019.

The case went to trial in September 2021. Delaware got the best appraiser it could for the case, according to DuBois, who said it used the same appraiser the county uses in such scenarios. The Villa Roma had its own appraiser to defend its assessment of its properties.

Judge Stephen Schick weighed appraiser against appraiser and found in favor of the Villa Roma. The judgment issued in May 2022 found that the town’s appraiser had overlooked key details and misanalyzed the Villa Roma’s properties consistently throughout his analysis.

That judgment applied to the Villa Roma’s taxes going back to 2017. Schick reduced the Villa Roma’s assessment from $23,348,000 to $11,100,000 for 2017 and 2018, to $10,628,252 in 2019, and to $10,416,070 in 2020. The 2020 figure will stand for the assessment rolls in 2021-23 as well, by order of the court.

Back taxes paid back

The court’s decision affects every municipality that has the Villa Roma on its tax rolls. Besides the Town of Delaware, the Villa Roma pays taxes to the Sullivan West Central School District, to Sullivan County, to the Upper Delaware Volunteer Ambulance Corps and to the Jefferson Volunteer First Aid Corps.

Municipalities with larger coffers feel the judgment less than the town.

The Sullivan County treasurer’s office refunded the Villa Roma $782,000 on the taxes it had already paid, according to treasurer Nancy Buck. That figure understates the true cost of the judgment; the Villa Roma hadn’t yet paid all its taxes owed, and will pay those at the new, reduced rate.

The county will collect from the Town of Delaware its $468,500 share of that refund figure. The town is responsible for collecting $145,000 from the special districts affected.

The process leaves the county paying $313,500, the town paying $323,300 and the special districts paying $145,200. (Again, these figures understate the full cost of the judgment; according to figures DuBois cited on October 12, the town’s payments total $401,140.61, the fire district’s total $100,877.51 and the ambulance district’s total around $43,835.25.)

It’s a normal process, said Buck; the county gets served every year with quite a few tax assessment cases. This one is noteworthy because of the sums of money involved.

Sullivan West has to pay the Villa Roma over $900,000, according to superintendent Kathleen Bressler.

The district maintains a four-percent fund balance for emergencies, giving it the funds to pay that amount. Bressler doesn’t anticipate a major impact on the school’s finances in future years from the decision: “We will feel it as we feel any change to our tax base, however, we are pleased that the property is still a part of our tax base.”

Up for sale?

Discussed throughout the town board’s deliberations were reports of the impending sale of the Villa Roma.

The potential new owners had nothing to do with the town’s situation, said DuBois. Anyone had the right to grieve their tax assessment, and the sale price of the property wouldn’t affect that assessment.

The court’s judgment made reference to the Villa Roma’s sale contracts. According to that judgment, the Villa Roma went up for sale twice in the past decade: Inner Circle Investments had a contract to buy the Villa Roma for an ultimate price of $14,880,000 from 2015 to 2019, and Fay Villa Roma LLC had a contract to buy the Villa Roma for $16,250,000 from 2020 onwards. The Villa Roma’s appraiser indicated that the later contract had not yet closed; more recent reports indicate that negotiations are still ongoing.

Next steps

The town board decided on a preliminary budget at its October 12 meeting. That budget is available for review upon request at the Town of Delaware municipal building, 104 Main Street, Hortonville; call 845/887-5250, ext. 105 for an appointment.

The board will hold a public hearing on the budget at 4 p.m. on Friday, October 28, also in the municipal building.