James Skoufis launching probe into Orange County IDA tax breaks

State Senator James Skoufis announced Wednesday he is investigating tax breaks granted by the Orange County Industrial Development Agency.

The investigation will be conducted through the Senate's Committee on Investigations and Government Operations, which Skoufis chairs.

Skoufis, D-Cornwall, is looking into whether all the tax breaks needed to be granted.

One application that Skoufis cited was for a 15-year payment in lieu of taxes (PILOT) agreement for an expansion of Milmar Foods, a frozen food manufacturing facility operated by Mack Brothers LLC in Goshen.

The application estimated the annual sales and use tax exemption at $487,000, and the mortgage tax exemption at $75,000. The annual real property tax abatement was listed only as "TBA."

On the application, in response to the question, "Will this project move forward without the requested incentives?" the "yes" box was checked.

Skoufis said most applicants check the "no" box. He is questioning why tax breaks are needed, if the project is going to proceed anyway.

"I raised that objection at a public hearing," Skoufis said. "But they gave them exactly what they asked for."

While focused on the Orange County IDA, Skoufis said his investigation also will be taking a look at other IDAs across the state, "to see if things like this are happening elsewhere."

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In a statement released Wednesday, the IDA defended its process, saying in part, "Incentives are awarded to project developers only after a thorough cost-benefit analysis."

The IDA also noted that all applicants must provide a statement indicating how their project would fare without the benefit of tax breaks. While indicating they would proceed without the tax breaks, Milmar did say there would be fewer jobs created, and they would take longer to create, the IDA noted.

"Contrary to some misconceptions, an exemption from real property taxes awarded by an agency does not diminish the tax base realized by the taxing jurisdictions and their school districts," the statement continued. "Rather, each of those taxing jurisdictions and school districts continue to receive 100 percent of the real property taxes they always received."

The Orange County IDA previously came under fire in 2021 when the Orange County District Attorney's Office investigated reports of financial impropriety and conflicts of interest at the agency.

The county legislature removed the agency's entire board and appointed seven new members. The new board then canceled a $738,000-a-year contract with managing director Vincent Cozzolino's firm, and CEO Laurie Villasuso resigned.

Cozzolino pleaded guilty to corrupting government and agreed to repay $1 million of the more than $2.6 million his firm, Galileo Technology Group, had billed the IDA since 2015.

Villasuso also pleaded guilty to corrupting the government and admitted to being on the Galileo payroll while also approving or signing the firm's annual contracts in her IDA role. She paid the IDA $175,000 in restitution.

And Ed Diana, a former three-term county executive who served on the IDA board, pleaded guilty to two felony counts of offering a false instrument for filing, which were later reduced to misdemeanors, and one misdemeanor count of permitting a prohibited conflict of interest. He also admitted to being on the Galileo payroll and paid the IDA $90,000 in restitution.

Skoufis is not necessarily expecting to find any criminal wrongdoing in his investigation, but will refer any such findings to the proper authorities.

"We are not prosecutors," he said.

Skoufis said his main purpose is to shed light on an area that affects those who pay school and municipal property taxes, whose burden increases when others are granted exemptions.

"Many people don't follow IDAs and don't even know what they are," he said.

Mike Randall covers breaking news for the Times Herald-Record, Poughkeepsie Journal and The Journal News/lohud. Reach him at mrandall@th-record.com or on Twitter @mikerandall845

This article originally appeared on Times Herald-Record: Orange County IDA tax breaks under state senator's investigation