1 Avon Place, Suffern, NY

Rockland IDA Terminates Avon PILOT; Ramapo and Suffern File Notice of Claims Against IDA For Waiving Recapture Rights

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Attorney Says IDA Acted Appropriately; Avon Satisfied Payments Due Under The PILOT

By Tina Traster

The Village of Suffern, the Town of Ramapo and the school district were hopeful when Avon demolished a tired manufacturing facility and built a $100 million state-of-the-art research and development complex on eleven acres on the eastern edge of the Village of Suffern in 2005. Avon relocated manufacturing employees to Ohio but brought a vibrant corporate partner to Suffern with the help of a PILOT program through the Rockland County Industrial Development Agency.

“Avon came and got a 20-year deal,” said Curley. “Suffern did everything to help them along.”

Now, with Avon winding down its operations and relocating its employees overseas, both the Village of Suffern and the Town of Ramapo have filed “Notices of Claims” against the county’s IDA, alleging that the IDA acted illegally by unilaterally terminating the PILOT (payment in lieu of taxes) agreement without consulting the town or village. The town and village are charging that the IDA improperly waived “rights to recapture” some of the benefits Avon enjoyed when Avon terminated its PILOT agreement in April, more than a year before its contract was due to expire.

The friction is playing out while Avon is marketing the site. Sources say Regeneron Pharmaceuticals, headquartered in Tarrytown, is looking at the 235,000 square-foot, four-story building on the 11-acre site for laboratory space. Some estimate Avon is trying to sell the building for $40 million.

Regeneron has not filed an application with the IDA; Suffern Mayor Michael Curley would only say “a pharma company and others” are looking at the building. Loopnet, the commercial real estate site, lists the property as “Under Contract.”

“Avon came and got a 20-year deal,” said Curley. “Suffern did everything to help them along. Suffern sacrificed to help them. But when it came time to let them out of the PILOT, the IDA didn’t notify the village, town, county, or school district. The IDA acted unprofessionally and incorrectly.”

At the IDA’s April 2023 monthly meeting, an agreement was hashed out between the IDA and Avon Capital Corporation. The agreement, called a “Termination Resolution” formally cancelled the PILOT. Avon requested, and the IDA agreed, that the IDA would “waive its rights to seek recapture of any of the benefits provided to the Company (Avon).” Avon agreed to pay the remaining, but reduced taxes, under the agreement, as a condition of termination.

Neither Curley nor Ramapo Town Supervisor Michael Specht were consulted or informed of the termination agreement. The Notice of Claim is essentially a precursor to a town or village’s intent to file a lawsuit.

Lino Sciarretta, the attorney representing the IDA said, “with respect to notices of claim we received, the IDA acted appropriately in all respects, and Avon satisfied payment options under the PILOT.

Together Suffern and the Town of Ramapo are seeking $1.5 million in damages, citing in its notices that the IDA is in “breach of contract and breach of fiduciary duty under General Municipal Law.” The charging papers also say IDA failed to provide timely notice of termination and were derelict in handling the transaction “in good faith and fair dealing.” The claims also state that the action amounted to “tortious interference with the right to contract.”

IDA disputes the claims, saying that “recapture” rests with the discretion of the IDA. The IDA further says that Avon has paid the balance of its taxes – roughly the same amount the town and village is seeking in damages – to fulfill its financial obligation to the four taxing entities.

But both Curley and Specht say the dissolution of the PILOT was not as simple as settling the tax bill. Specht said the town has filed a notice of claim “to protect our rights.”

The town’s filing says “the town does not know at this time whether a “Recapture Event” occurred during the term of the PILOT Agreement and therefore its damages or injuries are yet unknown.

Partly at issue in the filings is whether Avon maintained the terms of the PILOT agreement, particularly in terms of the number of employees working at the facility over the past few years as the company was winding down its operations.

Under the terms of the PILOT, in 2022, Avon paid about $600,000 in taxes, saving more than $1.6 million it would have paid absent the PILOT. The PILOT agreement with the IDA required Avon to provide and maintain a certain number of full-time employees at the site. When the agreement was executed, Avon had 274 full-time employees in Suffern. Avon committed to maintaining those jobs and creating 70 additional full-time jobs. At year-end 2022, Avon had only 151 employees on site, having transferred the bulk of its staff to overseas locations as part of its reorganization plan.

Ramapo and Suffern say that if Avon relocated employees, it failed to live up to the agreement, a percentage of the real estate tax benefits that accrued to Avon during the PILOT agreement, plus interest and penalties, must be repaid to the taxing jurisdictions. The PILOT also says the agreement “may not be modified or changed without the written consent of the taxing jurisdictions.”

When asked how he’d feel about another corporate entity enjoying a PILOT, Curley said, “I’m open, I have a responsibility to listen, I’m hoping for a good responsible tenant with employees that work there.”

Curley said PILOTs are fine but they only work when companies bring a workforce that buys homes and shops in the village and town.

More than 100 years ago, Avon came calling on Suffern. Originally called the California Perfume Company, Avon was among the largest employers in the county. In 2002, Avon ceased manufacturing in Suffern and in 2003, the company broke ground on its research and development center on the Suffern campus.

Corporate entities seek PILOT programs, often stating they will take their business elsewhere without them. Avon’s benefits included breaks on sales and mortgage recording taxes in the early years, as well as a known tax obligation throughout the duration of the contract. Towns often trade the concession on taxes with the promise of a company building a long and stable business that stays in the municipality and benefits both the workforce and Main Street.

“If the IDA had brought everyone in and we would have got a clean deal, ok,” said Curley. “Now the IDA has forced us to litigate.”