AUBURN | The Merry-Go-Round Playhouse, Inc., after successfully appealing a Cayuga County Supreme Court decision, has been granted tax-exempt status for two Auburn apartment buildings it uses to house staff during the theater season.

The properties at 112 Franklin St. and 230 Genesee St. were determined unanimously by the state Supreme Court's Appellate Division, Fourth Judicial Department to be "incidental to the primary or major purpose of (the theater company)," which is a tax-exempt organization. The decision was filed March 22.

When the Playhouse challenged the taxes on the apartment buildings, which it purchased in 2011 for a combined $900,000, it lost the case in March 2012 in Cayuga County, but appealed the decision, arguing that under state Real Property Tax Law, any property that is used to further the primary purpose of a tax-exempt organization is also exempt from property taxes.

The appellate division confirmed that the Playhouse itself is tax-exempt, as it provides the "presentation of theater as the showcase for all the arts" and encourages "appreciation of wholesome entertainment in the Auburn area" and conducts "year round programs in the performing arts for children, teenagers and adults."

The lynchpin of the argument for the tax-exempt status of the apartments, however, was the Playhouse's argument that those housing units — 30 of them — are an integral part of its mission.

"Petitioner (Playhouse) met its burden ... by presenting evidence that the primary use of the properties furthers a primary or major purpose of that corporation," the decision stated.

According to The Citizen archives, the apartment buildings brought in more than $31,000 annually in property taxes for the city, county and school district in past years when they were privately owned.

With the decision from the appellate division, the case has been remanded back to Supreme Court in Cayuga County to determine how much of a refund the three municipalities owe the Playhouse.

However, the city of Auburn plans to try to fight the decision, said city attorney John Rossi.

Rossi said the Auburn City Council authorized his office to request permission from the state Court of Appeals to appeal the decision of the appellate division. Permission is required from that top court prior to an appeal of an appellate division decision.

City Councilor Peter Ruzicka said he is not optimistic about the city's chances of getting an appeal in time to help the budget situation and is upset that the Playhouse appealed the county decision even after the city has been generous in helping the theater company establish itself downtown.

"As a taxpayer, I view this as a kick in the teeth," he said.

And as a councilor, Ruzicka said he is concerned about the city's financial shortfall and how a potential refunding of taxes to the Playhouse could hurt the city fiscally even more.

"(The Playhouse) can certainly afford to give up this amount in taxes," he said.

Ed Sayles, producing artistic director for the Finger Lakes Musical Theatre Festival, which is produced by the Merry-Go-Round Playhouse, said the Playhouse is a non-for-profit organization and does not have surplus money to give up.

"It's even more important that the theater receives everything it's entitled to at this time, due to the fact that we have made a major commitment to the economic development of this community with our expansion into the Finger Lakes Musical Theatre Festival," Sayles said.

Staff writer Kelly Voll can be reached at 282-2239 or kelly.voll@lee.net. Follow her on Twitter at CitizenVoll.

(5) comments

fullytaxed

MGT is no friend of the taxpayers of Auburn. We hear so much about welfare and entitlements. This is the real welfare problem! How are the grand Promises and Projections working for Auburn and Cayuga county. Notice the Unemployment rate anyone? 9.7 its gone up not down. MGT is nothing more than a parasite to the community. Like everything else affiliated with this Broadway of the Fingerlakes idea, it all sucks money out of the Community. There was a time when MGT did plays for the playgrounds. The playgrounds for our children are now all gone, and so should the tax breaks be gone. If the MGT is such a good thing and has such high demand why cant it stand by its self without every tax payer subsidizing it. Most of us cant even afford a ticket! So this is giving back to the community? Yes Auburn should fight this and make MGT stand up on its own without a taxpayer crutch.

patchwork

The MGR just can't take enough from the taxpayers and appears to be just sucking the life out of this community. Sayles says they can't afford taxes, but can afford to pay a million bucks for 30 apartments, seriously? Then he throws out that economic development talk. A few weeks ago this newspaper had an article where the manager of the pavilion stated that theater patron groups come with little money, which means little economic impact. When will people wake up to the fact that highly subsidized arts are not an economic driver and while they demand tax exemptions, they only cost us more money in the long run and that impacts our ability to run school programs and provide services. MGR, a community minded organization, I don't think so.

patchwork

"Ed Sayles, producing artistic director for the Finger Lakes Musical Theatre Festival, which is produced by the Merry-Go-Round Playhouse, said the Playhouse is a non-for-profit organization and does not have surplus money to give up."

But the public IRS 990 forms, which are available online, may show a different story. The organization purchased one apartment building in Dec. of 2010 and the other in Jan 2011. The 990 for 2011 shows a raise in pay, for an individual, of $31,039 over what was reported in the same column for 2010. Interestingly enough this news article shows that property taxes are about the same amount of $31,000. I guess an obvious thought might be, yes they can afford a $31,000 tax bill, but maybe chose to direct the necessary funds elsewhere.

movingon

Lets remember that this is not a question of whether or not MGR can pay the 31k, the question is are they required to. They are non profit. Non-profits don't pay property tax! Get over it. The city and county owe them the money because MGR never should have paid it to begin with.

patchwork

I understand the ruling, but If you read and understood the article, Sayles said that they don't have "surplus money to give up" and I merely pointed out that his comment was misleading and backed it up with informtion from their 990. All we've been hearing is that we are going to see a huge influx of visitors and business to the area because of these non-profits. Public dollars are being pumped in, they don't pay taxes and the return on our investment is questionable at best, so taxpayers once again are getting the short end of the stick. By the way, it's not just the city and county that will be hurt, it's education as well. So we can cut another position or a program for the kids. Non-profits are being asked to pay for services in cities across the nation and it's only a matter of time before legislation catches up with reality, hopefully it's before too many cities are bankrupt.

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