TYRE — Casino Free Tyre has filed another Article 78 proceeding related to the proposed Lago Resort & Casino.
The lawsuit, filed Friday in state Supreme Court of Seneca County, focuses on objections to the financial assistance the Seneca County Industrial Development Agency provided to the casino developers in February.
No date has been set for briefs or arguments.
Dagmar Nearpass, Desiree and James Dawley, Lynn and Robert Barbuto, Jonathan and Jane Morelli, Richard Barner and David Schoonmaker filed the litigation. The IDA, Seneca County, the town of Tyre, Waterloo Central School District, Lago Resort & Casino LLC, Wilpac Holdings LLC, Wilmorite Gaming LLC, Wilpac Funding LLC, Thomas Wilmot Sr., M. Brent Stevens and Wilmorite Inc. were named as defendants.
The IDA approved a package that calls for Wilmorite, the Rochester company hoping to build the $425 million resort, to pay the county $45.3 million over a 20-year period, beginning in 2016, in lieu of property taxes due the Waterloo Central School District and Seneca County.
Tyre taxes are not included because the town will receive $10.5 million under a host benefits agreement with Wilmorite.
Wilmorite would not have to pay the county’s 4 percent sales tax or the state’s 4 percent sales tax on goods and services it buys for construction of the facility or to equip it.
For a project of this size, Wilmorite would normally have to pay a mortgage tax of about $3.3 million to the county and state. The exemption means it won’t have to pay that amount but must pay $100,000 a year for 10 years to partially offset the $1.75 million in mortgage tax loss to the county.
The IDA normally would receive a fee from Wilmorite of about $4 million. Instead, the agreement calls for $1 million to be paid in equal increments for a 10-year period.
Casino Free Tyre’s latest court action seeks a ruling to nullify the IDA incentive package for these reasons:
• Lago is not eligible for IDA assistance as a matter of law. It claims when the law creating IDAs was enacted by the state Legislature in the early 1970s, it did not extend benefits to casinos because, at the time, the state Constitution barred casinos.
The lawsuit notes the Legislature did not add casinos to the projects that can qualify for assistance under the IDA Act, although new projects have been added, such as horse-racing facilities.
“Consequently, industrial development agencies lack the authority to provide financial assistance to casinos such as Lago,” it states.
• Lago’s application for assistance was incomplete. The lawsuit claims it failed to designate an official amount of real property tax assistance it was seeking, as required.
• The agreement is an improper use of public benefits for private purposes. This cause of action states that Lago received $19.3 million in sales tax exemptions and $3.3 million in mortgage tax exemptions.
“Lago received this assistance even though by its words and actions, Lago represented that no inducement was necessary to build the facility or to build it in Seneca County,” it states.
The lawsuit claims CEO Thomas Wilmot made several statements that he didn’t plan to approach the IDA for a payment-in-lieu-of-taxes benefit and Wilmorite submitted its application for a casino license to the state Gaming Facilities Location Board before seeking IDA benefits.
• The IDA provided inadequate advance notice to the affected taxing jurisdictions of the amount of tax abatement sought by Lago.
• The resolution adopted by the IDA board stating the casino’s real property tax abatement failed to specify the amount of that abatement, a violation of law, they claim.
• The IDA provided inadequate notice of the deviation from the IDA uniform tax-exemption policy and guidelines.
The county’s IDA uniform tax-exemption policy and guidelines provides that the period for exemption will be no more than 20 years. It claims the Lago benefits motion provides an exemption period of more than 20 years and any deviation requires notice to the affected tax jurisdictions.
• The IDA is accused of failing to set forth in writing the reasons for the deviation from the IDA uniform tax-exemption policy and guidelines.
• The IDA materially misstated the amount of public assistance received by Lago.
The petitioners claim the IDA announced that the agreement would result in nearly $4 million more in revenue from Lago than if no agreement was reached, but said the IDA used an unreasonably low tax rate and tax basis for Lago. They said the assessed value of the project will be “significantly” higher than the IDA’s estimate of $102.7 million.
• The IDA failed to comply with public-hearing requirements. They said the Feb. 12 notice failed to describe the amount of real property tax abatement that Lago would be receiving.
• The IDA process was tainted by a significant conflict of interest.
The lawsuit claims Lago was represented by Shawn Griffin of the Harris Beach law firm, noting that Griffin has represented the IDA since at least 2008 — that conflict of interest wasn’t revealed.