G’Tel Seeking Tax Exemption

GERMANTOWN — Germantown Telephone Company is seeking a mortgage-tax exemption on a $15 million project that will bring high-speed internet to rural parts of Columbia County.
The company had to take out an additional $4 million loan in July for the added cost of replacing existing utility poles that are not suited for the fiber-optic cables needed for the project. The $4 million loan came from the Rural Telephone Finance Cooperative through the state Department of Public Service.

“It’s important to understand that one of the things that Germantown Telephone did in making this application initially was to make a commitment to the people that it served that the maximum per month cost charge for basic cable was under $60,” said GTel attorney William Better of the Office of William J. Better, P.C.

Better said 2,600 utility poles have to be replaced for the 293 miles of fiber-optic cables to be installed. This resulted in an additional $4 million in costs for the project, which now totals more than $15 million.

The project will bring high-speed internet to rural parts of Columbia County in Germantown, Clermont, Tagkhanic, Livingston, Gallatin, Greenport, Hillsdale and Claverack. The project will serve more than 5,000 customers.

Internet service in these rural areas has not been guaranteed and historically has been unreliable, and is more important during the COVID-19 pandemic as students learn remotely and employees work from home, according to the application document the company file to secure a loan.

“They agreed to do this. Their revenue is capped. They needed to borrow additional money to fix these poles and bring this project to fruition,” Better said. “In order to do that GTel went to something called the Rural Telephone Finance Cooperative and borrowed the additional money. What they wish to do today is to obtain an approval from the Columbia County Industrial Development Agency to save the money associated with the mortgage recording tax. They are not seeking to have an abatement or a reduction of sales tax or payment in lieu of taxes.”

A mortgage tax is imposed for recording a mortgage on real property located in New York state, according to the Department of Taxation and Finance. 

The estimated value of the project’s mortgage recording tax is $50,000, according to the project document filed with the Columbia County Industrial Development Agency. The estimated savings are critical and the package might not be viable without these savings, according to the document.

The project is estimated to be completed in 2021, according to GTel’s website. 

The Columbia County Industrial Development Agency held a public hearing Monday about the possible exemption from mortgage-recording taxes where Better gave a brief overview of the project. No one from the public commented on the matter.

GTel President Bruce Bohnsack was previously a board member for the Columbia County IDA five years ago. State law permits current board members to apply to the IDA for benefits as long as they disclose any possible conflicts of interest. If a conflict exists, that person cannot participate in the decision-making process.

“It’s a stretch to claim that there is a conflict when a former IDA board member’s company makes an application for assistance, Columbia Economic Development Corporation President and CEO F. Michael Tucker said. “State regulatory guidelines permit a company to apply for assistance even if the former board member was still on the board. In that case, the board member would be required to recuse themselves and abstain from participating in the discussion or decision.”

The IDA will meet Friday to discuss the company’s request for a mortgage-tax exemption. The new fiberoptic network will provide high levels of reliability and increased bandwidth, resulting in increased internet speeds, according to GTel’s website.

The project had an initial budget of about $11.5 million.

Germantown Telephone Company and subsidiary Valstar were previously awarded about $8.7 million in three phases of grants through Gov. Andrew Cuomo’s 2015 Broadband For All initiative to support Columbia County expansion projects to deliver broadband access to unserved or underserved customers statewide.

 

By Natasha Vaughn
Columbia-Greene Media
Oct 19, 2020