TAM Ceramics, Despite Tax Break, Is Pushing for More: $1 Assessment

TAM executives think their property should be valued at only $1 for tax purposes.

Jerry Williams of TAM.

So much for large favors.

Rather than being thankful for their huge gift of public money, a PILOT agreement from the Niagara County Industrial Development Agency (IDA) and a $400,000 grant from Empire State Development Corp., TAM Ceramics, the company owned by Jerry Williams, Al Muto, and George Bilkey, has repeatedly challenged its Town of Niagara property assessment.
TAM is challenging the Town of Niagara’s assessment of its property as unequal and excessive – despite only having to pay between 20-50 percent of its annual real estate taxes over the course of its 15-year PILOT agreement.

The PILOT, or payment in lieu of taxes, provides TAM, a producer of ceramic powders and chemicals used throughout various industries, with a graduated scale of tax payments which greatly reduces their property tax rate, theoretically providing more capital to re-invest to save and create jobs.
According to TAM’s most recent petition, the company declares that the “lawful, correct and proper assessment should be the following - $1.” The property is currently assessed at $1.5 million. If Williams, et al. are successful, their victory would also affect the Niagara Wheatfield School District, which had to raise taxes on property owners nearly 5 percent last year to avoid further cuts to teaching and other staff.

Aside from appearing to be a patently frivolous valuation, the absurdity would mean that their 2013-14 tax levies would be less than the cost of postage to mail in the payment.

TAM Ceramics received the generous PILOT agreement in 2010, despite several hundred thousand dollars’ worth of outstanding water and sewer charges being owed at the time. Under the terms of the agreement, these past due amounts were supposed to be paid off by October 2011, or else TAM would be in default.

4511 Hyde Park LLC, the pass-through entity which owns TAM Ceramics’ real estate, has current outstanding county taxes of $182,816.82 for 2011 and $10,961.01 for 2012. The Buffalo News is reporting that the total outstanding amount owed by the Williams-led group, including the past-due water/sewer charges, is $627,072.25.

While a provision in the IDA deal provides TAM Ceramics the right to challenge assessments and other charges, failure to make the past-due payments puts them in default under the agreement, and now the tax jurisdictions may recover directly from TAM.

Once the IDA was made aware of the more than one-year-old default by the Buffalo News, NCIDA Attorney Mark J. Gabriele sent notice to TAM Ceramics that they must cure the default within 30-days, or risk having the PILOT canceled.
Now, you might expect that a company having trouble paying its taxes might be in financial distress. However, according to a 2011 suit filed by Muto against his co-owners Williams and Bilkey, TAM Ceramics is clearly prospering under its new ownership. So much so that the owners are fighting over what to do with the more than $3 million in annual profits.

Perhaps that’s why they aren’t paying the original water/sewer charges they agreed to pay as a term of receiving the 15-year PILOT. And perhaps that’s why they are challenging the town's assessment.

Imagine paying taxes for a multi-million dollar corporation at a rate 20 percent of $1.00. That would leave nearly 100 percent of the profits untouched and available to distribute to the owners, instead of paying taxes to the Town, School and Fire district.

According to the lawsuit, Muto claimed that Williams and Bilkey were attempting to divert the first million dollars of annual profits to themselves, and freeze Muto’s interest in the company. According to Muto, the scheme involved paying Williams $1,500 an hour for work he allegedly performed for the company, and then hire Williams as an actual employee of TAM Ceramics at a rate of $500,000 per year. Williams and Bilkey were also seeking to increase Bilkey’s own salary from $125,000 to $500,000 per year.

Clearly a company that can afford a million dollars in salary for two individuals should have little difficulty in meeting their obligation to pay taxes and past-due charges.

In fact, according to Muto, before the scheme to pay Williams and Bilkey $1 million a year, the company was making monthly distributions to the owners of between $10,000 and $30,000 each until around August 2011, when the payments unexpectedly stopped.

Muto feared that Williams and Bilkey were conspiring against him, and that he would be cheated out of the more than $4 million in investment cash and loan guarantees he had in the company. Muto also claimed that Williams moved into the building, maintained a rent-free office on the premises, and that TAM Ceramics had contracted work with other businesses owned by Williams, including more than $65,000 in work to Apollo Steel and/or Apollo Dismantlement.

Williams and Bilkey also used $29,000 of TAM Ceramics money to purchase an interest in a luxury suite from Apollo at the then-HSBC Arena.

Williams, in his affidavit, stated that the value of Muto’s investment (and therefore the groups) “has increased significantly,” and declared that TAM was “on track” to earn profits in excess of $3 million for 2011. Annual sales for TAM Ceramics were estimated by Bilkey and Williams to be around $20 million.

Williams continued in his affidavit to say that the success of TAM Ceramics in 18 short months meant that the members have received returns and profits on their initial investment “in spades.”

Williams also touted that the company was doing so well that the Niagara USA Chamber of Commerce named TAM business of the year for 2011.

Perhaps Williams, named businessman of the year for 2010 by Leadership Niagara, knows what he’s doing, and that the secret to creating a successful business is to reduce taxes. The only problem is that business owners can’t unilaterally decide to give themselves a tax-cut.

Now in an attempt to untangle what is becoming a dizzyingly difficult tax and water charge delinquency, attorneys for Niagara County, the Town of Niagara, and the Niagara Falls Water Board are engaging in talks to see who TAM Ceramics actually owes the past-due amounts.

John Ottaviano, who is normally the attorney for the Niagara Falls Water Board, is representing the Town of Niagara in this TAM Ceramics issue with regard to the approximately $200,000 payment the County made to the Town to cover the company’s delinquent bill.

The Niagara Falls Water Board, due to Ottaviano not being available in this matter, is being represented by outside counsel, Phillips Lytle LLP.

As they say, you won’t know the players without your program!

The County, surprisingly being represented by county attorneys in this matter, is claiming that it improperly paid the Town for TAM Ceramics past-due water/sewer charges, and that it is seeking to recoup the payment from the Town.

Ottaviano, in his capacity as Town of Niagara attorney or NFWB attorney we know not, said that TAM Ceramics owes upwards of a half-million dollars more to the NFWB beyond what the County has already paid to the Town, according to the Buffalo News report.

At the end of the day, while Williams and his group are raking in millions on this project, they want the taxpayers of Niagara County to give them tax-free status, while still providing them with all the services the county offers. And on top of that, they also expect the county taxpayers to pay off their old tax bills.

And if that is not the definition of pure greed, I don’t know what is.

The TAM Ceramics PILOT should be canceled at once.

Stay tuned for more.