Guest Spot: IDA structure short-changing residents

08/18/2013 10:00 AM |

TIM GANNON PHOTO | A new 16,700-square-foot building on this site off Miller Way in Calverton will be home to Allied Building Products’ first East End site.

As Riverhead Town residents, our property taxes pay for the services we receive, such as town water and sewage systems, schools, police, sanitation collection, recreation and road maintenance. Our personal property taxes are supplemented by taxes collected from businesses within the town. Having a strong economic base is a necessity; therefore, new businesses should be encouraged to come to Riverhead.

The original purpose of the Riverhead Industrial Development Agency was to promote, develop, encourage and assist in acquiring, developing and equipping various business facilities, thereby advancing job opportunities and resulting in an increase in the general prosperity and economic welfare of the people of the town. The IDA has the power to abate property, sales and mortgage tax. Under federal tax law, IDAs can issue tax-exempt bonds to cover manufacturing facilities, governmental projects, nonprofit projects (a YMCA or civic facility) and exempt facilities (airports, solid waste facilities). The creation of new, well-paying jobs was expected to be a direct result of this exchange.

Adchem Corp. is one of Riverhead’s success stories. The company’s IDA process worked according to criteria that had to be met in order to be eligible to apply for tax exemptions. These included local and regional economic conditions, the creation of new jobs, the type of industrial or commercial activity, the benefit afforded to residents and the project location. After the company’s abatement period was over, substantial local jobs were created and they continue to make a significant contribution to our tax base.

I have been attending IDA meetings for almost a year. I can truthfully say that many of the projects approved met very few of these criteria. Two new businesses come to mind. In June 2013, Theriac Enterprises was granted tax abatements for the renovation of the old PC Richard & Sons building on Route 58. This company has offices in 28 states and seven foreign countries. It is well-established and its 21st Century Oncology facility will compete with a local business, North Fork Radiology, right around the corner on Roanoke Avenue. Theriac plans to occupy a third of the new building and rent out the remaining two-thirds. What criteria they met to be granted their abatement is unknown. This is outrageous!

Then, last week, Allied Building Products was granted IDA tax abatements. The public commentary was unclear but it seemed the Riverhead IDA was under the impression that, if not granted, the company would locate in Westhampton, where it was being offered Suffolk County IDA abatements. However, David Doran of Allied Business Products later admitted the company had not filed with the Suffolk County IDA at all. Again, Allied Building Products has over 180 locations and employs 3,100 people. It is well-established. Why does it need tax abatements from us to expand the business?

Has the current IDA board ever seen a proposal it didn’t like? Are we granting every application in order to create a salary base for an employee? Over the past year I have been attending IDA meetings; this board did not deny a single application, with board members often failing to ask pertinent questions along the way.

New York State Comptroller Thomas DiNapoli has continuously been critical of IDA practice statewide. You can access actual NYS IDA audits online and read how few real jobs have been created for the large tax breaks received. Mr. DiNapoli is currently sponsoring legislation that would provide taxpayers with the ability to evaluate if the IDAs are deriving the promised economic benefits, as they state. In cases where criteria are not met and jobs are not forthcoming, benefits can be “clawed-back.”

There are many fine regional examples of IDAs that share, and are proud of, their ability to grow their town’s economic base. If one were to access the Town of Islip, there is a transparent website explaining their projects, current and past, at islipida.com. They celebrate and share their success stories openly; financial reports and projects are there for all to see. In Islip Town, IDA board members and Town Board members are one and the same. They are directly responsible to the taxpayers.

Contrast theirs with ours at www.riverheadida.org and click on the “Projects” tab. There is nothing there. Information is unknown. There is no transparency for the taxpayer. This has become another runaway train.

Here’s the bottom line: Businesses that come to town immediately create the need for the additional services listed in my opening paragraph. Since the business’ taxes are abated, the burden of providing those services fall on the taxpayer. It’s time to re-evaluate the Riverhead Industrial Development Agency and send the responsibilities of the Riverhead IDA back to the Town Board.

Ann Cotten-DeGrasse is a Riverhead resident and current president of the Riverhead school board. She is running a Democratic primary for town supervisor.

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