Has the Riverhead IDA ever denied an application?

04/17/2015 8:00 AM |
Peconic Bay Medical Center representatives meeting with Riverhead IDA officials in March. (Credit: Tim Gannon)

Peconic Bay Medical Center representatives meeting with Riverhead IDA officials in March. (Credit: Tim Gannon)

If you’ve followed the Riverhead Industrial Development Agency over the years, you may feel like it’s never voted down anything.

And a review of the IDA’s voting record over the past decade reveals that may be so. 

Since 2004, the IDA has held public hearings on 34 projects seeking tax abatements to build in Riverhead, some of which required more than one hearing. Thirty of them were approved, two are still pending and no vote was ever held on two more.

The News-Review could not find a single instance in the past 10 years when the IDA board actually held a public hearing and then denied the application.

“It hasn’t happened since I’ve been here,” said IDA executive director Tracy Stark-James, who’s held that position since 2011.

IDA board member Lou Kalogeras and former board member Paul Thompson both said the board has voted down some applications in the past, though they couldn’t recall specifics.

“It was a long time ago,” Mr. Kalogeras said.

IDA chairman Tom Cruso said one big reason so many projects are approved after a hearing is that most applications for tax assistance are vetted by Ms. Stark-James before they ever get to the hearing stage.

“We usually cut [ineligible applicants] off at the pass, or else we lower the amount of the abatement they get,” Mr. Cruso said.

Ms. Stark-James explained that vetting process, saying that hearings are only held for projects that are eligible to receive IDA benefits. She cited owners of residential properties and most retail applicants as examples of those that would not be eligible.

“I had two auto dealerships looking for IDA incentives on Route 58 recently,” Ms. Stark-James said. “They don’t qualify.”

Those interviewed were quick to defend the positive role the IDA plays, blaming much of the public criticism it receives — Mr. Thompson says he’s often “screamed at” by people in the community — on a lack of public awareness.

The IDA’s standard property tax abatement applies only to the value of what’s constructed and not the value of the land the project is built on. The standard abatement starts at 50 percent of the value of improvement and that abatement percentage decreases by 5 percent per year over 10 years until the project is completely on the tax rolls.

IDA benefits can include a partial property tax abatement on improvements, sales tax abatements on building materials and mortgage recording tax abatements.

“The public thinks that when we approve something, we lose taxes and their taxes go up. That’s not true. We gain taxes,” Mr. Thompson said.

A 2013 analysis of IDA property tax exemptions revealed that of the 15,156 taxable parcels in Riverhead Town, only 18 were set to receive IDA discounts for 2014. Those property owners paid a total of $419,401 in taxes last year, down from the $3.4 million they would have paid without IDA benefits. Those projects also combined to pay $1.3 million in payments in lieu of taxes, Ms. Stark-James said at the time.

The IDA has varied from its standard abatement at times, such as with the Hyatt/Long Island Aquarium and the Summerwind Square apartments, which got 100 percent property tax abatements on the value of the improvements over 10 years, or 21st Century Oncology on Route 58 and The All-Star bowling center, which received less than they sought.

Mr. Kalogeras thinks many of the projects that have won IDA tax incentives in Riverhead would not have been built otherwise.

Lee Browning, who owns the Hilton Garden Inn on Route 58, has received IDA incentives for that project since 2007 and last week received approval for IDA benefits for a Marriott Residence Inn on the same site. He told the IDA that his bank insists on IDA incentives before it will finance a project and that the Marriott won’t be built for at least three years, if ever, without IDA credits.

The IDA’s approval of that Route 58 project led Councilwoman Jodi Giglio to call for a resolution directing the IDA to limit its assistance to projects located downtown, at the Enterprise Park at Calverton and in blighted areas.

“I don’t want to see tax breaks on Route 58,” she said.

Supervisor Sean Walter agreed that IDA benefits should not be extended to projects on Route 58, but he disagreed that the Town Board, which appoints IDA members, should pass a resolution.

“The IDA is an independent agency,” he said. “The Town Board has plenty of opportunity to let their views be known to the IDA.”

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