Members of the Flanders, Riverside and Northampton Community Association raised concerns Monday about tax abatements issued by Riverhead Town’s Industrial Development Agency for businesses in the Riverhead School District, which incorporates the three Southampton Town hamlets as well as a portion of Brookhaven Town.
Officials from FRNCA argue that these tax abatements apply to property in Southampton Town, even though Southampton residents had no say in approving them.
The Riverhead IDA was discussed at Monday’s FRNCA meeting in light of its recent decision to grant a 30-year payment in lieu of taxes arrangement to Riverview Lofts, a 116-unit affordable apartment complex with two restaurants on East Main Street in Riverhead.
Under that PILOT agreement, the project will not begin paying the equivalent of full taxes until year 18 of the 30.
The IDA can grant exemptions from county mortgage recording tax and from sales tax related to construction of a project. It also can grant tax abatements on the value of the new construction as it applies to town, county, school and fire district taxes.
Former FRNCA president Ron Fisher, who is now a member of the Riverhead Board of Education, was recently appointed to a BOE subcommittee to investigate IDA tax abatements.
“The less people pay in taxes in Riverhead, the more taxes the Southampton side has to kick in,” Mr. Fisher said.
He said that as a school board member, he must look out for the interests of the entire district, not just the Southampton side, but he suggested that FRNCA could look into pressuring the Southampton Town Board to help solve the problem.
“It’s about $500,000 the Southampton Town taxpayers are making up in property taxes to subsidize commercial businesses in the Town of Riverhead.” Mr. Fisher said.
For the school district, tax abatements issued by the IDA in the current year totaled $1.5 million, he said.
“It seems like it should be illegal for the board of another town to vote tax breaks that basically are giving our taxes away, and we can’t vote for them or against them because they are in another town,” FRNCA president Vince Taldone said. “The IDA is controlled by the Riverhead Town Board but they are, in effect, giving away tax money from us, which is taxation without representation.”
Richard Ehlers, attorney for the Riverhead IDA, said in an interview Tuesday that Brookhaven Town also has an IDA and also covers a small portion of the Riverhead School District. In addition, the Suffolk County IDA can grant tax abatements to projects located anywhere in the county.
These IDAs were created by state legislation, as was the Riverhead IDA, and therefore are legal, he said.