Tax increases expected in Valley Stream

Implementation of mall tax break shifts financial burden to residents

Posted

This story was updated on Sept. 28 at 7:13 p.m.

Valley Stream taxpayers are about to be hit with tax increases as the impact of a Green Acres Mall tax break is felt across different classes of properties.

“This is taxation without representation at its worst,” the District 24 Board of Education wrote in a letter to the Herald. “We are outraged by it, and think that you should be, too.”

Two years ago, the Town of Hempstead Industrial Development Agency approved a 15-year payment plan for the mall to ease the financial burden of a planned massive overhaul, including renovations and additions. The PILOT plan — payments in lieu of taxes — removes the property from Nassau County’s tax rolls for those 15 years.

The plan starts with total payments of $13.7 million in its first year. By the sixth year of the PILOT, the payments increase to a total of $14.5 million, and by the 15th year, to $17.9 million.

In the early years of the plan, even if Valley Stream did not have a Central High School District, the shortfall would be made up with tax increases across different classes of properties, as determined by the county Department of Assessment — likely resulting in a modest tax increase until the mall’s payments stabilized.

The unique setup of the school system, combined with the fact that the mall is in District 30’s commercial tax district — but not the two other elementary districts — will fuel a more drastic distribution of school taxes in October’s property tax bills than usual.

The Central High School District budget is funded so that each elementary district has to pay an apportionment based on the taxable property in its district — but with the PILOT plan, the total value of taxable property in District 30 will shrink drastically for the first time this billing cycle, and lower the entire district’s assessed valuation. As the valuation of taxable property shrinks, so will District 30’s payment to the Central High School District budget.

Voters approved both the Central High School District’s $111 million budget, and District 30’s $34 million spending plan, last May.

"The amount of the voter-approved budget for District 30 and the Valley Stream Central High School District has not changed for the 2016-2017 school year," the District 30 Board of Education wrote in a letter to the Herald. "What is changing is the Green Acres Mall property tax reduction is being reapportioned to the Class 1 homeowner’s tax base."

As a result of the shortfall created by the Green Acres PILOT, taxes will likely increase in all three districts to varying degrees.

According to the Department of Assessment, the average tax bill will increase by 4.6 percent this year in District 13 (about $324), by 5.2 percent in District 24 (about $322), and by 12.2 percent in District 30 (about $758).

Fred Parola, executive director of the Town of Hempstead IDA, said that the agency was not aware of the unique situation in Valley Stream at the time the PILOT was granted, but, he added, the financial impact on taxpayers would have been much worse had the IDA not stepped in.

“They were declining, the buildings were declining,” Parola of the mall. “If you have a vacant building, you’re not going to get the same return as if you’d have fully rented properties.”

Parola explained that given the scarcity of centralized high school districts — there are only three in Nassau County — the unequal distribution was easy to miss. He said that he had been in contact with Valley Stream school officials, and had referred Town of Hempstead lawyers to the issue.

“We didn’t understand the problem,” he said. “I don’t know, legally, if there’s anything we can do … This kind of hardship is not one that you probably see, and I hope the legislators can come up with some kind of fairness.”

Parola said that according to the PILOT arrangement, the mall must prove to the IDA that it has added 670 employees by the 10th year of the plan, at which point, if it has not met that benchmark, the IDA can refuse the additional five years — forcing the mall to reappear on the tax rolls. “We’ve done that [in the past],” he said. “We will claw back if they do not keep their commitment.”

Parola stressed that the PILOT plan would benefit the community in the long term, but he acknowledged that for the “struggling taxpayer,” the interim could be seen as frustrating.

District 24 Superintendent Ed Fale said that the Board of Education has asked local officials to address the loophole governmentally — though no legislation would be able to curtail the tax increase expected in October. The legislative fix, Fale said, would be to amend New York State Education Law 1908, which does not require the Central High School District to consider PILOT payments in calculating how much to collect from each elementary district, and was likely written before PILOT programs existed.

PILOT plans are fairly common in New York State, according to a State Education Department official. Data from the state comptroller’s office show that 492 districts had some level of PILOT revenue, and that 83 districts reported more than $1 million in PILOT revenue in 2015.

The District 24 Board of Education will host a forum on this issue at its next regular meeting, on Oct. 19 at 8:30 p.m. Representatives of the Town of Hempstead IDA, neighboring school communities, and elected officials have been invited to attend.

How do you feel about the Green Acres Mall tax break? What do you think needs to happen next? Send letters to the editor to nciccone@liherald.com for consideration.