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Town of Hempstead backpedals on IDA lawsuit

Audits of mall’s tax breaks sought by mayor, county comptroller

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About a month after announcing plans to sue its Industrial Development Agency over the handling of a tax break for the Green Acres Mall, Town of Hempstead officials have said they will hold off on the lawsuit.

The tax break, issued by the Town of Hempstead IDA in 2015, went into effect for the mall this year, reducing its tax payments by about $6.5 million and by a similar amount each year until 2022 as part of a payment in lieu of taxes agreement, or PILOT. That helped explain why tax bills in school districts 13, 24 and 30 increased, on average, between $322 and $758 in October, drawing residents’ fury.

Town Supervisor Anthony Santino and Councilman Bruce Blakeman announced plans to sue the IDA over the agreement in October, and called the PILOT deal “arbitrary and capricious” in a news release. Six of seven IDA board members resigned on Nov. 14 — a day before Santino had promised to replace them.

Now, Mike Deery, a town spokesman, has said that the town is in a “holding pattern” regarding the lawsuit.

“We want to give that new [IDA] board an opportunity to address the concerns of the [town] board,” Deery said. “[Town officials] have insisted that the [IDA] hold a new hearing or reopen the hearing on the property at Green Acres Mall … They want to see what additional work they do as far as determining economic impact and looking at those impacts, and the other steps that the board takes in response to this and other issues.”

Fred Parola, executive director of the Hempstead IDA, did not see any indication that the hearing would or could be reopened. “Unless there is something that we find where we have to change something in the initial agreement, rehearings are not done,” Parola said.

He added that the Macerich Company, the mall’s California-based ownership, had “kept its word,” and that the allegation that the IDA deal was responsible for tax increases in Valley Stream and neighboring communities had been proven false.

Parola was referring to a report released last month by a consulting firm the IDA hired to examine the economic impact of the deal, which blamed the Central High School District and District 30 for underestimating the PILOT revenue, and levying more taxes than they needed from residents. PILOT money received from an IDA is included in the school budget as if it were tax dollars, but schools must include an estimate when they prepare their budgets.

The school districts have stood by their good-faith estimate, given the information they had at the time. According to District 30 Superintendent Nicholas Stirling, that estimate was based on “historical data from the IDA indicating that PILOT payments have been reduced mid-year.” The IDA has claimed that the school districts knew how much money they were getting all along.

According to New York municipal law, IDAs do not have the power to change the proportions by which PILOTs are divvied up. “Unless otherwise agreed by the affected tax jurisdictions,” the law states, “any such agreement shall provide that payments in lieu of taxes shall be allocated among affected tax jurisdictions in proportion to the amount of real property tax and other taxes which would have been received.”

The squabble among officials and residents has cooled somewhat since tax bills were due in the Town of Hempstead on Nov. 10, but there is still uncertainty about what caused the increases, and what the next 10 years of tax bills might look like for residents.

Valley Stream Mayor Ed Fare last week called for New York State Comptroller Thomas DiNapoli to audit the Green Acres Mall tax breaks, and specifically to investigate whether homeowners’ tax increases comply with the state’s 2 percent tax cap law. Unlike school District 24, which had planned to join the town’s lawsuit against the IDA, Fare said the village would pursue litigation even if the town did not.

Stirling said that District 30 is not planning litigation. Bill Heidenreich, superintendent of the Central High School District, said that the possibility of an IDA lawsuit would be discussed at the district’s Dec. 13 board meeting. “We are discussing it next week,” Heidenreich wrote in an email. “I know that many municipalities have agreed to ‘join’ a lawsuit that has yet to be filed. I’m not sure how that is done.”

Nassau County Comptroller George Maragos issued subpoenas to the IDA last month to undertake an audit of the Green Acres deal, but the IDA claims that Maragos has no jurisdiction in the matter.

“The issuance of your ‘subpoena’ without jurisdiction and with malice is, among other things, the abuse of process, waste of governmental resources and intentional interference with contractual rights,” John Ryan, counsel for the IDA, wrote in a Nov. 14 letter to Maragos, who is running for county executive.

Maragos disputed the IDA’s claims, and said his office was willing to take legal action to defend its right to audit the deal. He said the county attorney sent a demand-to-comply notice to the IDA on Dec. 2, giving it 10 days to provide all of the documents requested for Maragos’s audit.

“We do not want to engage in a wild goose chase,” Maragos said.

What solutions do you think should be discussed? How are you paying for the tax increases? Send letters to the editor to nciccone@liherald.com.