The Town of Hempstead on Monday announced plans to sue the town’s Industrial Development Agency to nullify a 10-year agreement with the Green Acres Mall that reduced its tax payments by $6 million this year.
Hempstead Town officials called the agreement “arbitrary and capricious,” and said that the IDA failed to provide public notice to various governments that would be affected by the agreement. According to a news release, the town’s lawsuit seeks to rescind the agreement, restore the mall to the tax rolls and force new public hearings to be held on the issue. The Valley Stream village board also passed a resolution Monday night announcing that it would either initiate its own lawsuit or join the town’s.
“Certainly, we welcome a lawsuit,” said Fred Parola, the IDA’s executive director. “We’re transparent here, so I guess it’s another forum that will ultimately justify what the board did.”
The tax break, issued by the IDA two years ago, will reduce the mall’s tax payments by about $6 million each year for 10 years (with an option for a five-year extension), beginning this year, and shift the financial burden across the different classes of taxable properties in Valley Stream. On average, October’s tax bills increased between $322 and $758 in school districts 13, 24 and 30.
IDAs are governmental agencies that work with business owners or developers to provide financial incentives to enhance local economies. IDAs typically obtain properties in need of development and then lease them back to their owners via payments in lieu of taxes, or PILOTs. Parola told the Herald last month that this particular PILOT was issued to the mall to prevent it from going “belly up.”
Residents began receiving their tax bills this week, leading to record attendance at local school board meetings. News of the town’s lawsuit came just days after nearly 1,000 frustrated taxpayers filled the William L. Buck Elementary School on Oct. 19 — some clutching their tax bills — to demand an explanation for the abrupt increase in property taxes.
Nassau County police officers ushered people into the gymnasium and the adjacent cafeteria, where the meeting was simulcast. One local business owner brandished a double-sided sign that read, “Stop stealing our money” and “Nassau County & Town of Hempstead: Corruption at its worst.”
Jonathan Kohan, an IDA board member since 1998, fielded a question about residents’ right to due process. “We sent out certified notices to … School District 30, the Central School District, the mayor of Valley Stream … ,” said Kohan, emphasizing every syllable when he mentioned Mayor Ed Fare and prompting more shouts from the crowd.
Kohan told the crowd that the IDA had held public hearings at Village Hall on the issue and no one attended. The hearings took place on Dec. 15, 2014 and April 21, 2015 — both weekdays, at 10 a.m.
A letter posted on the IDA website, dated Dec. 4, 2015, was sent to Fare, then-Town Supervisor Kate Murray, District 30 Superintendent Dr. Nicholas Stirling, Central High School District Superintendent Dr. Bill Heidenreich and Nassau County Executive Edward Mangano, notifying them of the public hearing. The letter contained no details of the tax break’s impact on local taxes.
Fare and Stirling both said that they received the notice from the IDA of the public hearings, but weren’t alarmed by any of the details. Dr. Christopher Dillon, assistant superintendent for business in District 30, said that he had reviewed the letter this week, and that it didn’t say much.
“There’s no reason to think this would’ve happened,” he said. “[PILOTs are] usually minimal, so, really, it doesn’t affect you.”
Dillon also noted that under a PILOT agreement, if the payee fails to make payments, it’s the schools’ responsibility to collect what they are owed — an undertaking previously enforced at Nassau County’s expense. He added that the county typically mails checks to the schools to make them whole if taxes are unpaid.
County Comptroller George Maragos told an audience of about 200 people at District 30’s Board of Education meeting Monday night that he thought the lawsuit was a waste of time and money.
“If there is a lawsuit filed by the town, they are filing it against the people that they’ve appointed … So that doesn’t make sense to me,” he said. “Throughout the history that I’m aware of the IDAs, there has not been an instance where legal action has been taken and has overturned a decision in a binding PILOT agreement between an IDA and the recipient.”
He urged the Town of Hempstead to bear the financial burden and make the taxpayers whole.
Resident George Catalanotto faulted two school districts –– District 30, the Central High School District and the other parties that were notified — for relying on past experience and not investigating the $6 million shortfall caused by the mall’s new payment plan. He also voiced frustration that the IDA can without oversight.
“It’s like giving a kid a loaded gun over here,” he said. “They can do what they want and nobody’s watching the shop. Now we’re all trying to close the corral door after the horse got out.”