Citing vacancies and impending lease renewals, Tanger Outlets at the Arches in Deer Park is asking for an extension on a tax abatement awarded when it started developing the center.
Representatives of the Arches, which opened in 2008, are entering the seventh year of a 15-year tax abatement deal brokered by the Babylon Industrial Development Agency.
That agreement called for an initial 60 percent cut in taxes, with a 6 percent increase annually until full taxation was reached. The modification requested by the Arches' owner, Deer Park Enterprise Llc, would extend that deal for another eight years to slow the increase to 2 percent each year.
David Blumenfeld of Syosset-based Blumenfeld Development Group Ltd., a partner in Deer Park Enterprise, said the original 6 percent is actually an increase of the center's assessed value, which resulted in a tax increase for 2011 to 2012 of nearly 18 percent.
He said in the current economic climate, tenants cannot afford that kind of hike. Blumenfeld said the Arches is 78 percent occupied, with about 100 businesses. Of those, 20 have leases that are up for renewal next year. "I think it's important to get through this . . . and continue to build up traffic and sales, and not lose tenants," he said. "This is going to help keep the center occupied."
The original tax abatement was granted because the center was to be a "tourist destination," IDA chief executive Robert Stricoff said at the time. Blumenfeld said traffic and sales are starting to increase, but the center has not yet become a destination.
"It's still in the making," he said, citing the economic downturn just as the center opened.
Under the original agreement, over the next two years, The Arches would have paid $7.9 million in taxes. Under the extension, that amount would drop to $7.2 million.
The extension would translate to about $482,000 less in taxes to the Deer Park school district over the next two years than would have been generated under the original agreement.
School officials declined to comment until the IDA board votes on the matter.
"I don't think anyone anticipated growth of those taxes at 20 percent a year," Blumenfeld said. "So I don't think it's really hurting them . . . because their operating budgets are not going to increase at the rate the taxes were increasing."
Stricoff said he favors the extension and hopes the board votes to approve. "I think the IDA board understands that a vibrant and healthy Tanger center is good for Babylon and good for the region," Stricoff said. "We don't want to be another . . . retail center that's vacant."
The board is expected to vote on the extension this month, Stricoff said.