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Big Brown owners seek tax break for new equine medical facility

BY THOMAS MAIER AND JOHNETTE HOWARD | thomas.maier@newsday.com; johnette.howard@newsday.com

9:18 PM EDT, June 8, 2008

The majority owners of Big Brown are seeking a tax break in Hempstead that could be worth at least $1 million for a new equine care medical facility being built near Belmont Park.

The town's Industrial Development Agency is considering a deal with International Equine Acquisitions Holdings Corp. that would freeze property taxes for the first three years after the building is completed sometime this summer, according to IDA director Frederick E. Parola.

A public hearing about the proposed tax break for the estimated $17 million project on Plainfield Avenue in Elmont is scheduled for June 25.

IEAH and its investors -- led by co-president Michael Iavarone -- have a stake in some 80 thoroughbreds and are racing's biggest money earners so far this year. The company is putting together a $100 million horse investment fund -- comprising self-described "high risk" investors willing to put up a minimum $500,000 stake -- similar to a hedge fund. Part of the company's plan is to run its new Ruffian Equine Medical Center, featuring medical care for local and regional horses.

Under the proposed IDA plan, similar to others granted in hopes of stimulating and attracting business to the area, the Hempstead agency would enter into a 10-year lease agreement for the 23,000-square-foot, two-story building.

Along with the three-year property tax freeze at the current $70,000 annually, IEAH's taxes would go up incrementally in the remaining seven years in a way to be determined by the agency, Parola said. At the end of the agreement, similar to other IDA-assisted projects, IEAH would own the facility, Parola added.

Nassau County Tax Assessor Harvey Levinson said he objected to the idea of a tax break for business owners who already are wealthy. He estimated a three-year freeze of property taxes at the site based on its current assessment -- compared to what a newly improved facility would bring on the tax rolls without the IDA deal -- would mean a tax savings of at least $1 million for the new owners.

"I don't understand why they [the IDA] would do this," said Levinson. "The investors should gamble with their own money. The facility should not be removed from the assessment rolls and further erode the tax base in Elmont, forcing homeowners and small businesses to pay more than their fair share of property taxes."

Parola supports the estimated $1 million tax break, noting that businesses such as this often rely on IDA help and in return help improve economically depressed areas.

IEAH owners, which include Wall Street figures like James Tagliaferri and Andy Cohen, as well as Iavarone and co-president Richard Schiavo, say the equine medical center is sorely needed.

"If it brings jobs, brings revenues and ultimately more taxes than the abatement or break IEAH will get on a temporary basis, then it is a good investment for Nassau and the state," said Tagliaferri, a Virgin Islands-based investment manager. "I don't think it matters how wealthy are the investors." Documents say the new facility would employ from eight to 13 workers.

According to documents filed with the IDA, Iavarone and Schiavo have a combined 13 percent stake in the company, with another 31 percent owned by businessman John A. Roberts of Ravenhill Investments. The biggest source of IEAH's funding, Iavarone recently told Newsday, comes from Tagliaferri's clients, who provided $25 million over the past two years, enough to help purchase several major thoroughbreds, including Big Brown.

Nevertheless, Tagliaferri said Iavarone is the key decision-maker in the company -- enough to seek a $20 million insurance policy on him. "Everybody is betting on Mike," said Tagliaferri about running the projected $100 million horse venture.