Warehouse developer wins tax-break vote after securing labor peace

A warehouse developer appears to have made peace with the unions that protested its use of out-of-state contractors and construction workers last year, leading on Thursday to an initial OK of tax breaks from Suffolk County for a $98 million project in Melville.

The county’s Industrial Development Agency voted unanimously to grant preliminary approved for a $8.5 million tax-aid package for developer Hartz Mountain Industries Inc. to construct a 411,000-square-foot warehouse on Spagnoli Road.

The 4-0 vote by the IDA board came nearly a year after it postponed deciding on the tax incentives because of a controversy surrounding another warehouse project by New Jersey-based Hartz. That project, which also received IDA help, consists of two warehouses at 235 Pinelawn Rd., the site of the former Newsday headquarters.

In May 2021, construction unions accused Hartz of violating the IDA’s Long Island First Policy, which states “to the greatest extent possible [IDA] project applicants should consider purchasing goods and services from Long Island-based providers, businesses and vendors and that to the greatest extent possible all employment opportunities should be provided to Long Island residents first.”

The union leaders, together with three county legislators and a state assemblyman, persuaded the IDA board to delay a vote on the tax breaks for the Spagnoli Road project.

At the time, Hartz and its general contractor for the Pinelawn Road project, Aurora Contractors Inc. in Ronkonkoma, confirmed to Newsday that steel and precast concrete work was awarded to contractors from Alabama, South Carolina and Pennsylvania. No local company can produce the type of precast concrete needed for the project, they said.

In addition, Aurora said “more than 75% of the work was awarded to Long Island contractors” of which 50% use union workers.

On Thursday, Matthew Aracich, president of the union umbrella group Nassau-Suffolk Building and Construction Trades Council, said the unions and Hartz had reached an understanding that ensures unionized contractors will be among those bidding for the new work.

“We had a very fruitful conversation,” Aracich said, referring to a meeting that he had with Hartz executives and Kevin McCaffrey, presiding officer of the Suffolk County Legislature and an official in the Teamsters’ union. “We will have every opportunity to work with the developer and make sure that there’s total transparency” in the bidding process, Aracich told the IDA board.

James P. Rhatican, Hartz’s land use and development vice president, agreed, saying the company will communicate directly with union leaders instead of relying on the project’s yet-to-be-selected general contractor.

He also said while the steel beams and precast concrete panels for the Spagnoli Road project will come from off Long Island, unionized iron workers from Nassau and Suffolk counties will be involved in putting the materials in place.

The IDA board has requested additional financial information from Hartz before granting final approval for the tax breaks.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.