The developer of an indoor soccer facility in Coram may have to repay tax breaks granted in 2013 because he didn’t notify officials he had leased space to a CrossFit studio, the Brookhaven Town Industrial Development Agency said.
According to agency rules, tax benefit recipients must have potential tenants approved by the IDA before leases are signed.
Last month, the IDA notified the developer of All Star Arena, Parviz Farahzad of East Setauket-based Little Rock Construction & Properties Inc., that he had 30 days to rectify the situation, IDA chief executive Lisa Mulligan said Friday.
The $3 million project, which involved the redevelopment of a former shopping plaza, has received roughly $136,000 in property and sales tax savings, according to 2015 data provided by the IDA to the state comptroller.
Farahzad, who is also the owner and operator of Grumman Studios and is a director for Gold Coast Bank, according to the bank’s website, did not disclose that his company had leased space at the site, Mulligan said. “They have a tenant that wasn’t approved in the facility.”
Farahzad declined to comment Friday.
The IDA board sent the “default letter” after the CrossFit studio was brought to Mulligan’s attention.
The board will meet later this month to decide whether to impose consequences for the violation. Mulligan said if a resolution isn’t found, board actions could include a “claw back” of benefits, a change in the amount of benefits going forward, or a termination of benefits.
“If you’re getting IDA benefits you can’t sub[lease] out to an industry or business that doesn’t qualify for IDA funds,” Town Supervisor Ed Romaine said Friday. “On the face of it, that is problematic.”
In 2013, the IDA granted the developer a sales tax exemption on the purchase of construction materials, a mortgage recording tax exemption, and a 10-year property tax break that reduced the site’s property taxes by 50 percent for the first year with increases of 2 percent annually for the remaining period. In year 11, taxes would go up to the full assessed value.