246-unit Hempstead apartment plan moves forward after developer gets tax breaks

A decade-long plan to build housing and retail at the site of a former parking lot in downtown Hempstead is moving forward with the help of tax breaks.

Rashid Walker, the founder and CEO of First Street Companies, plans to build 246 apartments at 257 Main St. after a handful of smaller projects for the site fell through. He expects to spend around $125 million on the development, he said.

The project, which received IDA tax breaks on March 24, is part of the village's larger plan to revitalize downtown Hempstead by adding hundreds of new apartments and new retail spaces, according to a 2021 report from the village.

The development "proves that Hempstead has the ability to attract capital to our village,” Deputy Mayor Jeffery Daniels said in an emailed statement. 

The planned development comes amid high demand for housing on Long Island and concerns of rising inflation on the heels of the war with Iran, which could push lenders to charge higher interest rates for construction loans, making it more expensive to build new housing, said Gagandeep Singh, an associate professor of practice in finance at Stony Brook University’s College of Business.

“You should be able to find financing, but it’s going to be more expensive most likely,” Singh said.

The rental building will have 32 studios, 132 one-bedroom units, 78 two-bedroom units and 4 three-bedroom units, according to First Street’s application for tax incentives from the Town of Hempstead Industrial Development Agency. 

Another 25 apartments will be set aside for renters who meet certain income requirements under Hempstead’s village codes, Walker said. The building will also include 6,114 square feet of ground floor retail space and a 109,975-square-foot parking garage, according to the IDA application.

Walker has been involved with the project since 2015.

At the time, he was working for another developer who planned to build a smaller, 156-unit building on the lot, according to a 2015 IDA application. But that project and a 2018 plan failed to materialize because the developers found it too difficult to secure approvals to build on Long Island, Walker said.

By 2021, Walker had started his own development firm, First Street. He partnered with Charlotte, North Carolina-based developer and investor Grubb Properties to build a 173-unit property on the parcel in 2022, according to an announcement from Grubb Properties.

In 2021, the IDA awarded Grubb Properties and First Street 25 years of tax breaks to build the complex, according to an IDA resolution.

Grubb Properties left the project to focus on the company’s other developments, Walker said, and he bought out their stake, approaching the IDA with a new plan last year: a 246-unit apartment building on a 1.69-acre plot, plus a new 25-year tax break agreement.

Walker, who grew up in Hempstead, said he was confident he’d be able to complete the long-planned project.

“It’s been really fulfilling to have this opportunity,” Walker said.

The Town of Hempstead IDA last week approved 25 years of tax relief for the 246-unit development. Walker said he hopes to break ground on the project in July, after he’s secured construction financing. 

Under the new IDA agreement, the developer will make a $144,104 payment instead of paying taxes in the first year of the deal, with annual payments rising over the 25-year period to $2.6 million, according to the IDA agreement. The IDA negotiated a new tax break deal because the project had substantially changed, said IDA chief executive Fred Parola.

The project will create an estimated 100 construction jobs, according to the IDA agreement.

Tax abatement agreements, however, usually mean local municipalities collect less money for local schools, said Greg LeRoy, the executive director of the nonprofit government watchdog organization Good Jobs First.