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IDA tax-break duels in Suffolk causing revenue concerns

Farmingdale-based D’Addario & Co., which makes guitar strings,

Farmingdale-based D’Addario & Co., which makes guitar strings, had its property tax bill reduced by Suffolk County after it agreed to move production work from New England, creating 20 jobs. (March 11, 2011) Credit: Ed Betz

Competition among IDAs in Suffolk County is leading to bigger property tax breaks for expanding businesses -- and worry among some local governments about revenue shortfalls, officials said Wednesday.

Islip Town's industrial development agency last month approved a policy change that allows it for the first time to cut or freeze a company's current property tax bill over a number of years. Previously, the IDA could only limit tax increases.

Islip's move is similar to a policy change made by the Suffolk County IDA in June 2012.

William G. Mannix, executive director of the Islip IDA, said it chose to offer more lucrative tax breaks because a half-dozen businesses in the town have done deals with the county IDA rather than Islip in the past year and a half.

"Companies are saying, 'If not for some relief on the current taxes on a particular piece of property, we might be forced to make a decision to leave this region or expand in another state,' " Mannix said.

Besides the Islip and county IDAs, the Babylon Town IDA also can reduce current property tax bills.

In fact, Suffolk County Executive Steve Bellone lobbied the county IDA to adopt the policy employed by the Babylon IDA for years. Guitar-string maker D'Addario & Co. of Farmingdale was the first to benefit from the Suffolk IDA's new policy in return for adding 20 jobs to its workforce of 761.

The Brookhaven Town IDA and the Riverhead Town IDA have yet to change tax incentive policies. Riverhead's Tracy Stark-James said, "There are no plans to amend it in the near future." A Brookhaven official declined to comment.

Concerns have been raised by public schools, whose budgets are reliant on property taxes.

School districts "often receive no direct or equivalent benefit from the [tax] reductions granted by the IDAs," said Lorraine Deller, executive director of the Nassau-Suffolk School Boards Association. "And the result is a shift of tax burden to the rest of local property taxpayers."

Islip officials said commercial property owners, but not homeowners, could see higher bills.

Union-backed critics of IDAs said it was counterproductive for those on Long Island to offer vastly different tax breaks. "They're just competing against themselves, and the result is big corporations aren't paying their fair share of taxes," said Charlene Obernauer of the Long Island Jobs with Justice campaign.

Asked about the issue, Kevin Law, president of the Long Island Association business group, vowed to call a meeting of the IDA Coalition, which was created by the LIA.

"If we have municipal IDAs working against each other, it may hurt one town and help another town, but at the end of the day we aren't making the pie for the region any bigger." Law said. "We're a stronger region when we're working together."

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