Rents on 230 apartments to stay low for 35 years due to IDA tax breaks

Nearly 230 apartments in Nassau County will continue to be occupied by low-income individuals for 35 years because of tax breaks granted by the county to real estate developers, officials said.

Rents at Mitchel Houses in East Meadow and Roslyn Plaza in Roslyn Heights, both garden apartment complexes constructed about 40 years ago, are subsidized by the federal Department of Housing and Urban Development. The portion of rent paid by the tenants, many of whom are disabled or retired, is capped at 30% of their monthly income.

In addition to the rent subsidies, Mitchel Houses has been receiving property-tax breaks since 1980 but the breaks were set to expire in June. Last month, the county's Industrial Development Agency agreed to extend those tax breaks for 35 years. Without the extension, the project would have been converted to market-rate apartments or condominiums later this year, the owner, the Benjamin Companies in Garden City, told the IDA.

Similarly, the owner of Roslyn Plaza requested that 17 years be added to its 20-year tax deal, which the IDA granted in 2017 after an earlier incentive package ended.

The additional property-tax breaks are needed to refinance Roslyn Plaza, so investors can take out their profits, an executive said. Without the additional incentives, the project would convert to market-rate apartments or condominiums in about 20 years, according to the application for IDA aid.

IDA chairman Richard Kessel said further assistance to Mitchel Houses and Roslyn Plaza "will keep them affordable well into the future. The people who are living in this housing will continue to benefit and that’s a comfort to them. We need more affordable housing in Nassau County," he said.

Roslyn Plaza, with 103 apartments in seven buildings along Laurel Street near the Long Island Rail Road station, sparked debate among the IDA board members.

Board secretary Timothy Williams, who was board chairman when Roslyn Plaza first received IDA tax breaks, said granting additional breaks mostly benefits the owners. Records show the largest shareholders are Lisa B. Puntillo, with a 49% ownership interest in the project, and Manhasset-based Royalnest Corp., with 26%. Puntillo's family operates Jobco, the Great Neck firm that built the complex.

"The only reason we are doing this is so [investors] can cash out," Williams, a former banker, said, adding the tax aid increases the investors’ profit.

Jobco president Robert M. Pascucci, who is married to Puntillo, responded that under the extended benefits, Roslyn Plaza will make larger property-tax payments than in the past. He added, "We are preserving the affordability of the housing and the tenants will continue to pay not a penny more after the refinance…Yes, the investors are looking for an equity return but we’re being open and transparent."

Besides the extension of its property tax savings, Roslyn Plaza received a sales-tax exemption of up to $32,538 on the purchase of construction materials and equipment to make $503,000 in improvements, including the construction of porticos and installation of storm doors.

IDA vice chairman Lewis M. Warren, who also is a banker, called the deal "a very thoughtful, balanced approach to keeping the affordability features" of the project. He said the "investors have obviously done a fabulous job over the last 40 years of providing affordable housing."

Warren sponsored the resolution granting extended tax breaks to Roslyn Plaza and it was adopted 6-0 with Williams abstaining.

The tax deal for Mitchel Houses, which also requires higher property-tax payments than in the past and grants a sales-tax exemption of up to $107,812, was approved unanimously. In return, the developer plans to make $2.5 million in improvements to the 125 apartments on Front Street, including new appliances, windows, roofs and boilers.

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.