The Nassau County Industrial Development Agency has rejected a Manhattan developer's request for a 25-year, $128.6 million tax break to build two apartment towers and retail space on the Long Beach boardwalk.
The development group comprising iStar Financial Inc. and AvalonBay Communities submitted the request in May for a PILOT, or payment in lieu of taxes, while two 17-story towers are built on vacant land off the boardwalk between Long Beach and Riverside boulevards. The IDA is now considering a revised 20-year PILOT; but the total tax break has not been determined.
The iStar group plans to invest $300 million in the project, which would include a total of 522 luxury apartments in two 15-story towers, with two stories of parking and 11,000 square feet of retail space. Developers said they could not build the project without the county's tax break.
IDA chairman Joseph Kearney said during Tuesday night's meeting that the initial PILOT would not be approved, citing the cost and length of the tax exemption as too rich to benefit Long Beach and the county.
Kearney said the IDA rejected the request in part due to "unprecedented public response," after about 300 residents largely opposed to the project crowded a June 3 public meeting in Long Beach.
"This is a very important project for the city of Long Beach," Kearney said. "It causes this IDA to be careful in its assessment and thorough in every facet of this process."
Officials with iStar did not immediately return calls for comment on Wednesday.
The developers submitted a revised request last month with a proposed 23-year PILOT, but it was rejected as too similar to the original request, Kearney said. The latest PILOT proposal would freeze taxes at $960,000 for the first five years and build up to $6.1 million in the 20th year. It could be discussed at a public meeting in Long Beach in seven to 10 days.
"With the help of the IDA, we hope we can finally make this opportunity a reality and in turn, create jobs and economic development in Long Beach," developers wrote in the application.
The IDA transaction committee rejected the initial proposal in part because the property was incorrectly classified as Class 1 -- which is no more than three stories without retail. The property taxes are doubled to about $1 million on a Class 2 property -- which includes retail and larger building height.
The project, as built today, would have property taxes of about $6.6 million, and iStar had requested a freeze on taxes for 10 years, Kearney said. "If they do come along with an appropriate proposal, we will proceed with that," he said.
The Long Beach City Council has declined to endorse or reject the project out of concern for pending liability and litigation from the developer if the project dies. City officials said they have not been in contact with the IDA since the May public hearing. Long Beach would receive a $4 million payment from iStar once the first tower is built.
"The decision to grant or deny a PILOT proposal rests solely with the IDA," Long Beach City Manager Jack Schnirman said. "They are responsible for ensuring that tax abatements are granted only to projects that are demonstrably advantageous to the host community in terms of economic benefits, job creation, and supporting local businesses. We look forward to receiving the IDA's detailed financial analysis."