New Subaru dealership headed to Hempstead, with tax incentive help

A new, roughly $14 million Subaru dealership is headed to the former site of a Mazda dealership in Hempstead Village, with the help of preliminary tax breaks from the Town of Hempstead.

The two-story building at 209 N. Franklin St. will span 29,210 square feet on the 1.25-acre parcel, according to a July application to the Town of Hempstead Industrial Development Agency (IDA) from 209 Franklin Realty LLC — an affiliate of Don T. Lia’s Lia Auto Group.

That building is nearly complete, said Justin Haynes, the dealership chain’s Long Island platform manager. He expects the Subaru outpost to be open for business in March, having already completed the foundation and facade this year.

“We want to put our best foot forward, and we want to do that with the community and with our clients,” Haynes said. “So it's our duty to make sure that we’re putting forward a phenomenal [project] — not just the product that we’re selling — but also the building in which it's going to be sold.”

The completed facility will hold a Subaru service center in the basement, Haynes said. Lia Auto has an existing Subaru dealership in Glen Cove, though Haynes said he's not yet sure what the Glen Cove site will be used for after the new facility is completed.

The 209 N. Franklin St. project is expected to create 70 full-time jobs, with an average salary of $100,000, and 20 part-time jobs at the dealership by its second year in operation.

In exchange for meeting those employment commitments, the IDA gave the dealership preliminary approval in November for property tax savings over 15 years, plus sales tax exemptions of up to $741,750 and mortgage recording tax exemptions of up to $117,900, according to the IDA’s agenda for its November board meeting.

“It’s all about jobs in a project such as this,” said Fred Parola, CEO of the Hempstead IDA. “The construction jobs are important. The land is going to be maximized and utilized in a modern new facility. All of those are positive incentives for why the board chose to embrace this.”

The IDA will hold a public hearing next year to discuss and vote on the tax breaks, according to a December news release from the agency. Parola said the agency has not yet set a date for the meeting.

Under state law, IDAs are generally prohibited from providing tax breaks to retailers, unless they are considered a “tourism destination” or are located in a “highly distressed area,” among other exceptions, according to the law. In this case, Parola said that because the dealership abuts an area designated as distressed under the U.S. Census, it’s exempt from the usual prohibition against tax benefits for retailers.

But Greg LeRoy, executive director and founder of the government spending watchdog Good Jobs First, questioned whether the dealership would benefit the local community enough to justify the cost of the tax benefits, and whether the incentives were necessary for the dealership to be built in the first place.

“The question is: Does the company need any help to decide to be there?” LeRoy asked. “Are we wasting money? Would they do it anyway?”

Daniel Baker, an attorney with Greenberg Traurig representing 209 Franklin Realty LLC, said the tax benefits were necessary to fund the cost of construction.

“The high and rising costs of construction, high real estate taxes, and difficulty in obtaining financing, all lead to the need for IDA benefits,” Baker said in a statement. “Otherwise, the cost to build is not feasible.”

Demolishing the old building and building a new dealership will cost roughly $14 million when the project wraps up, according to the application for tax incentives. The application also lists $6 million in land acquisition costs, though 209 Franklin Realty LLC purchased the land in 2020, according to the application.

The new dealership also will offer an apprentice program to local high school students, Haynes added. While he’s not sure how many locals are interested in joining the program, he said he hopes to recruit around 15 or 20 students.

“It's our duty to give back where we can, help grow the community from within, and get some of these young adults out into the workforce,” Haynes said. “We’re really excited about it.”

The preliminary tax benefits for the Subaru facility are not the first time the Hempstead IDA has assisted an automobile dealership. In 2018, Lia was awarded 10 years of property tax savings to demolish his Mazda dealership Garden City Mazda, which previously sat at 209 N. Franklin St., and relocate it next door to 225 N. Franklin St., over the objections of the town supervisor at the time, Newsday reported. (That vote was reapproved as of 2019, according to IDA records, after a Hempstead Village trustee raised concerns that the 2018 vote was improperly conducted.)

Nassau County’s IDA drew criticism in 2018 for awarding tax breaks to four car dealerships between 2014 and 2017, amid broader calls for reform to how IDAs used tax breaks across Long Island, Newsday reported.