A Carle Place office building, home to the 1-800-Flowers.com headquarters until the retailer relocates next year, has been awarded tax breaks by the Nassau County Industrial Development Agency despite objections from the agency’s former chairman.
The IDA aid for building owner DBD Realty Group consists of a sales-tax exemption of up to $672,750 on the purchase of construction materials and furnishing to modernize the property, up to $97,500 off the mortgage recording tax, and a 20-year reduction in property taxes that freezes the tax rate for six years followed by increases of 1.81% per year.
The IDA board, in a 4-1 vote earlier this month, gave final approval to the tax deal for 1 Old Country Rd., which 1-800-Flowers has said it will leave in May 2021. The deal supports $13.7 million in proposed renovations to stop other tenants from leaving and to attract new ones.
DBD Realty, which is owned by radiologist Shahrokh Abiri, purchased the five-story building and adjacent parking garage in February for $26.5 million. The structure, Long Island’s largest office complex when it opened in 1970, has fallen on hard times, with multiple owners defaulting on their mortgages.
1-800-Flowers is leaving for 2 Jericho Plaza in Jericho after receiving tax breaks from the Nassau IDA to support that move.
Former IDA chairman Timothy Williams, now the group's secretary, opposed the 1 Old Country Rd. project during the IDA meeting on July 9, saying tax breaks shouldn’t be awarded until the owner secures a replacement tenant for 1-800-Flowers. The retailer’s departure will raise the vacancy rate from 38% to 66%, according to DBD Realty’s IDA application.
Williams, the sole "no" vote on the project, said the coronavirus-induced recession is causing some companies to reduce office space while others are closing permanently. Dozens of building owners could seek property tax breaks, which, if granted, would shift more of the tax burden to homeowners, he said.
“My concern is whether we’re going to get into the habit of giving [tax] benefits to every single building that has large empty office space to help them attract tenants,” Williams said. “If that’s the case, we’re going to have benefit packages going to hundreds of office buildings.”
Williams' successor as IDA chairman, Richard Kessel, said at the IDA meeting: “I think this is a very good project. This office building is at the gateway to our county seat in Mineola, and it has fallen into disrepair."
He added, "With IDA assistance, this can be a first-class office building that’s attractive to businesses to our west who may be thinking of relocating to Nassau County” because the coronavirus pandemic is centered in New York City.
Daniel P. Deegan, the attorney for 1 Old Country Rd., said it presents “a compelling case” for tax breaks “because it’s so large and so empty.” He said DBD Realty has committed to a minimum of 300 people working in the building for the next 20 years. More than 1,000 once worked there.
IDA board member John Coumatos said the board should develop criteria for deciding whether a struggling office building needs the agency’s help.
Office buildings throughout Nassau must constantly make improvements in order to remain attractive to prospective tenants, County Executive Laura Curran said Monday. "It is vital that we create attractive commercial real estate options to entice businesses interested in expanding or relocating to our region – especially with the influx of businesses looking to move to less dense locations,” she said.