Legislator DuWayne Gregory, of the 15th Legislative District, and chair...

Legislator DuWayne Gregory, of the 15th Legislative District, and chair of the Suffolk County Hate Crimes Task Force addresses an audience at a hearing in Riverhead. (Sept. 22, 2009) Credit: Newsday/Mahala Gaylord

It's Suffolk County's $20 million black hole.

There are 124 contaminated properties -- former gas stations, dry cleaners and junkyards -- on which the county has liens for back taxes but doesn't own. The county has not been able to collect property taxes on them, sometimes for decades. Moreover, Suffolk as required by law has forked over a total of $20 million to schools, towns and other taxing jurisdictions to make them whole for the sins of tax deadbeats.

"These properties have laid dormant for years, and no one has been able to do anything about them," said Legis. DuWayne Gregory (D-Amityville).

Suffolk officials, spurred by Gregory, are looking to use a new state law to set up a land bank -- a nonprofit corporation that could take title to tainted parcels, clean them up and sell them so the land can return to the tax rolls.

The county legislature approved an emergency resolution last week authorizing the land bank, and county planners face a March 30 deadline to apply to the Empire State Development Corporation to be among the first five statewide to win the designation.

Normally, when a business or homeowner fails to pay property taxes, the county issues a lien against the parcel for the unpaid amount, plus interest and penalties. After a year for commercial properties and three years for homes -- plus time for due notifications -- Suffolk can take tax title to parcels and later sell them at auction.

However, brownfield properties that are in default are potential land mines that could saddle the county with liability for huge cleanup costs. As a result, Suffolk has balked at converting tax liens into titles on tainted lands. "These properties are in limbo and no one wants to touch them, said Sarah Lansdale," county planning director.

In 2006, the county tried to sell the tax liens on tainted properties to private investors, but no one bid in two separate auctions. The major drawback is that the Suffolk County Tax Act mandates that the county receive the full amount of unpaid taxes. With unpaid taxes having accumulated on some parcels since as far back as 1988, the money owed often far exceeded the land value.

Under the new state law, the county can turn over liens at a reduced rate to the land bank, which can foreclose on parcels without making the county liable, according to backers of the plan. And having gained title, the land bank can seek government and foundation grants for cleanup. "It's hard to seek funding for land to which you do not have title," Gregory said.

Without title to the properties, Suffolk also has been unable to dig test wells or fully investigate the extent on pollution where it is suspected. Legis. Tom Cilmi (R-Bay Shore), a backer of the land bank proposal, has submitted a resolution directing the health department within a year to develop a priority list of the most polluted sites and those that could be sold quickly.

Cilmi said he first became aware of the issue because of the abandoned Lawrence junkyard in Islip littered with leaky tanks and debris. "It's a disaster area," Cilmi said, noting Suffolk has paid schools and others $360,000 in taxes on the property since 1991.

County Executive Steve Bellone said the land bank would clean up sites and make them usable. "It will allow us to stop the bleeding on lost taxes," he said.