Valley Stream schools officials say they underbudgeted their estimate of the Green Acres Mall’s payments in lieu of taxes by nearly $3 million, possibly passing along the difference to school taxpayers, because the districts weren’t aware of how much they would receive from the mall.
The issue of the tax breaks, and the subsequent sharp increases in property taxes for the 2016-17 school year they’ve been blamed for, is expected to come to a head this week. On Tuesday, the Hempstead Town Board will take up the issue of whether to fire the town’s Industrial Development Agency board, which granted the mall’s controversial tax incentives.
While the nearly $3 million gap doesn’t appear to explain the 4.6 percent to 12.2 percent hikes village residents saw last month in their tax bills, it appears to be part of the problem, a Newsday analysis shows. This year’s tax hikes were, on average, between $322 and $758 for residents in school districts 13, 24 and 30.
For their part, officials with the Hempstead IDA say residents should only have seen a $45 increase this year from the mall’s PILOT, or payment in lieu of taxes, approved by the IDA board as an incentive for expansion and job retention and growth at the mall.
“There was such emotion from people when they were hit with a big increase,” said IDA executive director Fred Parola, a former Nassau County comptroller, in an interview with Newsday last week. “People got walloped this year really badly, and obviously the school districts in Valley Stream found a scapegoat” in the IDA.
The IDA held a public hearing on the project in December 2014, which no one attended, agency officials said. Parola has said that the IDA has been transparent and offered to meet with various officials.
But schools officials say they were not fully informed throughout the IDA process and had to guess their portion of the PILOT money that the mall would pay. This, the officials said, resulted in the miscalculation.
“This has never happened before,” said Nicholas Stirling, superintendent for District 30. “At the end of the day we were told to estimate.”
On Monday, a cost-benefit analysis will be released by Saratoga Springs-based Camoin Associates — which the IDA expects will vindicate its decision to grant the PILOT. And on Tuesday, the Hempstead Town supervisor said he will ask for the IDA board’s removal. On Wednesday, subpoenas for IDA documents, filed by the Nassau County comptroller as part of an audit, are due.
Previously, “PILOTs have been a positive” and have not affected school taxes, Stirling said. “This one is significantly different,” he added.
The IDA granted tax incentives to the Green Acres Mall, owned by the California-based Macerich, in December 2014 for the mall’s $79 million expansion. Those incentives included a sales tax exemption, worth $76.9 million, and a PILOT.
Documents show Macerich’s PILOT payments as $13.7 million annually for the first five years, and $14.5 million annually for the final five years. The payments rise to $17.8 million if the mall extends its PILOT through the 15th year.
The IDA also granted Macerich a much smaller PILOT for the Green Acres Commons, which is adjacent to the mall and is new construction. That PILOT starts at $440,000 annually and ends at $2.2 million in 15 years.
Those numbers are less than the mall’s overall $19 million in property taxes that it had paid per year, which Macerich is challenging in court.
Parola said the IDA lowered the PILOT’s amount — which Macerich pays instead of its full property taxes — because it believes the court will side with Macerich soon and lower its tax bill to roughly $13.7 million.
The superintendents and assistant superintendents of District 30 — where the mall is located — and the Valley Stream Central High School District say they were forced to guess what percentage of the PILOT that District 30 would receive.
“If we’re off by even 1 percent, it’s about $140,000,” said Bill Heidenreich, superintendent of the high school district, in an interview last week.
Based on a previous PILOT in District 30, Stirling said they estimated they would receive 50 percent of the PILOT payments for the mall and Commons, or about $7.1 million annually for the first five years. But because Valley Stream schools have a central high school district — one of just three on Long Island — District 30 has to give about half of its PILOT money to the central district.
Stirling said the IDA only told them in an email on Wednesday — well after the school’s budget had been created and the day before property taxes were due — that District 30 would receive 72.7 percent of the PILOT payments. He said the district had not received any documentation from the IDA with the exact percentage until then.
“Just tell us what we’re getting,” Stirling said.
The IDA told Newsday that 72.7 percent will come out to about $9.9 million for District 30 — which will need to be split with the central high school district — and, by its estimate, taxpayers should only have had to cover a $248,000 gap, or roughly $45 per household.
With James T. Madore
August 2014. Green Acres Mall owner Macerich requests tax breaks from the Hempstead Town Industrial Development Agency to support a $79 million renovation of the Valley Stream mall.
Dec. 15, 2014: IDA holds public hearing in Valley Stream to seek public input on the mall owner’s request for tax breaks. No one attends.
Dec. 17, 2014: After reaching an agreement with the mall owner on a package of tax breaks, the IDA board unanimously approves them. The package include a sales tax exemption and payments in lieu of property taxes.
Oct. 1, 2016: School property-tax bills go out to Valley Stream residents, who are facing 4.6 to 12.2 percent increase for 2016-17 school year.
Oct. 27, 2016: Following community uproar, Hempstead Town Supervisor Anthony Santino calls for removal of IDA board.
Nov. 3, 2016: Nassau County Comptroller George Maragos issues subpoenas to IDA and Hempstead Town for audit
Nov. 10, 2016: School taxes are due