The Nassau Industrial Development Agency has approved its most generous tax break to date for a low-income housing developer, setting off opposition from Hempstead Village residents who object to the deal.
Manhattan-based developer Omni New York received a 30-year partial tax exemption on a $43.8-million project to buy and refurbish 26 rundown apartment buildings in a high-crime section of Terrace Avenue. Bedell-Terrace apartments, a 247-unit complex built in the 1920s, have been rated by County Executive Thomas Suozzi's office as "the most significantly deteriorated housing in Nassau."
The payment in lieu of taxes agreement, or PILOT, represents a 50 percent discount over the payment formula the county IDA has applied in past deals with low-income housing developers. Instead of paying 10 percent of gross rents collected from tenants, minus other costs, Omni will pay 5 percent.
Several state agencies and local leaders - including Suozzi and Hempstead Mayor Wayne Hall - backed the tax break for the project, calling it a major step in the rehabilitation of the neighborhood, the target of a two-year-old initiative to eradicate the open drug trade.
"Things got better up on Terrace Avenue, except for the blighted side on the West," said Hall, who cast a vote in support of the PILOT at a special village board meeting on Aug. 11 along with Deputy Mayor Henry Conyers and Trustee Perry Pettus. "I feel that this is phase two of the Terrace Initiative."
Affordability at issue for all
Nassau IDA Executive Director Joseph Gioino said the dilapidated units required such extensive repair that the developer could finance the project - and keep rents stable - only by receiving a tax break of that size.
"The key thing toward the affordability of these projects on Long Island is the PILOTS," said Gioino, citing a review of the project's financing by the nonprofit National Development Council, which supported the 5 percent formula as necessary. "You wouldn't be able to keep the rents where they are with the tax structures that you have in place."
The tax benefit has galvanized a coalition of residents, People United to Save Hempstead, who protest that the village tax base is already strained by a disproportionate number of such tax exemptions for low-income housing. "It's the disparate concentration of poverty," said homeowner Robin Brazley of PUSH. "It increases the poverty rate in the village, it furthers segregation and it erodes an already diminished tax base."
According to the village budget, more than a dozen complexes - including Park Lake Residences, which is managed by Omni - have PILOT agreements with various agencies. Last year, Omni paid the village about $107,000 in lieu of taxes for the 240-unit complex.
What's it worth?
Eugene Schneur, Omni's managing director, said the Bedell-Terrace property is worth less than the assessed value and paying full property taxes - worth nearly 40 percent of projected rents - would sink a low-income development. "Everyone's screaming, 'This property is supposed to be paying $800,000,' but that's like getting blood from a stone," Schneur said. "It's not happening."
The annual payment in lieu of taxes due is about $156,000, the IDA said.
In comparison, a PILOT agreement with the Town of Hempstead IDA for a 417-unit apartment building at 100 Terrace Ave. cut the total yearly tax bill from about $1.1 million to $700,000, according to Executive Director Fred Parola.
James Adams, superintendent of the Bedell-Terrace complex for almost 20 years, said he attended a hearing to show his support for the project, along with several dozen tenants who organized with the nonprofit ACORN. "I've seen a lot of people try and fail. If they do what they promised, I'm all for it," said Adams, 52. "Who doesn't want to live in a nice neighborhood? I know I do."
Omni, which was cofounded by retired baseball player Mo Vaughn, expects to acquire the foreclosed property next month for $12 million. Plans for repairs include replacing floors, fixing walls, plumbing and electrical problems, and rehabilitating 75 shuttered units. The company would also install at least 250 security cameras and electronic keys for entrances.
Around 125 of the 247 units in the Bedell-Terrace apartment complex will be set aside for Section 8 tenants only, who pay 30 percent of their income in rent, said Connie Lassandro, head of Nassau's housing and homeless services. Most of the remaining apartments will be set aside for renters who qualify for Section 8 vouchers (who can select a unit from a number of locations) and for those earning less than 60 percent of the median family income in Nassau as set by the federal Department of Housing and Urban Development, $101,800.
MAXIMUM INCOMES TO QUALIFY FOR SECTION 8
Family of two: $24,450
Family of three: $27,500
Family of four: $30,550