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State says IDA within rights to grant tax breaks to Green Acres Mall

Taxpayers in the Valley Stream School District 30 were outraged when some school tax bills jumped as much as 14% in 2016.

A state comptroller audit vindicates the Hempstead IDA

A state comptroller audit vindicates the Hempstead IDA in offering tax breaks to the Green Acres Mall. Photo Credit: Howard Schnapp

Auditors from the state comptroller’s office found that the Hempstead Town Industrial Development Agency acted within its authority when it granted tax breaks to Green Acres Mall in Valley Stream and blamed Valley Stream School District 30 for increases in residents’ tax bills last year.

The highly anticipated audit, released Tuesday, said District 30 underestimated the amount of money it would get from the tax breaks, “resulting in $1.8 million in excess revenue and an unnecessary increase” for homeowners.

The report largely exonerated the IDA, which has been under fire since Valley Stream residents opened their school tax bills in October 2016 and found increases as high as 14.24 percent. Homeowners and elected officials have vilified IDA officials for months, calling for the staff and board to be fired and saying the tax hikes were caused by the agency’s agreement with Macerich, the California-based owner of the mall and an adjacent shopping center, Green Acres Commons.

State Sen. Todd Kaminsky (D-Long Beach) and Assemb. Michaelle Solages (D-Elmont) called on State Comptroller Thomas P. DiNapoli in October 2016 to investigate what led to the tax increases.

“Comptroller DiNapoli wanted to get in there and take a look,” Gabriel Deyo, deputy comptroller for the Division of Local Government and School Accountability, said in an interview Tuesday. “We wanted to be able to go in there and independently assess what had happened.”

The IDA has maintained throughout the controversy that the school district’s budgeting practices were at fault, even when district officials said the agency did not tell them how much money they would receive from the tax breaks and so they were forced to estimate. The audit disputed the district’s account, and said the IDA gave District 30 “timely and accurate information.”

“We dissected it 100 times over. It has now been dissected by independent parties,” IDA Deputy Executive Director Edie Longo said Tuesday. “We tried to say that to people, we tried to tell people that.”

The outcry last year led the Hempstead Town Board to appoint a new IDA board; the members who had approved the deal resigned en masse the day before they could be fired.

Ted Sasso, the former board chairman, called the controversy “hogwash.”

“The bottom line is that we didn’t do anything wrong, which we knew then,” he said. “The increases that were pinned on us — we didn’t do that.”

The new IDA board voted in April to revoke the tax breaks, citing allegedly “grossly misstated” job creation figures, and Macerich filed a lawsuit. But a letter from the IDA staff, included in the audit, says job benchmarks were hit. The case is ongoing.

In December 2014 and April 2015, the IDA board approved tax incentives for Macerich. The agreement included a sales-tax exemption and a payment-in-lieu-of-taxes, or PILOT, for the $79 million renovation of the mall and the construction of the Commons. The mall’s PILOT began at $13.7 million annually, which is more than $6 million less than what Macerich had paid in property taxes the year before. The IDA — correctly, Deyo said — used the lower figure because Macerich was grieving its tax assessment and agency officials believed the mall would win the case. It remains pending.

While the state auditors said that decreased figure did contribute to higher taxes for Valley Stream residents, it was not the sole cause of the hikes.

The state audit said the school district’s inaccurate budgeting led to District 30 taxpayers seeing their bills increase by, for the median household, $887.75 — when it should only have been $573.59. The extra $314.16 was the result of District 30 underestimating its PILOT revenue.

The factors for the $573.59 increase included changes to the tax system’s adjusted base proportions, increases to the tax levy and the PILOT agreement.

To make up for their error, District 30 reduced its 2017-2018 tax levy by more than $1.8 million and residents saw an average decrease of $382 in their October school tax bills, Superintendent Nicholas Stirling said in a response letter to the auditors.

District 30, in a news release Tuesday, disagreed with the audit’s characterization of its estimate as “inaccurate.”

“It is also unfortunate that the audit does not fully address the complexity of this matter, or the considerable uncertainty that existed in 2016” when the district was setting its 2016-2017 tax levy, the release stated.

The state report also recommended the IDA develop policies to access the “indirect tax impact” of PILOTs on taxpayers.

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