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Nassau comptroller subpoenas officials over mall tax breaks

Town of Hempstead IDA member Jonathan Kohan takes

Town of Hempstead IDA member Jonathan Kohan takes questions during a community forum at the William L. Buck Elementary School in Valley Stream on Wednesday, Oct. 19, 2016. Credit: Steven Sunshine

The Nassau County comptroller’s office issued subpoenas Thursday to the Hempstead Town Industrial Development Agency and two Hempstead Town officials regarding the tax breaks the agency granted to Green Acres Mall that may have contributed to tax hikes for Valley Stream residents.

The subpoenas were served to the IDA’s executive director, Fred Parola, its chairman, Theodore Sasso Jr., and Town Supervisor Anthony Santino and Town Clerk Nasrin Ahmad, according to Comptroller George Maragos’ office.

The subpoenas are the latest move in the controversy surrounding the mall’s tax breaks, which residents and politicians have faulted for tax increases that Maragos said are between 4.6 percent and 12.2 percent. The IDA, however, insists its deal is not solely to blame for the hikes.

Maragos’ office wants records related to one of two tax break packages that the IDA granted to the mall’s owner, California-based Macerich. The comptroller’s audit focuses on tax incentives — primarily a payment in lieu of taxes, or PILOT, agreement — in support of renovating the mall. The subpoenas are part of an audit into the deal that Maragos launched last month.

The comptroller claims the IDA has refused to hand over the documents or hold meetings with his office, necessitating the subpoenas.

But Parola, the IDA’s executive director, disputed Maragos’ allegations and said the agency has been transparent and cooperative with the comptroller’s office. Parola, a former Nassau County comptroller himself, called the subpoenas politically motivated.

“Politics, that’s my final word,” he said.

Maragos, who is running for Nassau County executive and has issued subpoenas before as comptroller, said the town officials were included because his office was told by the IDA that the town has some of the records.

The subpoenas call for the documents to be delivered to comptroller’s office by Nov. 16, “otherwise we will go to court to enforce it,” Maragos said.

Parola said that while the IDA does not believe Maragos’ office has the authority to audit the deal, the agency has offered to sit down with him and go over the case. Maragos’ spokeswoman disputed Parola’s statements.

Sasso said Thursday evening that he hadn’t heard about the subpoenas.

“I have not seen it, I’m not aware of it,” he said.

Town spokesman Michael Deery, speaking on behalf of Santino and Ahmad, said town officials would “review the subpoenas and respond appropriately.”

A spokesman for the state comptroller — who was asked last month to perform an audit by state Sen. Todd Kaminsky (D-Long Beach) and Assemb. Michaelle Solages (D-Elmont) — said the office is monitoring the situation.

Ken Volk, senior vice president at Macerich, issued a statement on Thursday, saying that the company’s investment “stabilized” the mall and preserved “nearly 3,000 jobs.”

“The Green Acres campus project also creates 670 new union construction jobs and over 800 permanent jobs, increases the sales tax revenue, and has already made a number of critical safety and infrastructure improvements and brought new stores and more visitors than ever before,” Volk wrote about the Green Acres Mall and the newer, adjacent Green Acres Commons, which received a different tax break package from the IDA.

Following community uproar about the tax increases, Santino announced last week he will move to fire the IDA board members during a Nov. 15 town board meeting.

IDA members work independently from the town, but are appointed by and can be removed by a vote from the town board. The IDA’s seven members use tax incentives to entice businesses and developers to the town.

Santino and Councilman Bruce Blakeman — who represents Valley Stream — also are planning to file a lawsuit against the IDA over the mall tax abatement.

The public outcry over the tax increases prompted the IDA last week to commission a cost-benefit analysis by economic development firm Camoin Associates.

The firm’s vice president, Michael N’dolo, said he expects the report will be done by Nov. 14 and added that he believes several factors might have contributed to the steep tax increases, not just the mall.

The PILOT covers the mall’s $79 million renovation over a 10-year period. In the first five years, the mall pays $13.7 million annually — about $4 million less than the previous assessment, which currently is being disputed in court, Parola said.

The payments gradually rise in the sixth year until they reach $14.5 million in the 10th year.

The mall has the option to extend the agreement for another five years. If it does, the payments would reach nearly $18 million by the 15th year.

With James T. Madore

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