A group of Manhattan developers is seeking 42 years of tax breaks from the Hempstead Town Industrial Development Agency to complete $35 million in improvements at a low-income Hempstead Village apartment complex.
Manhattan developer Scott Jaffee has filed plans to renovate 240 apartments at Park Lake Residences at South Franklin Street and Martin Luther King Drive.
The Metropolitan Realty management group is seeking to refinance and invest $133 million — which includes acquisition and financing costs — using a 42-year PILOT, or payment in lieu of taxes, to reduce payments for the life of the project. A cost-benefit analysis by the IDA says the project would save $87 million in property taxes and $2 million in sales tax and mortgage recording fees.
There are still eight years remaining on an existing PILOT after the building was acquired this year by a different ownership group led by Jaffee, but developers said the project is in dire need of more improvements, including flooring, ceilings and new kitchens and bathrooms. Developers also plan to build a new community center and add solar panels.
If approved, construction would begin next summer and be completed in 18 months, developers said.
The apartments, which span across 14 buildings on the site, date back to the 1940s, and were originally built as military housing. The apartments need to be gutted and developers have promised existing residents will not be forced to relocate, other than to existing vacant units, while apartments are renovated.
Daniel P. Deegan, a Uniondale attorney for the developers, said extending tax breaks would keep the buildings off the tax rolls and is a requirement for loans under the federal Department of Housing and Urban Development.
He said developers are seeking a 20-year PILOT, which will then be reviewed for a 22-year extension, to ensure it remains affordable housing for the life of the project. He said rents will not change.
Developers submitted several letters of support, including one from tenant association president Shirley Brown.
"We are looking forward to all this work to be done because it has been long overdue for an upgrade to the property," Brown wrote.
The Hempstead Industrial Development Agency tabled a proposal for tax breaks at its Dec. 17 meeting because IDA chairman Fred Parola said some apartment residents raised questions about the project with developers. He said the board would also have to review the length of the tax breaks to set bench marks for improvements and a tax schedule to be met.
"The feeling among the board members was the developers need to do more homework in letting folks know what’s going on to make them feel comfortable that this is in their best interest," Parola said. "There’s some opposition of homeowner groups that feel Hempstead has too many apartment buildings supported by PILOTS and feel there is an impact on homeowners."
The Nassau County IDA’s Local Economic Assistance Corp. has already approved $63 million in tax-exempt bonds to partner with the Hempstead IDA.
Nassau IDA and assistance corporation chairman Richard Kessel said the town’s IDA will extend tax benefits while the county’s agency will handle financing on bonds.
"There is tremendous interest to maintain and upgrade affordable housing. They’re going to get beautiful new apartments and a guarantee that those apartments remain affordable for years to come," Kessel said.
With James T. Madore
Park Lake Residences in Hempstead Village
240 low-income apartments slated for renovations, including walls, windows, kitchens and bathrooms
Developers seek a 42-year tax schedule
Projected tax savings of $87 million
Source: Application to Hempstead IDA, cost benefit analysis