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Valley Stream district owes $2M in mall tax dispute, judge says

Payments in lieu of taxes granted by the

Payments in lieu of taxes granted by the Hempstead Town IDA for the Green Acres Mall and an adjacent shopping center in Valley Stream spurred the school districts' dispute. Credit: Danielle Finkelstein

A Valley Stream school district must hand over more than $2 million in taxes it withheld from another district over a dispute that stems from tax incentives granted to the Green Acres Mall, a judge ruled on Thursday.

The Valley Stream Central High School District filed a lawsuit in June against one of its three feeder elementary districts, District 24, in state Supreme Court in Nassau, suing to recoup the money that District 24 withheld.

State Supreme Court Justice Jack Libert wrote in his decision that the elementary district “wrongfully withheld tax revenues” and that District 24 is prohibited from withholding taxes in the future, too. The district must pay more than $2 million in taxes, plus interest, the judge ruled.

Payments in lieu of taxes, or PILOTs, granted by the Hempstead Town Industrial Development Agency for the Green Acres Mall and Green Acres Commons, an adjacent shopping center, in Valley Stream spurred the dispute.

Currently, the school tax levy funding formula is calculated as if properties that receive PILOTs are off the tax rolls. But District 24, one of three elementary school districts that sends a portion of its tax levy to the high school district, believes the formula should account for PILOT properties.

In May, District 24 withheld the taxes from the high school district, prompting the lawsuit. The money has remained in a custodial account during the court case.

“While we understand the judge’s decision, Valley Stream 24 is not done fighting for its residents in an effort to right an undeniable wrong,” Matthew J. Mehnert, an attorney representing District 24, said in a statement.

He did not say whether the district would appeal the decision.

Lawyers for the high school district applauded the judge’s decision, but added that the need to litigate was an “unfortunate expenditure.”

“Those monies should have been expended on student needs,” John Gross and Carrie Anne Tondo wrote.

The high school district also had asked Libert to force three members of District 24’s board of education who also are on the high school’s board to recuse themselves from discussions and votes about the lawsuit. The board members have voluntarily recused themselves, and Libert dismissed that part of the case in his decision because it no longer applies. Mehnert said the district would not appeal that part of the decision.

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