Islip’s Foreign Trade Zone may be expanding by 120,000 square feet, giving some companies an opportunity to reduce tariffs if they operate in the zone.
The 52-acre property at Long Island MacArthur Airport in Ronkonkoma is home to 35 businesses and could see the addition of three buildings, executive director Brad Hemingway told Newsday on Friday. A timeline for the project isn’t clear, but Hemingway said he hopes to see it finished in 18 to 24 months. Hemingway, who has worked in the zone for eight years, called it a "unique treasure" for the town.
The Foreign Trade Zone, established in Ronkonkoma in1981, allows companies to save money through decreased and waived tariffs. The Islip zone is the magnet site for Suffolk County and made possible through a 1934 act that established a board to oversee and approve zones. In the zone, companies can limit, avoid or defer paying fees when they import or export items. Companies can also reduce tariffs when an item or raw material is subject to a higher duty rate than the finished product that is produced in the zone, which is common for vehicle manufacturers that import many automotive parts, Hemingway said.
Companies that lease space in the Foreign Trade Zone include technology companies, alcohol distributors and metal contractors.
Participation has jumped since 2018 when only one company participated in the program, which Town Supervisor Angie Carpenter linked to the town’s "aggressive" marketing of the zone to businesses. The zone has operated at 99% capacity, so the expansion "is something people have been looking for," she said.
"It’s another tool in the arsenal of what we do here with economic development and trying to provide opportunities for our businesses," Carpenter said.
Gill Singh, who owns apparel store minimL, is leasing two parcels of land in the zone. The site plan for the first building, which will be 54,000 square feet with space for five tenants, has been developed and submitted to the planning department. A plan for the second building, which will be 24,000 square feet and hold two units, is underway.
Singh found that Islip was too far of a drive for a warehouse for his store, but was interested in leasing land to construct buildings for trade zone tenants. He signed a 40-year lease and hopes to begin construction this summer.
The third building, which Hemingway anticipates will be constructed by a business owner-operator, will likely deal with imports.
Fourteen buildings have been built on the Islip Town-owned land, and the expansion is the first since 1990. Hemingway said tenants are a mix of property management groups that act as landlords and businesses that own their buildings.
To entice importer-exporter tenants, property taxes are waived when a company imports or exports 30% of its business, Hemingway said. Of the current tenants, only a handful don’t import or export and must pay a fee that’s equal to the property tax.
Tri-Link, which has additional locations in Miami and Los Angeles, operates in the zones to take advantage of lower prices for its customers, said general manager Don Ambrosio. The company distributes alcohol and services the airline industry, which, since some spirits are consumed on international flights, eliminates tariffs.
"It provides us the ability to create a business that saves our clients money," Ambrosio said. "We can charge a bit of better pricing."