Heartland developer Gerald Wolkoff and the board of the Brentwood Union Free School District have been negotiating to no avail since the 10-year PILOT, or payment in lieu of taxes, expired earlier this year.
While the town board approves PILOT agreements, town officials have deferred to the school board, which receives the bulk of property taxes, to iron out the details.
Without a pact, town officials say they're prepared to bill Wolkoff about $3.5 million for property taxes for the 2012-13 tax year -- more than double the current annual bill of $1.6 million -- if the parties involved fail to reach an agreement by Jan. 10, when tax bills are due.
"I don't want to hurt the school district," said Wolkoff, who purchased the 450-acre site from the state for $20 million in 2002 and thinks its $120 million assessment is vastly inflated. "But if they force me to go to court, they could possibly lose the case and be hurt. They can bill me whatever they want -- that doesn't mean I won't object to it."
Wolkoff said he's negotiating with school officials, but neither party would offer specifics.
Neither Rick Beylea, a spokesman for the Brentwood School District, nor school board president Helen Moss, responded to messages seeking comment.
The town's move could further delay the planned development of a mini-city with 9,000 apartments, a movie theater and artists' lofts at the site of the former Pilgrim Psychiatric Center, which has been stalled by disputes over the use of union workers on the project and traffic mitigation.
In an email response to questions, town spokeswoman Inez Birbiglia said the town has "acted in some ways as a broker" between the two parties, and said there have been a series of proposals and counterproposals. She declined to offer specifics.
Birbiglia said the PILOT has brought "certainty" for the last decade into the district's tax picture, which she said could have faced a "roller coaster effect" due to fluctuating assessments and other issues.
Islip Democratic Committee chairman Gerry Pallotta said the town "dropped the ball on fiscal responsibility" by failing to broker a deal or collect the full taxes owed.
"There is no urgency to develop the property as long as there is a free ride on property taxes," he said.