Plan to purchase Holbrook IRS site moves forward

An element of Suffolk County Executive Steve Levy's latest cutback plan - the purchase of a $25 million Holbrook IRS building to reduce rental costs - cleared its first hurdle Tuesday as aides acknowledged the Sachem School District will lose $220,000 a year in property taxes after the sale.

The County Legislature's budget committee approved a resolution to exempt the midyear deal from having to provide an offset in the capital budget to make room for the purchase.

While the proposal would pierce the county's debt cap, it would be self-financed by rents from existing tenants, including the Internal Revenue Service and Immigration and Naturalization Service. It also would save money by enabling health department workers to move out of two leased quarters, officials said.

The proposal also would allow the county to sell a health department building in Farmingville for $1.7 million. Levy aides estimate the net savings on the deal at $1.5 million to $2 million a year.

However, Chief Deputy County Executive Christopher Kent acknowledged in testimony that the county purchase would cost about $341,000 in annual lost property tax revenue - with the largest chunk, about $220,000, from the Sachem School District. Sachem school officials said they had not seen the proposal and could not comment.

Kent made the disclosure when Legis. Jay Schneiderman (I-Montauk) asked whether the deal made any provision for payments in lieu of taxes, known as PILOTs, to protect other taxing jurisdictions. Kent said the county plan calls for payment of property taxes for the 2010-11 year, with the property exempt after that.

Levy's chief deputy also said providing ongoing payments to the school district would "create a terrible precedent" by making the county responsible for school taxes on any building it owns. However, he added such a decision would be a policy issue for the county legislature.Schneiderman said he has no position on the whether to give PILOTs, but added, "It's a discussion we should have."