Business needs Nassau to recover

The decision by the Nassau Interim Finance Authority to seize control of Nassau County's leaky finances anticipates a reset for the county's overall fiscal operations. With any luck, this will begin a right-sizing of the region's public-sector cost structure - a vital exercise in self-discipline already undertaken by so many Long Island households and businesses.

Living and working on Long Island means tolerating a bloated governmental wage-and-cost structure. Elected officials who challenge this system commit what amounts to political suicide. As a commercial broker, I face the impact of these rampant underlying costs every day, and so do my clients.

My job is helping companies find space to lease or purchase in Nassau and Suffolk, so they can stay, grow or relocate on Long Island. What I hear every day is that companies are concerned about Long Island getting its public-sector house in order.

There's still real estate business to be done, and indeed we're doing it. Leasing activity on Long Island is rising, as the economy joblessly rebounds. But there's a dark cloud behind the silver lining. Long Island companies like Computer Associates, Symbol, Grumman and Sperry once launched global companies from local footholds, tapping the strength, skills and abilities of Long Island's remarkable workforce. The workforce prospered as the businesses did, making things the world needed, acquiring wealth in proportion to their employers' success in the global market.

But that homegrown juggernaut is disappearing. And few out-of-town companies are knocking on our doors.

The chief reason is cost. Office space on Long Island averages nearly $33 per square foot, making the region the second most expensive suburban market in the country. Nationally, suburban office space averages $26. That means a business hoping to grow here will pay about 27 percent more just to open its doors - before hiring a single worker.

What accounts for that differential? It's taxes. Even if a landlord charges the $26 national average, the landlord is in the hole. First, local government will tax $15 per square foot. Of the remaining $11, the landlord has to pay operating expenses and mortgage costs. Profit? Maybe a dollar or two, in many cases.

If that isn't the tail wagging the dog, I don't know what is.

About two-thirds of this tax money goes to schools. Changing the salary structure that drives education costs here will require herculean will power and district-by-district negotiation. In other words, don't count on that happening anytime soon.

More feasible in the short-term is cutting expenditures on equipment, outside services and other nonsalaried items. By consolidating Long Island's school purchasing into two county-based geographic districts, administrators could slash costs of materials and services.

But lowering school taxes is just part of the story. Long Island needs to accept - and embrace - a more sustainable model for development. Business and housing are interrelated. Around the country, suburban communities have been reinventing themselves by smart-growth planning. They are rezoning, investing in mass transit, and encouraging mixed-use, higher-density housing. As a result they have revived downtowns, increased the stock of affordable housing, reduced dependency on cars, expanded parkland, attracted businesses, kept retirees and young people from getting squeezed out, and created work sites where employees can walk or bicycle to the job. River Oaks District in Houston and Celebration, Fla., are two examples of this kind of planning.

Of course, proposing smart-growth on Long Island is like bringing your kids' textbooks on vacation - no one's interested. That has to change. Long Island is losing its most talented workers. The kind of people who brainstorm great ideas and launch superb companies are exiting, taking with them creativity, resourcefulness and vigor. Several young brokers in my association have departed over the past couple of years for Hoboken, a city often cited for its appeal to young people. Their exodus makes Long Island a bleaker place to do business.

Can that be reversed? The question is, do we have the political will to make the cuts necessary to keep Long Island livable?

What happens with NIFA may offer some clues. Businesses are rooting for you.