Will Long Island learn from Amazon warehouse mess?

Over the last two months, two Amazon warehouses in two Long Island counties saw deals worth millions of dollars in tax breaks terminated. 

While the moves occurred under different circumstances, they both were rare but welcome examples of how the counties' industrial development agencies should operate, and indicators of how the IDAs should evaluate similar projects going forward.

In Suffolk, Hartz Mountain Industries Inc., the developer of an Amazon warehouse in Melville, asked the county IDA to terminate its 20-year $5 million tax incentives deal. The decision came because Amazon couldn't commit to creating 175 jobs in two years. Now, it'll be up to the IDA to make sure to claw back every dollar Hartz owes in sales taxes.

The Nassau County IDA, meanwhile, voted earlier this month to end its own deal with Amazon, which provided the online retail giant with tax incentives in exchange for building a new warehouse in Syosset, at the former Cerro Wire site, land that for decades had been the source of battles over development plans.

In 2021, Amazon and the Nassau IDA came to the agreement, which offered the company $11 million in tax breaks over 15 years in exchange for creating 150 new jobs at the Syosset site. Less than 1½ years later, Amazon announced plans to close its warehouse in Bethpage and move those jobs to Syosset — an indicator that Amazon would not be creating as many new positions as it had promised.

Now, the Nassau IDA, too, will have to claw back funds — about $1.7 million worth of sales and mortgage tax savings.

The upside is that both agencies recognized that Amazon wasn't going to fulfill its pledges — and stopped their incentive deals in their tracks.

But the question is whether IDAs across the Island will learn from the recent warehouse mess. When Amazon next comes to an IDA seeking a tax break for a last-mile warehouse — a facility the company can't move and can't build anywhere else — will the agency remember what happened in Melville and Syosset? Will the IDAs realize that most warehouses or last-mile facilities shouldn't get tax breaks at all? 

Hopefully, this will be a turning point. Recently, a Newsday analysis found that developers have proposed more than 11 million square feet of warehouse space for Long Island.

In size, those warehouses altogether represent the equivalent of 25 Nassau Coliseums. 

Perhaps that's a reminder that Long Island developers who want tax breaks, as well as planners and IDAs, should focus on efforts that will truly impact the region. That includes projects that will add jobs, expand and revitalize the Island's economy, from developing the rest of the Ronkonkoma Hub to finally building something at the Nassau Hub —  the land around the Coliseum itself.