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Editorial: No full 10-year tax break for Heartland

Jerry Wolkoff, developer of Heartland Town Center, on

Jerry Wolkoff, developer of Heartland Town Center, on the site. In August 2012, Wolkoff and Islip Town were embroiled in contentious negotiations over the renewal of an agreement for payment in lieu of taxes on the $4 billion Heartland project in Brentwood. Credit: Newsday, 2010 / Audrey C. Tiernan

Taxes are the latest twist in the road for Heartland Town Square, developer Gerald Wolkoff's massive mixed-use project on land that was once part of Pilgrim Psychiatric Center. An agreement setting up a decade's schedule of reduced taxes, based on the expectation that developing the land would produce lots of new jobs, has expired. Now the Town of Islip, its industrial development agency and the Brentwood School District must decide how much of a break Wolkoff gets in the future. This is a complex, crucial decision, and Islip must get it just right.

Islip Supervisor Tom Croci has quite correctly taken the position that any new agreement must meet with the approval of the school district. It has major financial challenges, and its needs must be considered seriously. But that is about the only part of this situation that seems simple.

One major consideration is the certainty that an agreement can give the town, the school district and other taxing jurisdictions about the tax revenue they'll get from Wolkoff over the term of any new arrangement. Certainty is a key ingredient in budget-making.

Another matter is the possibility that the town can use talks about a new agreement as leverage to nudge Wolkoff toward accommodation with the Building & Construction Trades Council of Nassau and Suffolk Counties. These unions need the work, but the council declines to work on Heartland Town Square without a project labor agreement, laying out wages and conditions -- or a document promising to use 100 percent union labor. Wolkoff says he won't sign a project labor agreement.

That remains a big obstacle. Wolkoff thinks that the need for work will bring the unions to him, one by one, without an overall agreement. The trades council vows that it will remain firm and united.

In agreeing in 2002 to set some of Wolkoff's taxes lower than they might otherwise be, Islip was betting that this project would create a lot of jobs and soon increase overall property tax revenue. It was, after all, planned to include 9,000 rental units and a lot of retail. But the start of construction still seems a long way off.

Wolkoff argues that grinding out the required economic impact studies and going through the town's approvals has taken up a lot of the past decade. There's no question it's a complicated project with a lot of moving parts, requiring detailed analysis and agreements. But the standoff with the building trades is a major impediment. However you parse the lack of progress, the fact remains: The project hasn't produced many jobs.

At the end of the year, the property tax bills go out. By then, this has to be resolved. If there's no agreement, Wolkoff could end up with a tax bill double the $1.6 million he now pays annually to all jurisdictions for the property -- and he maintains even that is too much because it was based on an inflated assessment. Without an agreement, he'll keep fighting the increase in court, and that would deprive the school district and other entities of revenue certainty.

Still, it is unwise to give him another 10 years of reduced taxes without receiving strong assurances that the union issue will be solved and construction will begin soon. So the most prudent solution might be a shorter-term agreement, with no guarantees of another renewal if Wolkoff doesn't finally get shovels in the ground.