West Hempstead apartment complex got $7 million in tax breaks, was not required to set aside any affordable units

When the 428-unit Heritage Westminster luxury apartments opened in West Hempstead in July, the developer touted the building’s myriad amenities, including a 2-acre courtyard with pickleball courts, a pool and barbecue grills.

The project, which town officials said would bring much-needed housing near the West Hempstead train station, received more than $7 million in tax breaks from the Town of Hempstead Industrial Development Agency. It was the largest rental complex to open on Long Island since 2019.

But the Commack-based developer Heatherwood was not required to include any affordable housing.

The apartment complex is among eight projects the Hempstead IDA has approved since 2022 that received tax breaks without setting aside any affordable units, according to a Newsday review of IDA documents.

As Long Islanders struggle to find attainable housing, industrial development agencies have said financial assistance to developers can help address the region's housing shortage. But critics of corporate subsidies question whether for-profit builders of market-rate rentals should get tax benefits.

"The argument for subsidizing market-rate [housing] is absolutely absurd," said John Kaehny, executive director of Manhattan-based nonprofit Reinvent Albany, which advocates for government transparency. "Market rate is what people are willing to pay. Right now, it’s very high because there’s such an incredible shortage of all forms of housing."

Only three of 11 market-rate apartment buildings backed by the Hempstead IDA since 2022 designated affordable housing.

Those 11 buildings included 1,304 apartments combined, and developers agreed to allocate just 53 units, or 4%, as affordable housing, Newsday’s review showed.

Many of those approved projects have not yet opened. They include the 117-unit Bridgeview in Island Park, a 63-unit building on West Jamaica Avenue in Valley Stream and a 58-unit building on Grand Avenue in Baldwin.

Frederick Parola, CEO of the Hempstead IDA, said all developers receiving benefits must attest that without assistance they wouldn’t move forward with construction, and the Hempstead IDA takes developers at their word.

He said the tax breaks to market-rate developers support needed housing for the town’s workforce.

"The IDAs are addressing the fact that we need all types of housing, and I think we're proud of that," he said.

Heatherwood said without financial assistance, it would not have been able to build the $212-million complex.

Incentives offered by industrial development agencies are necessary to make projects feasible given soaring construction costs, high taxes and lengthy government approval processes on Long Island, company president Christopher Capece said in an interview.

Construction of "multifamily housing will come to a grinding halt if the IDAs are not part of this," he said.

At Heritage Westminster, the asking rent for the most popular one-bedroom layout was about $3,450.

The average asking rent for a one-bedroom unit on Long Island was $2,761 as of this week, according to commercial real estate data provider CoStar.

State Sen. Siela Bynoe, a Democrat whose district includes the new building, supports municipal IDAs providing tax breaks to spur new housing. But, she said, those dollars should come with strings attached.

"We should use every tool available to us to help create more housing," Bynoe said. "At the same time, we must recognize that the housing shortage and affordability crisis go hand in hand. When tax benefits or subsidies are provided to developers, there should be a requirement to include affordable housing."

Boost for building

Industrial development agencies are public-benefit corporations designed to boost economic development through financial incentives to companies that create jobs and improve economic welfare.

State courts have found IDAs have the authority to support new housing if they promote employment and prevent economic deterioration.

In a February decision by a New York appeals court, the appellate division ruled against the Wyandanch school district in favor of the Town of Babylon IDA, affirming a lower court decision that affordable senior housing was among the types of projects it could support under state law. 

In recent years, IDAs have shifted to offer more tax breaks to housing developers, including developers of luxury housing. These buildings create fewer permanent jobs than tax breaks offered to major employers, Newsday has reported.

However, transformation of dilapidated commercial buildings into housing offers economic benefits including construction jobs, housing for the local workforce, and new customers for area businesses, Parola said.

"The intent really for these kinds of projects is to bring in people who can be added to the workforce in the area in which the project is proposed," he said.

Heritage Westminster appeared to be just that kind of project when the Hempstead IDA granted Heatherwood tax breaks in 2023.

In 2019, Heatherwood agreed to buy a 9-acre former shopping hub for nearly $26 million from the bankrupt discount chain National Wholesale Liquidators.

After the closure of Liquidators, the property fell into disrepair and began to attract household garbage, said Regina Todd, president of the Cathedral Gardens Civic Association, a group of homeowners in the Cathedral Gardens area that spans part of West Hempstead and Hempstead Village.

"It was a dump," Todd said. 

In 2021, Heatherwood executives met more than a dozen times with members of the Cathedral Gardens and West Hempstead Civic Associations, as well as the fire department, to field questions on topics including parking and the building design, according to the company and the civic associations.

Todd said she doesn’t remember community members urging Heatherwood to include affordable housing in the development.

Tax breaks for Heritage Westminster

$7.4 million

The combined value of the sales tax exemption and mortgage recording tax exemption granted to developer Heatherwood. 

The Hempstead IDA awarded Heatherwood a sales-tax exemption of up to $6.6 million for purchases of construction materials, furniture, fixtures and other supplies and a mortgage recording tax exemption of up to about $806,000.

Heatherwood also entered a 20-year payment in lieu of taxes agreement, lowering the future building’s expected tax bill. The company will make $42.7 million in payments, or an average of $2.1 million per year. Payments started at $771,000 in the first year and are slated to rise to $5.3 million by the 20th year.

The previous property owner paid about $1 million annually.

The project generated 350 construction jobs, and the company committed to creating seven full-time positions by its second year, according to Heatherwood and IDA documents.

In its cost-benefit analysis of the project, economic development consulting firm Camoin Associates said none of the benefits imposes a tax burden on local municipalities because if Heatherwood opted not to build, there would be no tax revenue generated.

IDA officials, who are responsible for giving tax breaks, should question such assertions, said Arlene Martinez, deputy executive director of Washington, D.C., nonprofit Good Jobs First, which advocates for transparency in economic development.

"Private developers can come in and make these sweeping statements, and they often go unchallenged," she said.

Asked about Newsday’s findings, Parola said the agency could do more to prod developers to set aside units with affordable rents.

"Could we press more? Sure," he said, adding he would bring up the issue with the board. "When we discuss, we’re going to say we really need to do a little better here."

They took a blighted, downtrodden property and created 428 units. If we’re going to address the housing crisis here on Long Island, we should be looking to add all types of housing."

— Kyle Strober, executive director of the developers group Association for a Better Long Island

Kyle Strober, executive director of the developers group Association for a Better Long Island, supported the Hempstead IDA’s decision. Heatherwood completed a major redevelopment while incorporating community feedback, he said.

"They took a blighted, downtrodden property and created 428 units," he said. "If we’re going to address the housing crisis here on Long Island, we should be looking to add all types of housing."

Tax incentives are necessary to encourage investment on Long Island, Strober said.

Heatherwood, founded in 1950 by Donald Partrick and Stanley Neisloss, has been one of the most prolific builders of housing on Long Island, constructing about 14,000 houses, condos and apartments from Brooklyn to Hampton Bays.

The company touts that it holds and manages its own properties unlike so-called merchant builders who develop housing to sell.

Given the difficulty of building housing on Long Island, Heatherwood has started to build in other markets. The company has plans for four complexes with about 1,600 units in the Charlotte and Raleigh-Durham metropolitan areas, said Douglas Partrick, the company’s owner and son of its founder.

"We are going south with our capital," Partrick said. "I’m talking $50 million to $150 million of our capital to build somewhere else because we can’t get anything done here."

Demand for affordable rentals

There are eight industrial development agencies on Long Island, and some have stricter policies tied to requiring affordable units when they grant tax breaks to housing developments.

Developers that have received IDA support often agree to set aside units within higher-priced buildings. These apartments offer Long Islanders a rare opportunity at a discounted rent in a new building.

For example, the Babylon IDA adopted an affordable housing policy in 2017 that requires developers seeking tax breaks for projects with five units or more to set aside 20% of units as affordable.

The Brookhaven IDA’s policy says 10% of units must be affordable to people earning 80% of area median income and another 10% must be affordable to people earning 120% of area median income.

Heatherwood has included affordable housing in other buildings that have received tax breaks, including 30 affordable apartments at Heritage Spy Ring in South Setauket and 26 units at the Villas at Pine Hills in Manorville — both in the Town of Brookhaven.

In some of the cases, where Hempstead IDA-backed projects have included affordable units, renters swarmed. A housing lottery offering 20 apartments at discounted rents at The Langdon in Lynbrook received more than 1,000 applications.

The demand reflects how tenants have struggled to keep up with housing expenses. Nearly half of renter households on Long Island were cost-burdened in 2024, meaning they spent at least 30% of their income toward rent and utilities, according to the latest census data.

I would argue it’s dangerous to have a case-by-case approach and that it would be better to try to come up with a universal policy.

— Claudia Aiken, director and researcher at NYU Furman Center’s Housing Solutions Lab

The Hempstead IDA’s uniform tax-exemption policy includes guidelines requiring affordable housing within market-rate housing. It specifies that developers should include a minimum of 10% units affordable to people earning 80% or less of the area median income and 10% workforce units affordable to people earning 120% of area median income.

But the guidelines allow the IDA to deviate from that requirement on a "case-by-case basis."

When tax benefit packages are handled that way, it can be hard to measure whether the IDA is receiving an adequate return in exchange for the tax benefits it offers, said Claudia Aiken, a director and researcher at NYU Furman Center’s Housing Solutions Lab.

"I would argue it’s dangerous to have a case-by-case approach and that it would be better to try to come up with a universal policy," she said.

‘You can’t find anything’

West Hempstead renter Shoshana Ribenbach would like to move to a larger place with her boyfriend but said she couldn’t afford the more than $4,000 a month for a two-bedroom at Heritage Westminster.

Ribenbach, 23, said she looked at about 40 apartments two years ago before finding a place through an agent, where she pays $1,900 a month for a small one-bedroom unit.

"I would like to expand because I want to have kids and I just want more space, but it’s ridiculous," she said. "You can’t find anything around here affordable."

Ribenbach said she was frustrated to hear Heatherwood had received tax breaks given the rents at the new building.

"If you’re getting all this advantage while you’re building your property and you’re getting tax breaks and charging the prices that you’re charging, it’s disrespectful to people that grew up on Long Island their whole lives and want to stay here," she said.

The priority should be to develop housing but not on the backs of people who already can’t afford to live here.

— Kiana Bierria-Anderson

The IDA’s support for Heatherwood shifts more of the tax burden to working-class Long Islanders who can’t afford to live at Heritage Westminster, said Kiana Bierria-Anderson, the Long Island director for New York Communities for Change.

"The priority should be to develop housing but not on the backs of people who already can’t afford to live here," said Bierria-Anderson, 33, who lives with her grandparents in Hempstead.

She said she’d like to see more housing built, but developments that get tax breaks should be required to set aside 25% to 35% of units as affordable.

The Hempstead IDA has supported new affordable housing. It granted millions in tax breaks to five buildings with 436 units in Baldwin, Freeport, Hempstead and Inwood that are made up solely of affordable apartments. 

However, those developers created apartments with below-market rents because they financed construction with state and federal low-income housing tax credits, which require reduced rents to lower-income tenants.

"The argument for subsidizing affordable housing is that rent does not pay for the cost of construction and operation," said Kaehny, of Reinvent Albany. "For market rate housing, there's no argument for subsidy."

However, there are tradeoffs involved in mandating affordable housing.

In a 2024 paper, housing researcher Shane Phillips cautioned policymakers that while requiring lower rents helps the tenants who benefit directly, increasing the percentage too sharply could hurt overall housing production, pushing rents higher because of a shortage of units.

"The fact is developers can build elsewhere," said Phillips, housing initiative manager at the UCLA Lewis Center for Regional Policy Studies.

"When the public's money is being spent on something," he said, "we should ask if it's worth the investment or if that money should be going elsewhere."