By Stephanie Mariel Petrellese

A temporary restraining order halting the sale of the Garden City Hotel was issued by a state Supreme Court judge on Tuesday after counsel from the Garden City School District and Village of Garden City joined forces to initiate legal action against the Town of Hempstead Industrial Development Agency.

"The school district really has an interest in this case," said Superintendent of Schools Dr. Robert Feirsen at the July 9th meeting of the Garden City Board of Education. "We feel the IDA violated its own procedures, as well as its charge, its mission."

The IDA is a non-profit public benefit corporation authorized by New York State to promote economic development with financial assistance and tax relief. The purpose of the agency is to "attract, retain and expand businesses within their jurisdictions through the provision of financial incentives to private entities," according to a May 2006 report from New York State Comptroller Alan Hevesi.

There is no requirement that the business be in an economically distressed area. Frederick Parola, the IDA's CEO and executive director, has said jobs for construction workers will be created during a planned hotel improvement. Jobs are also expected to be retained as a renovated hotel will likely cause the number of hotel guests to increase.

On June 10th, the IDA approved a deal with Alrose GCH LLC, the reported buyer of the Garden City Hotel. The deal freezes Alrose's current $1.7 million total for school, county and village taxes for three years. The corporation will make payments in lieu of taxes, known as PILOTs, which will increase modestly over the next seven years. The hotel would be required to pay its full share of real estate taxes beginning in the eleventh year. The agreement also includes sales tax exemptions for the hotel renovation and exemption from a one percent mortgage recording fee.

Albert Chase, Garden City School District's assistant superintendent for business and finance, has estimated that the district will experience a loss of $2.8 million in tax revenue over the 10-year period.

The temporary restraining order will be in effect until July 15. As of press time, the parties were waiting to hear whether a judge would grant the IDA's request for an adjournment. The restraining order would then remain in effect until the next hearing date. Parola said he could not comment on matters of litigation and referred all calls to the IDA's attorney.

School district counsel Bonnie L. Gorham explained that the next step is to pursue a preliminary injunction to further halt proceedings until the court has an opportunity to rule on the entire piece of litigation.

Gorham also announced that the court granted a motion made by the Village of Garden City to join the litigation as a petitioner along with the school district. At the last Board of Trustees meeting on June 19th, a resolution authorizing counsel for the Village of Garden City to begin litigation against the IDA failed to pass after five of the eight trustees decided to wait to see how the school district chose to handle the matter.

Village spokesperson Brad O'Hearn told the Garden City News that Mayor Peter Bee polled trustees before Village Counsel Gerard Fishberg went to court. "As was explained at the last Board of Trustees meeting, most of the trustees wanted a little more time to study the legal issues, and also preferred to work on the litigation strategy cooperatively with the school district rather than take independent 'shoot from the hip' action," Mayor Bee said in a statement released to the newspaper. "After our Board members had an opportunity to review a draft of the proposed litigation papers (which our village attorney assisted in drafting) and consulted with me informally, I directed village counsel to take the appropriate steps, and I expect the Board to ratify my direction at the next board meeting [scheduled for July 17th]."

The Village has taken the legal position that the tax abatement should be applied to the hotel improvements, not the current assessment, according to the Notice of Public Hearing and IDA's Uniform Tax Exemption Policy and Guidelines. According to Village Counsel Gerard Fishberg, the IDA believes that the two cited sources are broad enough to cover the approved abatement.

The school district's petition also included a supporting affidavit from Nassau County Tax Assessor Harvey Levinson. He is not officially a party in the litigation, but has been very vocal in his opposition against the IDA and this particular deal.