IDA Tax Breaks Granted To GC Hotel Buyer
By Stephanie Mariel Petrellese

The deal between the Town of Hempstead Industrial Development Agency and the reported buyer of the Garden City Hotel was approved at a special IDA meeting on June 10th, much to the chagrin of the Garden City School District, Board of Trustees and several residents.

"We are disappointed that the position of the Village and the school district did not prevail," said Mayor Peter A. Bee in a statement released to the Garden City News after the meeting.

Albert Chase, Garden City School District's assistant superintendent for business and finance, said that while he was not necessarily surprised by the IDA's vote, he was disturbed by their lack of acknowledgment of the school district's position. According to Chase, it seemed like the IDA board had already made up their mind. "It was democracy at its worst," he said.

School Board President Kenneth Monaghan had sent a letter dated June 5th to Theodore Sasso, Jr., IDA chairman, and Frederick E. Parola, Jr., IDA executive director and CEO, explaining why they opposed the deal.

"Given the prospective significant loss of revenue to the school district, it is impossible for the Board of Education to support IDA designation for the Garden City Hotel. While we appreciate the benefits of having successful commercial enterprises in our district, an IDA designation for the Garden City Hotel would inevitably shift a significant portion of the tax burden to other taxpayers."

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 a planned hotel renovation and exemption from a one percent mortgage recording fee.

From June 1st until May 31, 2009 the hotel will pay $536,889.60 in Village taxes. The hotel currently pays a total of $1,005,836 in school property taxes.

At its June 5th meeting, the Garden City Board of Trustees unanimously voted to send a letter supporting the school district's position. Village Counsel Gerard Fishberg wrote that, "The Village Board believes that the tax assistance requested by the applicant is not appropriate when considering the loss of real estate tax revenues to Garden City taxpayers." The letter was hand-delivered to all IDA board members on June 9th.

Several Garden City residents also voiced their disapproval at the June 5th Board of Trustees meeting. Arnold Finamore said he believes it is an improper use of IDA funds. According to a May 2006 report from New York State Comptroller Alan Hevesi focusing on IDAs, the purpose of the agency is to "attract, retain and expand businesses within their jurisdictions through the provision of financial incentives to private entities." Although there is no requirement that the business be in an economically distressed area, some residents believe that is how the IDA money should be used.

The IDA board held two public meetings, on May 6th and 28th, to hear public comment on the issue. In addition, Parola had invited the public to call him directly and said he would share any comments he received with the IDA board prior to their vote.

The public was not permitted to comment at the June 10th special meeting of the IDA. According to a published report, attempts by Nassau County Tax Assessor Harvey Levinson to speak were quickly quashed. Levinson has been critical of the IDA and said he is considering his legal options in an attempt to stop the deal.

According to the IDA letter from Village Counsel Gerard Fishberg, the establishment of a PILOT "is contrary to the Notice of Public Hearing dated April 3, 2008 and contrary to the IDA's Uniform Tax Exemption Policy and Guidelines. Both the Notice and the Uniform Tax Exemption Policy provide for abatement of real property taxes on the 'increased assessment resulting from the renovation of existing buildings or new construction.' The exemptions and/or deviations as provided in the Policy are not applicable to this project."

Fishberg explained the Village's position in an e-mail to the Garden City News. "It is our position that the Notice and Policy state that any tax abatement applies to the improvements to the hotel, not the current assessment. Mr. Parola has said that he has been told by his attorneys that the Notice and Policy are broad enough to cover the abatement that they have approved. In reading the Policy, I do not believe that the hotel situation comes within the language contemplated by the deviations."

The attorney for Alrose GCH LLC, the reported buyer of the Garden City Hotel, said the deal to buy the hotel for $91 million was contingent upon receiving the IDA tax breaks.

"I'm a little concerned as a taxpayer that he doesn't have the proper finances to buy it without the IDA," said resident Betsy Andromides. "I just thought that was a little sketchy."

Andromides attended the May 28th IDA meeting and said every Garden City resident who spoke was vehemently against the deal. "The problem with the PILOTs is someone has to make up the tax difference, and that someone is all of us, and small businesses in town," she said. "Quite frankly, I am really sick and tired of paying taxes for other people. It just seems like everyone thinks they can apply to the IDA and we're going to pay for it. I pay a lot in taxes. I'm sick of paying. It's just ridiculous."

Now that the IDA deal has been approved, Alrose will not be permitted to convert the top flour floors of the hotel into condominiums because they generate less tax revenue and jobs. The Nelkin family, who currently own the hotel, had been considering the conversion for a few years.