Amazon repays $2.5M in tax breaks for its Syosset warehouse

Amazon has repaid nearly $2.5 million in tax breaks because it cannot fulfill a promise to create 150 new jobs within three years at a recently-opened Syosset warehouse, officials said.

The online retailer, complying with a directive from the Nassau County Industrial Development Agency, delivered a check for $2,466,268, said agency chairman Richard Kessel.

About $1.75 million is a sales-tax exemption used for the purchase of construction materials, furnishings and equipment for the 204,000-square-foot warehouse at 200 Miller Place, north of the Long Island Expressway. The mortgage-recording tax savings is $712,500, he said.

The facility cost $72 million to build.

The tax incentives are part of an $11 million aid package awarded by the IDA to Amazon and warehouse owner Syosset Park Development LLC in March 2021. In return, Syosset Park agreed to additional environmental cleanup on the site of the former Cerro Wire factory and Amazon pledged to create 150 warehouse jobs.

The entire package, including about $8 million in property-tax savings over 15 years, was forfeited when Amazon decided to close one of its two warehouses in Bethpage and transfer more than 500 jobs to Syosset and other facilities in the metropolitan area, as Newsday first reported in June.

In August, the IDA board determined the job transfers were not new jobs and therefore did not fulfill Amazon’s obligation. The board voted to claw back the tax incentives that had been used so far.

“I’m glad we have done this,” Kessel told Newsday on Tuesday. “It shows that if companies aren’t able to meet their job commitments, we’re going to terminate the agreement and claw back the money.”

He added, “Amazon worked with us on this. There was no litigation, and I hope there will be future Amazon developments in Nassau County.”

Company spokeswoman Rachael Lighty said on Wednesday, "While Amazon is committed to [its] current jobs and meeting the needs of customers in Nassau County, because of the importance of Amazon’s partnership with the IDA, Nassau County and the Town of Oyster Bay, Amazon proactively went to the IDA to review the dissolution of the [tax aid] agreements out of good faith and in the best interest of all parties. Amazon has repaid all the [tax] benefits received to date."

This is the second time that an Amazon warehouse on Long Island has lost IDA tax breaks.

In May, developer Hartz Mountain Industries said it would give up nearly $5 million in tax aid over 20 years for a Melville warehouse rented to Amazon.

The developer said Amazon wasn’t certain it could meet a commitment to create 175 jobs within two years at the 276,500-square-foot building, which is on the site of the former Newsday headquarters, according to documents obtained from the Suffolk IDA under the Freedom of Information Law. The warehouse cost $52.8 million to construct.

In both instances, the IDA job commitments do not include the hundreds of van drivers employed by small transportation companies to deliver Amazon packages “the last-mile” to the customer’s doorstep.

Besides the two affected warehouses, Amazon plans or has opened similar facilities in Bethpage, Carle Place, Holbrook, Melville, Shirley-East Yaphank, Westhampton Beach and Woodmere. Some, but not all, have been awarded IDA aid.

Each warehouse employs about 100 people, with package handlers earning more than $19 per hour, on average, the Amazon spokeswoman said on Wednesday.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.