Tax breaks trimmed for developer who reduced jobs pledge

The developer of a large warehouse in Melville will receive fewer tax breaks because it will create only half the jobs that were promised earlier.

The board of the Suffolk County Industrial Development Agency, in a 5-2 vote on Thursday, reduced the property-tax savings granted to Hartz Mountain Industries Inc. by $774,400.

The New Jersey-based commercial real estate company will now save $2.5 million in property taxes, or about 11% off $24 million over 20 years. The 669,186-square-foot warehouse is located at 235 Pinelawn Rd., which once was home to Newsday's headquarters.

The tax savings had initially been for 20 years and now will be for 15 years, IDA officials said. 

Hartz Mountain requested an amendment to its IDA-aid package in March, saying it could only commit to the creation of 250 jobs, not 500 as promised in December 2021. As a result, the duration of the property-tax savings must be shorter under IDA policy.

James P. Rhatican, vice president of land use and development for Hartz Mountain, said it has been unable to find a single tenant that wants to use the entire warehouse. The completed building now will be subdivided to accommodate between four and six tenants, he said last month.

Rhatican said prospective tenants are concerned about the prospect of losing the property-tax savings, which would impact rents, if one of them fails to hire enough employees and the jobs threshold isn’t met.

He said on Thursday that a pharmaceutical company has signed a lease for 95,000 square feet and pledged to create 40 jobs.

Kelly Murphy, the IDA’s acting executive director, added that the agency was contacted by a prospective tenant that could potentially bring 150 to 200 jobs to the warehouse.

Rhatican said, “We’re highly confident that we’re going to create more than 250 jobs. It’s just the uncertainty that the higher [job creation] number creates for prospective tenants. We want to put them at ease” that the property-tax savings will materialize because the job commitment will be fulfilled.

As Rhatican spoke, 15 members of construction unions were in the audience on Thursday.

The union umbrella groups Nassau-Suffolk Building and Construction Trades Council and Long Island Federation of Labor have called on the IDA to rescind all of the breaks awarded to Hartz Mountain, saying the developer’s general contractor used out-of-state subcontractors and workers for portions of the project.

Hartz Mountain “has repeatedly taken steps to award work to contractors from other regions [of New York State] and other states,” Imran Ansari, political director for the 250,000-member federation, told last month's IDA meeting. “Hartz Mountain focuses on their bottom line rather than the enhancement of the communities on Long Island.”

Grant Newburger, director of communications and organizing for the trades council, questioned whether Hartz Mountain still needs the tax breaks. He said Amazon rented the adjacent warehouse on the property but returned nearly $5 million in IDA incentives after saying it might not be able to create the promised 175 jobs within two years. 

On Thursday, there was no debate among the seven IDA board members. They had spent more than an hour deliberating at last month’s meeting.

Board members Joshua Slaughter, a union official, and Brian Beedenbender, a business executive and former county legislator, voted “nay” on the resolution to continue Hartz Mountain’s property-tax savings but at a reduced level.

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.