Suffolk IDA awards tax breaks to one warehouse but makes no decision on another

In 30 minutes, the Suffolk County Industrial Development Agency approved millions of dollars in tax breaks for one warehouse project but couldn't muster the votes to decide the fate of another. 

The warehouses differ in size and the number of employees that would work in them.

But the projects are similar in many ways: Both are from large development companies that are relatively new to Long Island. They would be located in the county’s western half. Neither yet has tenants. The warehouse workers would earn about $40,000 per year.

The IDA board voted unanimously last week to give final approval for $2.4 million in tax breaks to the Venture One Real Estate LLC warehouse in Hauppauge. However, there weren't the necessary four votes to grant or deny final approval for $8.7 million in tax breaks to the Hartz Mountain Industries Inc. warehouse on Spagnoli Road in Melville.

The Hartz project was supported by three board members and opposed by two. So, the resolution neither passed nor failed, said IDA executive director Anthony J. Catapano.

The seven-member board has one vacancy and one member did not attend Thursday’s meeting.

In voting against Hartz, IDA board member Joshua Slaughter said he needed more financial information from the New Jersey-based developer to determine whether tax breaks are required to build the 411,000-square-foot warehouse.

Board member Brian Beedenbender agreed, saying he wasn't certain the $106 million project depended on IDA assistance. He said Hartz purchased the former National Grid training site for $37 million in 2019, before the pandemic and rising inflation.

“I still think [the warehouse] gets built anyway,” Beedenbender said.

Hartz executive James Rhatican responded, “I can’t say that it would or would not get built but for this [tax-aid package]. But I can tell you that these incentives … [will] bring tenants to the area” because the $5.2 million in property-tax savings over 15 years would lead to lower rents, he said.

On Friday, Rhatican told Newsday that Hartz is “disappointed that the motion to approve the incentives for this project didn’t carry.” But he said the company would hold talks with the IDA staff “to see if there is a path forward on the application.”

Between 200 and 300 people would eventually work at the proposed warehouse, according to Rhatican.

Hartz first sought the IDA’s help for the Spagnoli Road project a year ago, as the developer was embroiled in controversy with local unions over the use of out-of-state contractors and construction workers to build two warehouses at 235 Pinelawn Rd.

That project, on the site of the former Newsday headquarters, won nearly $17 million in tax breaks over 20 years in a 4-2 vote by the IDA board in November 2020.

More recently, Hartz appeared to have made peace with the unions and the IDA voted unanimously in April to grant preliminary approval for a tax-aid package for the Spagnoli Road warehouse.

 Separately, the tax savings approved for the Venture One warehouse will last for 10 years.

The 90,700-square-foot facility, costing $44 million, would replace a vacant office building at 49 Wireless Blvd. Between 30 and 100 people would eventually work there, said Brian McDonagh, Northeast regional vice president at Venture One, which is based in a Chicago suburb.

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.