Dealertrack to repay $4.8 million in tax breaks for failing to create jobs in North Hills
Dealertrack Technologies Inc. in North Hills, seen here in December 2019, has agreed to repay nearly $4.8 million in tax breaks to Nassau County. Credit: Barry Sloan
A software company that helps automobile dealerships improve efficiency and profitability has agreed to repay nearly $4.8 million in tax breaks to Nassau County after failing to create all the jobs it had promised.
The parent of Dealertrack Technologies Inc. in North Hills, Cox Automotive Inc., reached an agreement with the county’s Industrial Development Agency in February that was ratified unanimously by the agency’s board of directors.
The amount of recaptured tax benefits is among the largest in the agency’s history, according to state and local records. It comes three years after Amazon repaid nearly $2.5 million because it couldn’t fulfill a promise to create 150 jobs at its Syosset warehouse.
Dealertrack was awarded 19 years of tax breaks in 2014 to build a new headquarters on New Hyde Park Road instead of out of state. The 233,000-square-foot building opened in 2017.
In return for the aid, the company promised to add 357 jobs to its payroll of 367 over multiple years.
At the time, then-IDA executive director Joseph J. Kearney said the company had threatened to leave Long Island for Florida, New Jersey, South Carolina, Utah or Texas if it did not receive help from government.
The IDA assistance consisted of a sales-tax exemption of up to $5.7 million on the purchase of construction materials, furnishings and equipment, up to $1 million off the mortgage-recording tax and 19 years of property tax savings. In addition, New York State provided $10.5 million in payroll tax credits, a $1.5 million grant and an allocation of low-cost electricity.
“Dealertrack was seriously leaving. … They were going,” Kearney told Newsday in 2014.
But the company’s workforce never grew to the promised 724 jobs. There were 527 last year, according to a letter obtained under the state Freedom of Information Law.
The IDA is now clawing back some of the $17 million in tax breaks received through this year and reducing property tax savings over the next 10 years by a total of $1.9 million, the letter from Dealertrack attorney John D. Chillemi shows.
The IDA also has agreed to lower the minimum number of jobs that Dealertrack must maintain to continue receiving aid to 475. In the letter, Chillemi said the company might not be able to meet a higher employment threshold going forward.
At February's IDA meeting, he said, “We’ve reached what we believe is a fair means to resolve the [employment] shortfall and create a path to continued success and compliance.”
IDA officials, through a spokesman, declined to comment on Tuesday, saying the deal wasn’t final until payment and signed documentation are received.
Dealertrack doesn't owe the state because the payroll tax credits were terminated and the grant was never fulfilled after Atlanta-based Cox purchased Dealertrack, according to a spokeswoman for Empire State Development, the state’s primary business-aid agency.
Cox spokesman Tucker McNeil said Dealertrack didn’t create all the promised jobs because of “a recent period of volatility, including the COVID pandemic.” Workers assigned to the North Hills building have “adjusted in order to serve our customers through these fluctuations in the vehicle market,” he said.
McNeil also said last week this is the first time that the IDA has sought to claw back some of Dealertrack’s incentives.
“We expect to remain above the new job commitment level” of 475, he said when asked about future job cuts.
The office building, which cost $112 million to construct, was designed to be a showplace capable of attracting and retaining software engineers. There are a terrace, video walls, gym and basketball court that can be repurposed for volleyball, yoga and indoor cricket.
Employees earn, on average, $96,000 per year, according to state records.
Cox purchased Dealertrack in 2015 for $4 billion. The latter was one of Long Island's largest public companies at the time and was founded in Garden City in 2000 to develop software for auto dealers to process loan applications, track inventory, register titles and perform other tasks. Cox also owns the Kelley Blue Book.
A software company that helps automobile dealerships improve efficiency and profitability has agreed to repay nearly $4.8 million in tax breaks to Nassau County after failing to create all the jobs it had promised.
The parent of Dealertrack Technologies Inc. in North Hills, Cox Automotive Inc., reached an agreement with the county’s Industrial Development Agency in February that was ratified unanimously by the agency’s board of directors.
The amount of recaptured tax benefits is among the largest in the agency’s history, according to state and local records. It comes three years after Amazon repaid nearly $2.5 million because it couldn’t fulfill a promise to create 150 jobs at its Syosset warehouse.
Dealertrack was awarded 19 years of tax breaks in 2014 to build a new headquarters on New Hyde Park Road instead of out of state. The 233,000-square-foot building opened in 2017.
WHAT NEWSDAY FOUND
- The parent of Dealertrack Technologies Inc. in North Hills is repaying nearly $4.8 million in tax breaks because the software developer hasn't been able to create all the jobs it had promised.
- Dealertrack received aid from Nassau County and New York State in 2014 in return for constructing a new headquarters on Long Island and promising to grow its workforce from 367 people to 724.
- The company employed 527 people in North Hills last year, according to a letter obtained under the state's Freedom of Information Law.
In return for the aid, the company promised to add 357 jobs to its payroll of 367 over multiple years.
At the time, then-IDA executive director Joseph J. Kearney said the company had threatened to leave Long Island for Florida, New Jersey, South Carolina, Utah or Texas if it did not receive help from government.
The IDA assistance consisted of a sales-tax exemption of up to $5.7 million on the purchase of construction materials, furnishings and equipment, up to $1 million off the mortgage-recording tax and 19 years of property tax savings. In addition, New York State provided $10.5 million in payroll tax credits, a $1.5 million grant and an allocation of low-cost electricity.
“Dealertrack was seriously leaving. … They were going,” Kearney told Newsday in 2014.
But the company’s workforce never grew to the promised 724 jobs. There were 527 last year, according to a letter obtained under the state Freedom of Information Law.
The IDA is now clawing back some of the $17 million in tax breaks received through this year and reducing property tax savings over the next 10 years by a total of $1.9 million, the letter from Dealertrack attorney John D. Chillemi shows.
The IDA also has agreed to lower the minimum number of jobs that Dealertrack must maintain to continue receiving aid to 475. In the letter, Chillemi said the company might not be able to meet a higher employment threshold going forward.
At February's IDA meeting, he said, “We’ve reached what we believe is a fair means to resolve the [employment] shortfall and create a path to continued success and compliance.”
IDA officials, through a spokesman, declined to comment on Tuesday, saying the deal wasn’t final until payment and signed documentation are received.
Dealertrack doesn't owe the state because the payroll tax credits were terminated and the grant was never fulfilled after Atlanta-based Cox purchased Dealertrack, according to a spokeswoman for Empire State Development, the state’s primary business-aid agency.
Cox spokesman Tucker McNeil said Dealertrack didn’t create all the promised jobs because of “a recent period of volatility, including the COVID pandemic.” Workers assigned to the North Hills building have “adjusted in order to serve our customers through these fluctuations in the vehicle market,” he said.
McNeil also said last week this is the first time that the IDA has sought to claw back some of Dealertrack’s incentives.
“We expect to remain above the new job commitment level” of 475, he said when asked about future job cuts.
The office building, which cost $112 million to construct, was designed to be a showplace capable of attracting and retaining software engineers. There are a terrace, video walls, gym and basketball court that can be repurposed for volleyball, yoga and indoor cricket.
Employees earn, on average, $96,000 per year, according to state records.
Cox purchased Dealertrack in 2015 for $4 billion. The latter was one of Long Island's largest public companies at the time and was founded in Garden City in 2000 to develop software for auto dealers to process loan applications, track inventory, register titles and perform other tasks. Cox also owns the Kelley Blue Book.
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.
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