Babylon's Industrial Development Agency suing to recover tax break benefits

The Babylon Industrial Development Agency is suing two companies to recover more than $1.2 million in tax breaks after the businesses failed to meet their end of the deals, according to agency officials.

The cases are the first time in five years the agency has sued to recapture tax benefits, according to IDA spokesman Greg Gordon.

Agreements between the IDA and companies include a clause that spells out how much of the benefits must be returned if the company doesn't fulfill its promises.

The IDA is suing Marc-Robert Industrial LLC/MC Packaging Corp. Facility for $953,327.

MC Packaging Corp. Facility, a box manufacturer, previously filed paperwork with the state saying it would close its doors for good at the end of June 2022, Newsday reported.

Separately, the IDA also is suing R.R. 590 Oak Family Limited Partnership, a manufacturer of outdoor planters, for $254,877. The agency filed both cases last year in state Supreme Court in Suffolk County.

Documents the IDA provided show the box manufacturer signed a payment in lieu of taxes, or PILOT, deal in October 2017, agreeing to a 15-year property tax abatement starting at 40% of the estimated taxes and increasing by 4% each year.

The company promised to hire 106 full-time employees at its East Farmingdale building, according to Gordon. The IDA estimated the company's tax savings at more than $1 million. 

IDA CEO Tom Dolan said the agency found out in an April 2022 Newsday article that the box manufacturer would be closing within months and terminating 88 jobs.

“We tried to work with them but it became evident we needed to terminate the deal for the taxpayers of the town to make sure we were living up to our fiduciary responsibility,” Dolan said.

Attorney Ken Silverman, who represents the company's interests, didn't immediately comment when reached.

The outdoor planter company signed a 12-year payment in lieu of taxes deal with the IDA in September 2018, with a break starting at 40% of the estimated property taxes and increasing by 5% per year.

IDA officials said the company, which does business as Planterworx, is still believed to be operating out of its Copiague building. The estimated tax savings for the company, which promised to hire at least 31 full-time employees, was $394,781.

The company didn't file annual employee and state tax forms in 2020 and 2021, and 2022 filings showed they were short on employment numbers, Dolan said.

“We’re always willing to work with a company … But there was no response on their end,” he added.  

Planterworx CEO Randy Rollner didn't return requests for comment and court records don't show an attorney for the company.

Dolan said the agency works with companies who are struggling to avoid recapture and it rarely leads to a courtroom.

William Wexler, an attorney for both Babylon's IDA and Suffolk County Industrial Development Agency, said “99% of the time” litigation can be avoided.

“We don’t look to sue,” he said. “We’ve got better things to do … We’re not looking to make a buck, this is tax money.”  

But Richard Kessel, former head of the Nassau County Industrial Development Agency, said such lawsuits occasionally are necessary.

“A lot of people view the IDAs as just giving away money,” he said. “The IDA has to protect its integrity. Otherwise it's got problems with its own taxpayers.”

By Denise M. Bonilla

denise.bonilla@newsday.comdenisebonilla

Denise Bonilla has worked at Newsday since 2003 and covers the Town of Babylon, including the villages of Lindenhurst and Amityville.