Riverhead Supervisor Yvette Aguiar on Saturday denied that the Riverhead Industrial Development Agency grants real property tax abatements to commercial developers.
Real property tax abatements, along with sales tax and mortgage recording tax exemptions, are the IDA’s principal tools for inducing businesses to locate or expand in the Town of Riverhead.
The supervisor’s comments came during an appearance with the Heart of Riverhead Civic Association when she fielded a question from a resident in the audience.
Aguiar had spoken about struggling with limited funding to accomplish certain things in town government.
Riverhead resident Thomas McSwane asked why the town would give new businesses tax abatements.
“I don’t understand why they do that, because isn’t that tax dollars that the town could be collecting to help fund all of these things that we need to do?” McSwane asked.
“Okay, so you often hear that they got a tax credit or they don’t have to pay taxes or they’re exempt. And that’s not really necessarily the case” Aguiar replied. “The IDA — how they operate sometimes can be difficult to understand. The purpose is to bring business here and enhance the community,” she said.
“As far as not paying taxes? That’s not the case,” Aguiar continues. What they do get exempt for is from paying state tax on the supplies. So that doesn’t go back to our community,” Aguiar said, apparently referring to the exemption from state sales and use taxes industrial development agencies are authorized to grant.
Civic association cofounder Cindy Clifford, who moderated the meeting with the supervisor Saturday morning at the library, sought clarification.
“When we hear about, like, a 10-year tax abatement, the perception is —“
Aguiar interrupted to explain. “As they build, as they build, they pay taxes. It’s an empty piece of land. We’re not collecting, especially if it’s a town land — we’re not collecting. So now through this process, okay. Give us your project. We’re going to review it. Tell us how you’re going to formulate that plan to get to the full buildout,” Aguiar said.
“All right, you’re saying in two years, we’re gonna have a thousand square feet for commercial project… 10,000 square feet. But the whole project is going to be 25,000. So, okay, when you build that, you’re going to give us taxes on that. And then when you build the next level, or the further expansion, and so it’s a scale that’s built in until the project, and at the point that the whole project is completed. You’re paying full taxes on the property,” she concluded.
But that is not how IDA real property tax abatements work.
An abatement is essentially a discount. Property tax abatements granted by the IDA vary, but often start out at 50% of the full real property tax assessment and decline each year for a period of, typically, 10 to 15 years. At the end of that period, the property owner is paying 100% of real property tax due.
IDA tax abatements are not granted for special district taxes (The taxes that fund the sewer, water, lighting, ambulance, parking and business improvement districts.) IDA tax abatements do not apply to a property’s existing tax bill, whether taxes due on vacant land or existing structures. The abatements only apply to new improvements to the property, which are the target of IDA inducements.
There have been several new development projects granted real property tax abatements during Aguiar’s tenure as town supervisor, including Island Water Park, apartment buildings at 331 East Main Street and 205 Osborn Avenue, a propane distribution facility at 48 Kroemer Avenue.
In addition the Riverhead Community Development Agency, which is governed by the Town Board and which Aguiar serves as chair, this month filed a joint application with Calverton Aviation and Technology for IDA benefits, including an as-yet publicly undisclosed real property tax abatement.
The Town Board, sitting as the governing body of the Riverhead CDA, has conveyed its land holdings at the Calverton Enterprise Park, totaling 2,100 acres, to the Riverhead Industrial Development Agency in the hope of expediting the $45 million sale of 1,644 acres to Calverton Aviation and Technology. If the joint application for benefits is approved by the IDA, the agency will enter into lease and project agreements with both CAT and the Riverhead CDA that will allow the purchaser to try to complete the long-stalled land subdivision at the site.
During Saturday’s civic meeting, no one questioned or challenged the supervisor’s statements about IDA tax abatements. Former IDA board member and current Town Board liaison the IDA Councilman Bob Kern, Community Development Agency Administrator Dawn Thomas and Deputy Town Attorney Annemarie Prudenti, who negotiated the agreement to convey the property to the IDA and worked with Thomas on the joint application, were all seated in the audience.
Aguiar requested the civic provide questions in advance, which she said on Saturday helped her to research answers ahead of time. She also agreed to take some questions from the audience, including the one posed by McSwane.
Other topics covered included crime, code enforcement, soda machines at Stotzky Park and major development process being processed while progress on the town’s comprehensive plan update remains stalled.
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