Developers will be unable to seek tax breaks on new warehouses for the next six months, according to the Brookhaven Industrial Development Agency.
The moratorium applies to warehouses of at least 100,000 square feet, and be built on speculation — or “on spec,” meaning they’re move-in ready, but developers have no tenants yet.
In response to a flurry of “mega warehouses,” which are typically more than twice that size, in various stages of planning and construction on Long Island and the rest of the U.S., the economic development agency plans to study how effective the developers are at filling these spec warehouses.
“There's been some construction,” Lisa Mulligan, CEO of the Brookhaven IDA, said during the board’s Nov. 15 meeting. “Let’s see where we are, not just in Brookhaven, but Long Island-wide, and find out what's going on.”
“It’s just an opportunity to see some of those projects and what their status is,” added Frank Trotta, the IDA’s assistant treasurer.
Under the moratorium, existing applications would still be considered for tax exemptions. The Town of Brookhaven could also still approve developers’ plans — just without tax breaks in mind. The pause was issued after an estimated 1 million square feet of warehouses were considered in the last month alone.
The board unanimously voted to approve the moratorium while a study commissioned from over a year ago on spec warehouses in Brookhaven and Long Island is updated over the next six months. The previous study showed that the warehouse industry in Suffolk County is projected to produce more supply than is needed and lead to double-digit vacancies over the next five years.
A group of North Bellport residents want to see the moratorium be made permanent. They are concerned about the damage that increased diesel truck emissions will have on the environment and their health.
“The IDA tax breaks are corporate welfare — plain and simple,” said Kerim Odekon, a member of the Brookhaven Landfill Action and Remediation Group (BLARG), an environmental justice group made up of fenceline communities near the waste facility in Yaphank.
“Tax exemptions for speculative warehouses are fiscally irresponsible and shift the tax burden from wealthy corporations to existing residents and businesses,” Odekon added.
In a statement, BLARG said their community is already burdened by storage, distribution and waste facilities. Earlier this year, a New York state working group identified North Bellport to be an environmental justice area and disadvantaged community with among the lowest health outcomes in Suffolk County.
Odekon said his neighborhood has become a “sacrifice zone” to become a storage center for the region. The group is requesting New York State Comptroller Thomas DiNapoli and the State Authorities Budget Office investigate the Brookhaven IDA.
BLARG has also called for the proposed tax breaks for a pair of warehouses on the same road by the same developer a mile apart to be rejected. In October, the Brookhaven IDA postponed considering giving the developer, Ares Management Corp, an extension before approving a tax exemption program.
Residents are concerned that the South Country Central School District is cash-strapped due to the loss of property tax revenues — that the developer said it would be paying, but not for the length of the program, which can be anywhere from five to 10 years without extension.
“I've made it very clear that they need to clear up the record at the planning board at the next hearing,” Annette Eaderesto, the town attorney assigned to the agency, said at the November meeting.
The project needs to go back to the town planning board to consider accepting a final environmental impact review at a future hearing. Eaderesto said the state-mandated process will likely take the site plan approval process into early 2024.
The extension was granted to Ares Management Corp immediately before the moratorium was considered. Trotta, who was the only opposition, did not respond to requests for comment.
Some Long Island school districts and lawmakers are challenging the role of non-elected IDA officials approving tax exemptions. Earlier this year, the Riverhead Board of Education rallied against its local economic development agency for “defunding their school district.” Legislation was also proposed to ban IDAs from granting exemptions on school property taxes.
In October, Brookhaven IDA Chairman Frederick Braun said lawmakers were putting “targets on the backs” of these agencies.
“The real truth is that the Brookhaven IDA has placed a target on the back of the South Country School District budget for over a decade, and now parents, teachers and community members are standing up and fighting back,” Odekon said.
