A state audit of tax breaks granted to the Green Acres Mall in 2014 and 2015 found that School District 30 officials underestimated payment-in-lieu-of-taxes revenue, which drove up the district’s tax levy by $1.8 million and forced an “unnecessary increase” to residential tax rates.
In August 2014, the mall’s owner, Macerich, applied for two separate PILOTs — one for Green Acres and another for a new two-level shopping center called Green Acres Commons, which opened last year.
The tax break effectively reduced the mall’s tax payments by about $6 million each year for 10 years — with an option for a five-year extension — beginning last year. On average, October 2016 tax bills increased between $322 and $758 in school districts 13, 24 and 30.
District 30 officials have previously said that they received no guidance from the Town of Hempstead Industrial Development Agency as to the amount of money they should expect to receive as a result of the deal. According to the audit, the IDA advised District 30 on April 5, 2016, that it would receive roughly 73 percent of the mall PILOT and 63 percent of the Green Acres Commons PILOT.
The audit states that a few days later, Lisa Rutkoske, then the assistant superintendent of business, sent a memo to the Board of Education advising it to budget for about 50 percent of the mall PILOTs, “with the difference in expected revenues for the 2016-17 fiscal year to be funded by tax revenue.”
Rutkoske based the 50 percent recommendation on a previous, but unrelated, Town of Hempstead PILOT agreement, the audit stated. Rutkoske left District 30 in 2016 to take an assistant superintendent’s position in the Herricks School District.
Rutkoske did not respond to requests for comment as of press time.
“The district also strongly disagrees with the characterization of its estimate of PILOT revenue as inaccurate,” Superintendent Nicholas Stirling wrote in a Dec. 8 response letter attached to the audit. “Under the tax cap, school districts are obligated to engage in a process of developing a reasonable and good faith estimate of PILOT revenue prior to setting the tax levy. Until tax rates are set, it is not possible to know definitively how much PILOT revenue a school district will receive.”
Stirling added that the audit does not “appear to have considered the detailed analysis of the PILOT agreements the district undertook in developing its estimates or the fact that in at least one other instance, the district received significantly less PILOT revenue than it should have following the successful resolution of tax certiorari proceeding.”
The audit also recommended that the district return excess money that was levied, but a statement that the district issued Tuesday morning contended that it had already given back the excess funds by reducing the tax levy in the 2017-18 budget by $1.8 million.
“This amount represents every dollar the district received in excess of its estimate of PILOT revenue from the Green Acres Mall for 2016-17 and fulfills a promise we made to our residents that any excess revenue would be returned,” the statement reads.
Six of seven IDA board members resigned in November 2016 after Hempstead Town Supervisor Anthony Santino threatened to remove them from their posts. They resigned, they said in a statement, “because of the efforts of certain public officials to delegitimize and misrepresent the facts” about the Green Acres Mall deal.
A new board was appointed by Santino, and after collecting testimony from local taxpayers, voted to rescind the tax incentives in April based on the mall’s failure to create the number of jobs that it had agreed to in its contract. Rwevocation of the deal triggered a lawsuit between Macerich and the IDA that is pending.
Officials react to audit
Valley Stream Mayor Ed Fare’s office released a statement after the audit was published Tuesday.
“The audit confirms Mayor Fare’s contention that District 30 inaccurately and dramatically underestimated PILOT revenue, resulting in school taxes that were grossly inflated, causing tremendous strain and undue hardship on nearly all property owners within the Incorporated Village of Valley Stream, regardless of whether they reside in school districts 30, 13 or 24,” the statement read.
State Sen. Todd Kaminsky (D-Long Beach) released a statement faulting the IDA for its handling of the tax breaks.
“The audit lays bare the fact that the procedures put in place to check and oversee the Hempstead Town IDA’s actions — while perhaps lawful — were also grossly inadequate,” Kaminsky said. “That not one member of the public was present at the hearings to object or even comment on the unusual size (a $6.5 million tax shortfall) of the PILOT deal speaks for itself.”