Town IDA wins appeal against former comptroller

George Maragos

The Town of Hempstead Industrial Development Agency successfully overturned a Nassau County Supreme Court decision that had allowed the county comptroller to have subpoena power over IDA documents.

The ruling, handed down from the State Supreme Court Second Judicial Department Appellate Division on July 10 is a blow to an effort by former County Comptroller George Maragos to audit the town agency in the wake of a 2015 tax-break agreement between the IDA and the owners of Green Acres Mall that led to a sharp increase in school taxes within Valley Stream Elementary School District 30, of which the mall is a part.

“We’re very pleased by the decision,” Town IDA chief executive officer, Fred Parola, said in a statement. “The lower court’s decision was totally incorrect in terms of established precedents and the appeals court made the right decision.”

In its decision and order, made by a four-person appellate panel consisting of associate justices Ruth Balkin, Betsy Barros, Jeffrey Cohen and Robert Miller, it argued that the county comptroller lacks the legal authority to subpoena the Town IDA because it is state-chartered agency.

Maragos had initially sought to use his office’s authority in December 2016 to request documents related to tax breaks granted to Green Acres owner, California-based Macerich, which included a 15-year payment-in-lieu-of-taxes deal, arguing before Nassau County Supreme Court Justice Jeffrey Brown that the county charter authorizes him to audit any town or special districts that fall within his jurisdiction.

The appellate panel ruled, however, that the Town IDA is not a part of “a town,” “special district” or “political subdivision” as alleged by Maragos, but like all IDAs, was established by the State Legislature as a “corporate governmental agency, constituting a public-benefit corporation,” according to General Municipal Law Section 856.

A late-2017 audit report from the office of State Comptroller Tom DiNapoli would reveal that the Town IDA had followed the correct procedures when approving the Green Acres PILOT agreement, and placed much of the blame for the tax hike on School District 30.

District 30 officials had reportedly underestimated the amount of PILOT revenue they would receive from the mall by as much as $1.8 million, resulting in a sharp property tax hike that ultimately proved to be unnecessary. The report recommended the district return the excess taxes and to develop more accurate budgeting estimates.

DiNapoli’s auditors recommended the Town IDA adopt policies to assess the indirect tax impacts of the PILOTs it approves.