Attention Albany: IDAs need new rules

In the region's ongoing effort to add more housing, there's one oft-controversial piece of the puzzle that remains complicated, opaque and inconsistent: tax breaks.

Long Island developers have long suggested the only way they can build housing — especially affordable housing — is with tax incentives and other assistance from the local industrial development agency. Each marches before one of eight IDAs, presenting glossy renderings and big promises. They insist their plans pass the agency's "but for" test — meaning "but for" tax breaks, they wouldn't be able to build. 

With the expense of land, the difficulty of obtaining financing and the cost of materials, that's sometimes true. But it's not always. Too often IDAs take the developer's word, without doing a full analysis or asking tough questions. Most problematically, IDAs lack uniform rules, resulting in a hodgepodge of standards that make it tough to evaluate the decision-making.

That's particularly noticeable when it comes to the inclusion of affordable housing in proposed developments. Some IDAs, such as Brookhaven and Babylon, require a developer to earmark a percentage of units as "affordable." Some, like Hempstead, do not.

In one recent illustration of this mess, the Hempstead IDA provided $7 million in tax breaks and a 20-year payment in lieu of taxes, or PILOT, agreement, to Heatherwood, a Commack developer that built 428 units of housing in West Hempstead, none of which were affordable. Rents range from $2,800 up to $8,000 a month.

That's unfortunate. If the Hempstead IDA had sought some affordable units, it's unlikely Heatherwood would've rejected the idea. After all, the developer previously met the Brookhaven IDA's affordability requirements. And separately, Heatherwood is planning 495 new units on state-owned land in East Farmingdale — 100 of which will be affordable.

Critics of IDAs are quick to say that tax breaks go to companies and developers that don't need them. By approving developments without any affordable housing, IDAs feed that argument. The agencies should be more discerning in their approvals, to underscore and legitimize the necessity and impact of the incentives.

Certainly, the West Hempstead development, known as Heritage Westminster, is a significant boost for the region, replacing a dilapidated property, adding hundreds of desperately-needed rental units, and bringing in millions of dollars in annual tax revenue. But an affordable component would have opened the door for more residents who need more varied housing options.

Reforms are necessary. State lawmakers in Albany should develop new rules. They should include requirements that any residential project receiving benefits have a specified percentage of actual affordable housing. The state also should require IDAs to complete a checklist of criteria that must be met before granting tax breaks, including evaluating the impact on the area's tax base.

Long Island needs housing of all types, and IDAs are a necessary part of that process. But the agencies must be more judicious in what they approve. And developers must be more thoughtful in their asks — and generous in what they offer in return.