Why iStar just doesn't get it

iStar is seeking a 20-year, $109 million tax break to build two, 17-story towers on the Superblock, with 522 luxury oceanfront rental apartments.

Courtesy iStar Inc.

John Bendo, the president of the West End Neighbors Civic Association, asks why taxpayers should subsidize rent of the iStar apartments.

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If you are reading this, you are probably one of the people that pay attention to what goes on in our city. Don’t take that for granted, because many of our neighbors do not pay attention. Wednesday, Feb. 24, was one of those times when residents should have been paying attention.

That was when the Nassau County Industrial Development Agency held a hearing to gather public input on whether the developer iStar should be granted a 20-year, $109 million tax break to build two, 17-story towers on the Superblock, with 522 luxury oceanfront rental apartments.

First, let’s get something out of the way: iStar is a business — it is their job to maximize their profit and get return for their shareholders, so they are doing what a business does. Part of that is using the system — albeit a seemingly flawed one — to their advantage. So, we really shouldn’t be all that shocked at what iStar is doing.

If you listen to iStar, they say that this is a simple on or off, meaning that if they get a Payment in Lieu of Taxes, or PILOT, they would proceed with the project. If not, they’ll take their bat and ball and go home and build nothing. So what they are telling us is that Long Beach can get a little something now, in the nominal amount of additional taxes they would pay — and then in 20 years we would get the real payoff when the full taxes kick in — or we get nothing and just continue to get the land only taxes.

iStar says the reduced taxes that they would pay under the PILOT should cover any expenses (e.g. schools, infrastructure, etc.) incurred by the city for the addition of the two apartment towers. But this seems to be where the disconnect is between iStar and residents.

Though we hardly collect anything now (only land taxes), we effectively still get nothing with the PILOT for 20 years. The incremental addition they will pay in taxes with the PILOT is minor in the city’s overall budget. And in a “Wizard of Oz”-like man-behind-the-curtain move, iStar doesn’t seem to want to acknowledge the obvious — residents object that the taxes they will pay under the PILOT are a 75 percent tax cut from what they should be paying in taxes on the property.