Southold to IDA: Keep out!

The Southold Town Board has dug its heels into its clash with the Suffolk County Industrial Development Agency following its approval of a $2.7 million tax relief package for the forthcoming $43.9 million luxury hotel dubbed the Enclaves.

On Feb. 13, board members unanimously authorized Supervisor Al Krupski to issue a letter of objection to the county IDA with a request for reconsideration. The letter decries the agency’s unanimous Jan. 25 approval of tax relief for Enclaves LLC, comprising developers Jonathan Tibett, Edward Glackin and Andrew Giambertone, and asks that it “reconsider the implications” of this decision.

“I think anything could help,” Mr. Krupski said in a telephone interview about the letter. “At some point someone supported this and enabled the IDA to support businesses that weren’t going to pay their fair share of taxes. So if an effort can be made to reverse that, why not? It’s always worth the effort.”

The Town Board’s letter additionally demands — “on behalf of the residents of Southold Town” — that the county IDA “permanently remove the town from its jurisdiction.”

“One bad example was enough to alert us to the fact that it damages the residents,” Mr. Krupski said.

The IDA-approved tax package for The Enclaves includes a 15-year schedule of payments in lieu of taxes, or PILOTs, totaling $700,000 for the project, which upon completion will boast a two-story hotel with 40 guest rooms, four detached cottages and a pair of restaurants. In public comments, Town Board members and numerous Southold residents have asked that the IDA decline Enclaves LLC’s request so it would pay the full amount of property taxes it would normally be assigned following development and an updated assessment to fund schools and public works. Many also derided the majority of the jobs the project would create — 40 employees paid $33,993 annually, with 11 more slated to earn $88,400 each, according to IDA documents — as insufficient for those looking to live in the township in which they would work. Some residents supported the tax incentives on the grounds that even under the PILOT program, the property would still create jobs and generate more taxes than it currently does as the shuttered Hedges bed and breakfast on Main Road in Southold. During the IDA’s Jan. 25 public meeting, the developers said that without the tax breaks for which they applied, they could not proceed with the project, as costs had increased since it was first proposed in 2017.

The same evening it authorized the letter to the county IDA, the Town Board unanimously supported state legislation introduced last year by state Sen. Sean Ryan (D-Buffalo) and Assemblyman Harry Bronson (D-Rochester) aimed at protecting school districts from losing much-needed tax dollars due to IDA incentives. According to an analysis conducted by the national policy resource center Good Jobs First, New York public schools lost at least $1.8 billion in fiscal year 2021 to IDA tax abatements. Additionally, tax abatements cost an average of $541 per pupil among impacted school districts.

The Town Board’s endorsement of this legislation arrived a month after Gov. Kathy Hochul released her preliminary budget for the 2025 fiscal year. If approved as written, that budget would slash hundreds of thousands of dollars in state aid for school districts within Southold Town. These districts have been lobbying for a return of some of these funds before any figures become final. The state budget must be passed by April 1 and school districts will hold budget votes on May 21.

“That’s a step in the right direction,” Mr. Krupski said of the state legislation to keep school taxes out of IDA tax incentive packages. “It seems reasonable that people who have come up with their business plan should be paying their fair share of their impacts on the community.”