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Aug 4, 2010 10:51 AMPublication: The Southampton Press

Airport Empire Zone grounded before takeoff

Aug 4, 2010 10:51 AM

With the sudden end of the New York State Empire Zone program earlier this summer, it appears that a special tax break district arrived and departed from Westhampton before any businesses could take advantage of it.

The Empire Zone program, which ended as scheduled on June 30 as part of the 2009-10 state budget, provided some tax relief for qualifying businesses within certain designated areas throughout the state. The idea behind the program, which was created in 1986, was to lure enterprise into the state, spur economic development and, ultimately, create new jobs.

In 2003, state lawmakers split off a chunk of an existing Empire Zone at the Enterprise Park at Calverton, or EPCAL, and placed it on 48 acres at Francis S. Gabreski Airport, along Old Riverhead Road. But in the seven intervening years, no qualifying businesses opened there, according to county and state officials.

In fact, the first businesses that would have been able to reap the benefits of the Gabreski Airport Empire Zone would have been those to occupy a 433,100-square-foot technology park slated for construction next year. That facility will be built on 58 acres located on the northern part of the airport property.

In May 2009, Suffolk County signed a 40-year lease with Rechler@Gabreski LLC, a smaller branch of Rechler Equity Partners LLC of Melville, which will build the technology park. The complex will feature six buildings housing technology, film and homeland security businesses. There are also plans to build a 145-room hotel with conference capabilities on the site. The Rechlers are expected to invest about $90 million into the project.

It is unclear whether the loss of the Empire Zone benefits for potential businesses—which include refundable credits against certain taxes and utility discounts—will affect the technology park’s ability to draw tenants. Cousins Gregg and Mitchell Rechler, the developers behind the Hampton Business and Technology Park, did not return a call seeking comment this week.

At a Southampton Town Planning Board meeting last month, Gregg Rechler said that his firm has found four potential tenants interested in leasing space. Two tenants are already based on the East End and another two are based in western Suffolk, Mr. Rechler said, although he did not identify the businesses.

Carolyn Fahey, an intergovernmental relations coordinator for Suffolk County, said the Gabreski Airport Empire Zone was one of seven such sites in the county. When it was created, she said, the special zoning was designed to be a “tool” for whichever firm won the bid to develop the airport.

“We would have hoped that the Empire Zone would have given it new life,” Ms. Fahey said of Gabreski. “But it didn’t, so we’re moving forward.” The Empire Zone accounts for a tiny portion of the 1,480-acre airport property, she said.

A scaled-back state initiative created in June to replace the Empire Zone program, dubbed the Excelsior Jobs Program, does not require businesses set up shop in certain zones in order to receive tax breaks. Instead, businesses can apply on an individual basis, according to Ms. Fahey and Yves R. Michel, the commissioner of the Suffolk County Department of Economic Development.

However, the Excelsior Jobs Program does draw out a number of “investment zones”—48 in all, according to State Senator Kenneth P. LaValle—in economically distressed areas, where it is easier for businesses to qualify for tax breaks. Neither EPCAL nor Gabreski Airport fall into that category, Mr. LaValle said.

“This is truly a blow to Gabreski,” Mr. LaValle said of the loss of the Empire Zone. “If you make an analogy to an airplane, the plane got blown up before it actually got down the runway.”

The political effort earlier in the decade to bring an Empire Zone to Gabreski was linked specifically to the prospect of building a technology park there, Mr. LaValle said.

“The reason why [former Southampton Town Supervisor Patrick Heaney] and the county wanted to transfer the Empire Zone designation over there was to help out with the industrial park,” he said.

Suffolk County Executive Steve Levy has also decried the end of the Empire Zone program.

The Excelsior Jobs Program—which started with a $50 million budget this year and will be capped at $250 million annually when fully implemented in 2015—is a fraction of the size of the $550 million per year Empire Zone program, which encompassed some 84 zones throughout the state, Mr. LaValle said. While existing Empire Zone businesses will continue to reap their benefits for some time, the sun has set on any potential Empire Zone businesses.

“It’s over,” Mr. LaValle said. “Ball game’s over. I would tell you that there are very, very few people that believe this Excelsior Program is worth anything.”

State Assemblyman Fred W. Thiele Jr. agreed, calling the switch from Empire Zone to Excelsior “ill-considered.”

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Did Bob Stevens Appliances have to move out because of this, and subsequently was forced into bankruptcy?

If so, add another cost into this process. Sorry to see them go.
By PBR (4956), Southampton on Aug 11, 10 12:45 PM
Bob Stevens was a great loss to all of us on the East End but I think the die was already cast and they were well on their way to bankruptcy court before the infrastructure construction started and certainly the loss of the Empire Zone benefits did not directly affect their business. It appears that they would have been required to relocate anyway and the stores location at the airport was hardly an ideal retail site.
By foodie (74), Remsenburg on Aug 11, 10 6:33 PM
PS a technology park was a stupid idea to begin with, or hasn't anyone the guts to say THAT aloud
By Hambone (514), New York on Aug 19, 10 11:41 PM