by Jamie Heiberger of JH Heiberger PLLC
This week, Newsday took a hard look at Heritage Westminster, the 428-unit luxury rental complex that recently opened on Hempstead Turnpike in West Hempstead. It is the largest new housing development on Long Island since 2019 — built by Heatherwood on the old National Wholesale Liquidators site, steps from the LIRR station. Advertised rents run from about $3,400 a month to more than $7,000. It is, by any measure, a success story for building housing where Long Island needs it.
Then Newsday did the math on what the public paid to help make it happen. In 2023, the Town of Hempstead Industrial Development Agency gave the project an estimated $7.4 million in exemptions from sales tax and the mortgage recording tax, plus a 20-year PILOT — a payment in lieu of taxes — totaling about $42.7 million over the life of the deal, starting at roughly $771,000 in the first year. And the number of affordable apartments the agency required in return was zero.
Not a handful. Not ten percent. Zero.
How a Deal Like This Works
An industrial development agency is a public authority that can offer tax incentives to projects a town wants built. In a PILOT deal, the agency effectively takes the property off the regular tax rolls for a set term, and the developer pays a negotiated schedule instead — usually starting low and stepping up over time, while the building is leased up and the project's finances stabilize. Done right, everyone gets something: a derelict or underused site goes back to productive use, construction and permanent jobs get created, and the taxing jurisdictions eventually receive more than the empty site was paying. The prior owner of this site paid about $1 million a year in taxes.
That is the theory, and there are projects where it works exactly that way. But an incentive is public money by another name, and the public is entitled to ask what it received for its money. Here, on the issue Long Island talks about more than any other — affordability — the answer is nothing. Newsday found that Heritage Westminster is one of eight housing projects the Hempstead IDA has assisted since 2022 with no affordable set-aside at all. Even the agency's own chief executive, asked whether the IDA could press developers harder on affordability, answered: "Could we press more? Sure."
The Part That Should Bother Every Small Owner
In my decades of practicing real estate law in New York, I have sat across the table from hundreds of small housing providers. Nobody negotiates their tax bill down for twenty years. Nobody waives their sales tax on a boiler replacement. They pay the full assessment on buildings whose operating costs — fuel, insurance, maintenance — keep climbing at a pace their regulated rents are not permitted to match, and then they read about a 428-unit luxury project, backed by public incentives, that was not asked to set aside a single apartment a working family could afford.
Let me be clear: the problem is not that a town offered incentives to get 428 homes built on a dead retail site near a train station. Long Island needs the housing, and this is what transit-oriented development is supposed to look like. The problem is a negotiation in which affordability never made it onto the term sheet. A modest set-aside — even ten percent — would have meant more than forty homes priced for the teachers, nurses, and young workers every town on this Island says it wants to keep. The IDA held the leverage. It simply chose not to use it.
What to Take From This
If you are buying, selling, or financing a property with IDA benefits, read the PILOT schedule before you read anything else. Those stepped payments are a real cost that phases in over time, and they affect value, underwriting, and what a buyer will pay. If you are a developer, understand that these deals are now negotiated in public — expect the affordability question to be asked, loudly, and come with an answer. And if you are a broker, when a listing boasts about tax incentives, ask the follow-up question: incentives in exchange for what?
Public money should buy public benefit. On Long Island, in the middle of a housing shortage, forty affordable apartments would have been a benefit. Zero is just a number the rest of us are paying for.
New York Real Estate Attorney • Decades of Counsel to Small Housing Providers.
by Jamie Heiberger of JH Heiberger PLLC