- Opposition to tax incentives granted by Long Island’s industrial development agencies is spreading just as developers say those breaks are essential to building new housing, with some IDA board members reportedly discussing removing housing from their charters altogether, according to Bisnow.
- Long Island permitted just 7 housing units per 1,000 residents between 2012 and 2021 — far below Boston’s 23 and San Francisco’s 27 — with multifamily development even more constrained since zoning bars apartments on 96% of land in Nassau and Suffolk counties.
- The region’s eight IDAs distributed $213 million in PILOT agreements in 2024, up from $167 million in 2019, but critics point to a Reinvent Albany report finding only about a quarter of IDA-backed units are actually below market, raising questions about whether the incentives are hitting their affordability goals.
Opposition to industrial development agency tax breaks is spreading across Long Island, threatening incentives developers say are essential to building new housing in one of the hardest regions in the country to develop, according to Bisnow. “It’s actually very scary that you’re hearing some of the IDA boards talk on the dais, in public, about removing housing from their charter,” Heatherwood President Christopher Capece said at Bisnow’s Long Island Real Estate Conference. The pushback comes as the region already lags far behind peer markets on new housing production.
Get Smarter About What Matters in New York
Subscribe to our free newsletter covering the biggest commercial real estate stories across the five boroughs — delivered in just 5 minutes.
A Region Already Behind
Long Island permitted just seven housing units per 1,000 residents from 2012 to 2021, according to a Long Island Regional Economic Development Council report. That compares with 13 in the Lower Hudson Valley, 16 in Connecticut’s suburbs, 23 in Boston and 27 in San Francisco.
The multifamily gap is even wider. Long Island permitted just 2.3 multifamily units per 1,000 residents. Zoning prohibits apartments on 96% of land in Nassau and Suffolk counties. Meanwhile, 89% of the land allows single-family housing as of right.
The region also lost 98,000 residents ages 35 to 54 between 2012 and 2021. Job growth reached just 2%, compared with 12% nationally, according to the same report.
How Long Island’s IDA Tax Breaks Work
Long Island’s eight IDAs distributed $213 million in payment-in-lieu-of-taxes agreements in 2024. That was up from $167 million in 2019.
The incentives matter in a region with unusually high property taxes. Nassau and Suffolk property taxes are 23 and 18 times higher than the median for counties outside New York City, respectively.
In Long Beach, a 6-acre parcel sat vacant for decades after the Nassau IDA denied $109 million in tax breaks in 2016. The agency later reversed course and approved a $200 million PILOT and $50 million in other abatements.
Developer B2K Development and Harrison Street broke ground on the 438-unit Superblock in 2021. Moody’s later cited the project as a key reason for upgrading Long Beach’s credit rating to Baa1 in 2023. The city had been near junk status two years earlier.
“There’s this misunderstanding that the IDA is writing us a check,” B2K principal Jon Weiss said. “It’s not.” He credited the project with bringing dozens of permanent jobs to new boardwalk retailers.
Zooming Out
The fight reflects a broader debate over how New York structures housing incentives. Gov. Kathy Hochul’s 2023 executive order directed state authorities to prioritize funding for localities that promote housing construction.
That push has also appeared in New York City topping the U.S. for new multifamily construction. Long Island’s debate also mirrors the city’s experiments with programs such as the 485-x program, which has spurred larger units and higher rents.
Both approaches rely on tax relief rather than mandates to encourage new housing supply.
Why It Matters
An October report from watchdog group Reinvent Albany found that only about a quarter of units built with IDA support are below-market. That raises questions about whether the incentives align with the state’s affordability goals.
A Brookhaven IDA-commissioned report raised another concern. In one prototype project, rents allowed under a 120%-of-area-median-income threshold were higher than prevailing market rents. The requirement therefore provided no pricing benefit to tenants.
At the same time, the report found that a 15-year PILOT would cut the project’s operating costs by nearly $8.5 million. It would also unlock financing that otherwise was not available.
Zoning fights add another obstacle. A 146-unit affordable housing project in East Northport was first proposed in 1978 but took more than 40 years to complete. The town’s refusal to rezone the site for multifamily use eventually became the subject of a state Supreme Court decision. The court found that the zoning perpetuated segregation.
What’s Next
A follow-up Brookhaven IDA report published in March found that PILOT agreements are as important for market-rate luxury rentals as they are for affordable housing.
That suggests the incentives have become critical to nearly all new Long Island housing, not just subsidized units. Opposition is growing, and some IDA boards are reportedly considering whether housing should remain within their mandate.
Developers like Tritec’s Kevin Law warn that “without the IDAs, projects don’t move forward.” The debate will test whether Long Island’s incentive structure can survive the current political pressure.
