Long Island’s IDA Tax Break Debate Puts Housing Pipeline in Focus

What happened

A debate over tax incentives is becoming a central issue for housing development on Long Island. Developers speaking at Bisnow’s Long Island Real Estate Conference said industrial development agencies, or IDAs, have become important to the feasibility of multifamily projects through payment in lieu of taxes, known as PILOT agreements. At the same time, opposition to using IDA assistance for housing is growing, with critics challenging both the agencies’ authority and the public value of the subsidies.

The dispute comes in a region with relatively low housing production. From 2012 through 2021, Long Island permitted seven homes per 1,000 residents, according to the Long Island Regional Economic Development Council. Its multifamily rate was 2.3 units per 1,000 residents. The report said apartments are prohibited by zoning on 96% of land in Nassau and Suffolk counties, while 89% of land permits single-family housing as of right.

The key details

New York has 107 IDAs. The agencies have followed a 2023 executive order from Gov. Kathy Hochul directing authorities to prioritize funds for localities that encourage housing construction. State data shows Long Island’s eight IDAs provided $213M in PILOTs in 2024, compared with $167M in 2019. The article also cited property-tax levels in Nassau and Suffolk counties at 23 and 18 times the median, respectively, for counties outside New York City.

IDAs cannot change zoning, but developers said their backing can matter in a contentious approval environment. A 146-unit affordable project in East Northport, initially proposed in 1978, was not finally approved until 2022. Its zoning dispute reached the Supreme Court, which held that the ordinances perpetuated segregation.

The legal debate has also reached the courts. A 2021 suit challenged Babylon IDA assistance for an affordable senior project in Wyandanch. Earlier this year, a New York Supreme Court Appellate Division judge ruled that the agency could provide the tax benefits because the project would advance employment opportunities and the town’s economic welfare. The developer had said it would abandon the project without assistance.

Critics have raised oversight and transparency concerns. A Reinvent Albany report released in October found that about one-quarter of units built with IDA support were below market rate. In Brookhaven, IDA applicants must reserve 10% of rentals for households earning up to 80% of area median income and another 10% for households earning up to 120% of AMI. A July 2025 consultant report for the Brookhaven IDA found that, in a prototype project, rents permitted at the 120% AMI level exceeded prevailing market rents. That same report concluded a 15-year PILOT would lower operating costs by nearly $8.5M and enable financing otherwise unavailable.

Why it matters

The incentive debate is tied to both project economics and regional workforce pressures. The regional council reported that Long Island lost 98,000 residents ages 35 to 54 from 2012 to 2021, while job growth was 2%, versus 12% nationally.

Developers point to Long Beach’s 438-unit Superblock as an example of the stakes. After the Nassau IDA denied $109M in tax breaks in 2016, the long-vacant six-acre site later changed hands. The project broke ground in 2021 after the agency, a year earlier, approved a PILOT valued at $200M and another $50M in tax abatements. Moody’s upgraded Long Beach to Baa1 in 2023, with the Superblock identified as a main reason.

What to watch

Watch whether IDA boards move to limit housing in their mandates, and whether challenges to IDA authority or calls for stronger oversight change how assistance is awarded. Brookhaven’s experience also highlights a practical question: whether affordability set-asides produce rents below the local market, even when PILOT savings remain material to financing. The direction of those policies could affect the timing and financial structure of proposed multifamily developments across Long Island.