MINEOLA, N.Y. (CBSNewYork) – A so-called “tourism loophole” is allowing some unusual suburban businesses significant tax breaks if their customers are from across county lines.

As CBS2’s Jennifer McLogan reported, Nassau County taxpayers are getting stuck with the bill.

Fitness centers, self-storage facilities and car dealerships in Nassau County are allowed a state tourism exemption tax break for projects if they attract 50 percent of their customers from outside the region.

Asked where the so-called tourists come from, Hempstead’s deputy chief of economic development Adam Haber told McLogan, “Queens.”

“I don’t think anybody’s coming from California to buy a car in Valley Stream,” he said.

It means lost revenue for counties and towns, while taxpayers are stuck with the funding.

Now, there’s a push to reform the Industrial Development Agencies (IDA), with independent boards in place in counties and towns across the state granting tax breaks to businesses. The effort is to generate economic development.

“I think it’s very important that taxpayer dollars don’t subsidize facilities like self-storage facilities and car dealerships. It is meant to be for true economic development and job creation,” Nassau County Executive Laura Curran said.

No sooner were those words spoken, and despite pleas from the town supervisor,  Hempstead’s IDA renewed a 10-year tax break to one local car dealership that wants to expand with a vote of 7-2.

“Nothing is changing. They just did it again,” one woman said.

“That just compounds the problem for us,” another added.

“A tourist loophole? That doesn’t sound right to me,” said another.

“The IDA process has been abused by people using things like the  tourism loophole to get these deals when they should just be taking out a business loan,” Town of Hempstead Supervisor Laura Gillen said.

With new county and town leadership came pledges to claw back the benefits if economic and jobs benchmarks aren’t met. Former LIPA Chief Richard Kessel was just named the new IDA chairman.

“Attracting new business to Nassau County critically important to fulfill the county executive’s mission of expanding the tax base,” he told McLogan. “But granting tax breaks to car dealerships and storage facilities is not going to happen under the Nassau IDA anymore.”

The county comptroller just launched an audit of the IDA, where 173 projects received about $44 million in tax breaks.

Soon business applicants and consultants appearing before the IDA will have to disclose campaign contributions to county or local officials.

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