10/26/2026
WHAT’S IN A TAX ABATEMENT PLAN?
By John Bogack, editor
The owners of the new Tapestry/Hilton hotel in Patchogue Village currently have a tax abatement request before the Brookhaven Town Industrial Develop Agency (IDA). That request will soon be considered by the IDA in early November. The owners have advised the IDA Board an approval is necessary for the hotel to open.
At present their request has taken this form:
• Up to $1.8 million in sales tax exemptions
• Up to $333,000 in mortgage recording tax exemptions
• A 20-year property tax savings plan via a Payment in Lieu of Taxes (PILOT)
Many readers on this page have asked questions about just what are the tax abatements that get included in this kind of request. To get everyone on the same page this is an AI generated answer that provides some good answers to that question:
“When the Town of Brookhaven Industrial Development Agency (IDA) votes to approve a financial assistance package, they grant exemptions and abatements across three primary categories of taxes: real property taxes, sales and use taxes, and mortgage recording taxes.
Real Property Taxes (Land and Building Improvements)
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What is abated: The IDA provides an exemption from traditional real property taxes. This covers the standard real estate tax assessments collected on behalf of Suffolk County, the Town of Brookhaven, local School Districts, and local Special Districts (such as fire, water, or light districts). If the project is located within an incorporated village (such as Patchogue), village property taxes are also included.
Proportional Reductions across All Districts
Because a PILOT takes the place of standard real estate taxes, the abatement spans across all jurisdictions that levy taxes on that property. This includes:
• School Districts
• Library Districts
• Fire & Ambulance Districts
• Town and County Taxes
If an agreement states a developer receives a 50% abatement on new capital improvements for the first year, then all of those individual districts will see their corresponding portion of "new" tax revenue from that property reduced by 50% for that year.
Allocation of PILOT Payments
The money the developer does pay under the PILOT program is collected and distributed to each affected district. The funds are split proportionally based on what percentage of the total tax bill that specific district normally represents.
The Unimproved Base Tax Remains Affected
Typically, IDA abatements apply specifically to the value of new construction or capital improvements. Developers are almost always required to continue paying 100% of the baseline taxes owed on the original, unimproved land value. This base payment is distributed normally to the school, library, and fire districts. [
How it works (PILOT Agreements):
Instead of paying normal property taxes, the developer enters into a Payment-In-Lieu-Of-Tax (PILOT) agreement. The standard policy typically structures a partial property tax abatement over a 10-to-15-year period (though exceptional projects sometimes receive extensions up to 17 or 20 years). Under the PILOT, the developer pays a reduced, predetermined schedule of payments. This often scales so that the abatement applies primarily to the increase in assessed value from new capital improvements. These PILOT revenues are distributed back to the local taxing jurisdictions in proportion to what they would normally receive.
Sales and Use Taxes
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What is abated: Fully exempts New York State and Suffolk County sales and use taxes on eligible items.
How it works: Acting as an agent of the IDA, the developer, contractors, and subcontractors can buy goods tax-free. This exemption strictly applies to building construction materials, machinery, furniture, fixtures, and new equipment purchased during the initial construction and equipping phases. It does not cover ongoing daily operating expenses once the facility opens.
Mortgage Recording Taxes
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What is abated: Waives or partially exempts the developer from the New York State mortgage recording tax.
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How it works: This is a one-time exemption applied when the business takes out commercial mortgages to finance or refinance the acquisition, construction, or equipping of the project site. “
Note: AI generated responses are good but not perfect. If we need to fine tune these answers in the future, we will as needed.
Next up: what is the approval process for a tax abatement granted by the Brookhaven IDA.
Our illustration today: owner supplied graphic of the top floor of the new hotel once built, night time view.