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Self-Storage REIT Life Storage Reduces Job Commitment But Keeps Tax Breaks in Hicksville, NY


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Self-Storage REIT Life Storage Reduces Job Commitment But Keeps Tax Breaks in Hicksville, NY

https://www.insideselfstorage.com/reits/self-storage-reit-life-storage-reduces-job-commitment-keeps-tax-breaks-hicksville-ny

Life Storage Inc., a self-storage real estate investment trust (REIT) and management company, received permission to reduce the job commitment for its facility in Hicksville, N.Y., without suffering a decrease in its Nassau County tax breaks. The reduction was requested “based on changing business operations,” according to Kate White, the operator’s senior vice president of human resources.

Certain tax breaks were granted to Life Storage when it bought the property at 65 W. John St. in 2013. An adjustment was made to the REIT’s 15-year incentive agreement with the county’s Industrial Development Agency (IDA) in November, reducing its promised employment from three and half full-time or equivalent positions to three. The company paid a $1,000 amendment fee to make the change, applicable through 2028, according to the source.

The four-story facility isn’t busy enough to justify a workforce of three and a half full-time equivalents, according to Melissa R. Zizzo, legal real estate manager for Life Storage. The site averages one move-in and one move-out per day. This equates to about 20 minutes of staff time, which includes getting the space ready for re-rental, she said.

Most of the REIT’s 850 facilities operate with two employees but aren’t open as long as the Hicksville location, Zizzo wrote in a September letter to the IDA. The facility has increased and dropped its workforce since it was acquired. It jumped from three and a half people in 2013 to four in 2014, then to just two in 2015. In 2016 and 2017, the facility employed six, then dropped back to three in 2018, which led the company to request the amendment, the source reported.

Employees at the Hicksville location earn an average of $33,836 annually. The company’s property-tax savings totaled $90,436 in 2016, according to records obtained by the source under the Freedom of Information Act.

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Offering tax breaks to self-storage companies has come under fire from some IDA board members, homeowners and good-government groups. They claim it violates a state law that prohibits retailers from receiving IDA aid, and self-storage companies employ too few people to warrant the benefit.

This week, IDA Chairperson Richard Kessel acknowledged the discontent and noted these types of deals are no longer available to self-storage operators. “This was not approved by the current board. We do have a policy that we adopted against doing self-storage facilities because they don’t produce enough jobs,” he said, adding that the board didn’t consider reducing the Life Storage tax breaks because it didn’t want to “quibble” over half of a job.

Based in Buffalo, N.Y., Life Storage operates facilities in 29 states and Ontario, Canada. Its portfolio of owned and managed facilities comprises more than 60 million square feet.

Source:
Newsday, Life Storage Gets OK to Cut Job Promise Without Losing Tax Break

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