A yacht tax break with many fathers

ALBANY—A sales tax exemption for expensive boats that was included in New York’s final budget had its genesis in both houses of the Legislature.

A version of the measure, which exempts from sales tax any portion of the purchase of a boat above $230,000, was included in a budget clean-up bill last year that was never actually introduced.

The carve-out was not included in Governor Andrew Cuomo’s original budget proposal, but both houses of the Legislature included some version of the provision in their one-house budget proposals this year, and its inclusion in the final budget means both the governor and the legislative leaders agreed on the final proposal.

The exemption, which Senate Majority Leader Dean Skelos defended Monday as a way to create jobs, could benefit not only yacht owners, boat manufacturers and retailers, but also marina owners and operators.

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Michael Fortenbaugh, who previously operated the North Cove Marine near the World Trade Center site, said New York State’s sales tax has been historically unfriendly to yacht buyers.

“When you purchase a boat, very few people will claim the boat to be located in New York State,” he said. “If you buy a boat that’s $5 million you’re talking a huge amount of money [in sales tax].”

Fortenbaugh lost his license when it was awarded to two close allies of Cuomo.

In January this year, the Battery Park City Authority, whose members are appointed by the governor, opted to award a 10-year license to operate the North Cove Marina to Brookfield Properties and Island Global Yachting, which is run by Cuomo’s former employer Andrew Farkas, and is an affiliate of Island Capital Group LLC, the real estate merchant banking firm run by Farkas, which once employed Cuomo as a vice president. (During his time with Island, Cuomo helped mediate a dispute with community groups opposed to a planned waterfront complex and marina on St. Thomas in the U.S. Virgin Islands.)

At the meeting to announce the awarding of the North Cove license, Battery Park City Authority chairman Dennis Mehiel, who was himself a major donor and fund-raiser to the state’s Democratic party, and once ran against Andrew Cuomo as a lieutenant governor candidate on the ticket with H. Carl McCall, admitted that he had, on occasion, docked his own yacht at marinas owned by Farkas.

Local community groups who supported Fortenbaugh, the marina’s longtime operator, charged that the authority’s selection of Farkas’s group and Brookfield as the operators smacked of cronyism.

Farkas and his company donated $124,000 to the governor’s campaign last year and Brookfield and its holdings have donated $813,000 to Cuomo and the state Democratic party.

Brookfield Properties spokeswoman Melissa Coley said the sales tax exemption would not impact Brookfield.

“The new sales tax exemption for boats does not affect us positively or negatively,” Coley said in an email to Capital.

A spokesperson for Island Global Yachting, which also operates a marina in Montauk on the far Eastern end of Long Island, did not immediately respond to a request for comment.

– David Giambusso contributed reporting. 

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