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High-end Strip Joints Such as Manhattan's Penthouse Executive Club Enjoying Huge Tax Breaks
NY Daily News
Juan Gonzalez

November 12, 2010
View the Original Article


Its bevy of gorgeous lap dancers and luxurious decor have made Manhattan's Penthouse Executive Club one of the city's hottest high-end strip clubs.

But until now, few people realized taxpayers have been subsidizing the fantasy sex.

Shortly after the club opened on W. 45th St. a few years ago, city officials granted property owner Swingtime LLC a partial property tax exemption, city records show.

Under the exemption, known as the Industrial and Commercial Incentive Program, the owners saved more than $37,000 on their tax bill this year alone.

And the Penthouse Club is not alone.

Starlets Gentleman's Club near the Brooklyn-Queens Expressway in Astoria, Queens, has enjoyed an exemption for years - one worth more than $10,000 in 2010.

Up in the Bronx, the Hunts Point Triangle, a bar notorious for a lot more than its bikini-clad dancers, landed an exemption back in 2001. The break was worth more than $12,000 off its taxes this year.

The Bronx bar was forced to close down in June after its next-door neighbor, Joe Fratelli, owner of Fratelli's Pizza Cafe, bought the building and evicted the club.

"I just don't like that particular kind of business," Fratelli said Thursday. "There was prostitution and drugs going on there."

So why are strip clubs getting city tax breaks you and I don't enjoy?

That's what a lot of the city's tax assessors want to know. Several assessors told the Daily News they have been frustrated by the rash of property tax exemptions their department has doled out in recent years.

When Michael Bloomberg came into office in 2002, about 20% of private property rolls in the entire city had some kind of tax exemption. By last year, that had grown to more than 25%, the city's annual tax reports show.

Some of the biggest jumps have come in the commercial incentives program. The number of properties granted such breaks jumped from 4,600 in 2002 to 6,300 last year.

When it was first created, the program's goal was to entice firms to stay in the city by giving them a tax break for new construction or renovation of their properties.

It soon became a way for all kinds of firms to routinely apply for a tax reduction, which could last up to 25 years.

Several recent studies, including one by the city's Economic Development Corp., have documented rampant abuses of the program.

"We are looking into this situation," Department of Finance spokesman Owen Stone said Thursday night.

In 2008, Manhattan Borough President Scott Stringer revealed that scores of profitable fast food chains, big department stores and even gas stations in Manhattan were receiving this tax break.

"We shouldn't be giving tax breaks to firms that would otherwise operate fine without them," Stringer said, "and that certainly includes strip clubs."

The Penthouse Executive Club, for instance, caters largely to high rollers - and its tax break apparently never made it down to the club's workers.

In February, several former lap dancers sued the club, claiming Penthouse owners violated labor laws by not paying them the minimum wage, pocketing a share of their tips and requiring them to pay for their uniforms.

In the case of Hunts Point Triangle, city officials seem to have done no monitoring over the 10 years the tax break was being used.

"Subsidizing strip clubs shows how far afield the program has gone from its original intent," said Bettina Damiani, director of the economic development watchdog group Good Jobs New York.

Too many of these lap dances have been on our tab.