Libyan strongman Moammar Khadafy's government convinced city officials to drop more than $28 million in back property taxes against its diplomatic headquarters — only to later renege on its end of the bargain, The Post has learned. Libya House, designed to serve both as the rogue state's diplomatic mission and as a commercial office tower, had racked up unpaid taxes dating back to 1980 until the Bloomberg administration finally agreed to wipe the slate clean two years ago. Libyan officials refused to pay a dime in taxes, claiming that U.S. economic sanctions first imposed by President Reagan kept them from ever using the 24-story building at 309 East 48th St. as commercial property. Three mayoral administrations refused to buy the argument. But the Bloomberg administration sat down with Libyan officials and the U.S. State Department, and then allowed the oil-rich North African state to get off the hook. "We received new information from Libya and the State Department showing no commercial activity at the property," said city Finance Department spokesman Sam Miller.
Miller said diplomatic facilities are not taxable. And if there were no private, commercial use of the building, the city had no choice but to remove the tax debt. As part of the deal struck two years ago — before the recent thaw in relations between Libya and the United States — Libyan officials agreed to let city inspectors enter the property to take a look around and make sure it was strictly diplomatic. But Libya reneged on that agreement, and has refused to let the city inside ever since — "so we re-imposed the tax," Miller said. However, the city could only re-impose the tax for last year and this year — about $2.5 million total. The bulk of the debt had been permanently wiped from the books. Libya's tax break came as city homeowners were socked with a roughly 20 percent property tax hike to help boost revenues during the last budget crunch. |