Riverhead’s Route 58: Does commercial corridor carry its weight in taxes?

Route 58: A shopping mecca to some, a horror show to others, traffic to endure for all.

Love it or hate it, Route 58 — with its 16 traffic lights, its big-box national retail stores, numerous shopping plazas, hotels, freestanding retail and office buildings, auto dealerships, office complexes, a few holdout single-family homes and even, still, some vacant land — has overtaken Main Street not just as Riverhead’s commercial hub but also as its public persona.

What was built as a bypass to ease travel past a congested downtown commercial center decades ago itself became a congested commercial center once retail shopping centers and national chains won the hearts of American consumers. Shoppers eagerly jilted Mom-and-Pop downtowns across the country, choosing instead the gleaming facades and asphalt expanses of the modern shopping plazas, where parking was easy and discount stores and drive-thru windows bountiful.

Riverhead was no different and Route 58 — zoned mostly for commercial business once the town adopted a zoning ordinance in the mid-1960s — began to build up. The extension in 1972 of the L.I. Expressway to Exit 73, which dumped eastbound motorists onto the two-lane highway, made the four-mile stretch an attractive commercial corridor.

The “Old Country Road” that Riverhead residents today know and love — or love to hate — was not an accident. Riverhead’s “destination retail” corridor had already been the subject of pretty intense commercial development when planners began the process of writing a master plan for the town in the late 1990s. Stores and shopping centers were already built in the central portion of the corridor, more or less fanning out east and west from the Roanoke Avenue traffic circle.

The 2003 master plan embraced intense commercial development for Route 58 and suggested maintaining it as “Riverhead’s principal destination for convenience and comparison shopping, but with improved design, traffic circulation, and landscaping requirements.” Areas outside of Route 58 — the main roads between the hamlets — would be kept rural with new “rural corridor” zoning and the hamlets themselves would retain their character with new and improved hamlet and village zoning use districts in place.

Route 58, where intense commercial uses already existed, would continue to be developed in that way and “continue to be a mainstay for generating jobs and tax revenue,” according to the master plan.

The question of how much tax revenue is generated by Route 58 is as perennial as the local election cycle. It was a much-debated topic in the 2013 elections and continues to be the subject of discussion and debate as the 2015 election season gets underway.

Earlier this month, 2013 town board candidate Anthony Coates announced the upcoming launch of a website dedicated to “a better Riverhead.” In a RiverheadLOCAL interview, Coates, a newly re-minted Democrat, raised the question of the wisdom of Route 58 development, which he called “the body of work” of the sitting all-Republican town board. He asked:

“With all the development on Route 58, how do we even have property taxes in this town?”

It’s a question many have asked and continue to ask, fueled not just by the arrival of property tax bills each December but also by the misperception among many that much of the new development has been granted property tax breaks by the Riverhead Industrial Development Agency.

RiverheadLOCAL collected the property tax data for parcels along Old Country Road using the town’s posted 2013-2014 tax roll, the most recent tax roll record available on the Town of Riverhead website.

The properties in the corridor stretching from the terminus of the LIE on the west to the Route 25/Doctor’s Path intersection on the east paid just under $21.9 million in property taxes in the 2013-2014 tax year, according to the records we examined. That amount includes county, town and school taxes, as well as highway, street-lighting, fire and ambulance district taxes. For most properties, it includes water district taxes, and for some, sewer district taxes as well.

Included among the 113 parcels we tallied were properties that do not have Old Country Road street addresses, but are part of what is considered to be the Route 58 corridor. Examples include one of the two Tanger properties, which has a West Main Street address, buildings in “Commerce Park,” the office complex between Panera Bread and the Harley dealership, and the multi-story office building next to Taco Bell. There were a few others, too.

The $21.9 million in property taxes generated by Route 58 development last year represents 15.5 percent of the $141.7 million in total property taxes billed by the Town of Riverhead in 2013-2014.

Of the 18 parcels in the Town of Riverhead subject to IDA tax exemptions, according to the town’s final assessment roll, we found four of them on Route 58:

• the Hilton Garden Inn property (2007);
• 21st Century Oncology site, (2012); and
• two buildings in Commerce Park (dates unavailable).

All-Star Lanes also received IDA benefits including a real property tax abatement, but the bowling alley is located on Route 25, not Route 58. (The parcels on Route 25 between Doctors Path/Route 58 and County Road 105 were not included in our tally of Route 58 total tax revenues.)

Holiday Inn Express received IDA benefits in 2004, but not a real property tax abatement, Riverhead IDA executive director Tracy Stark said. That developer’s benefits were limited to sales and mortgage tax exemptions, she said.

“People think the IDA has given a lot of tax abatements on Route 58, but that’s a myth,” Stark said.

Route 58’s largest taxpayers in 2013-2014:

• Tanger: $4,322,780
• Riverhead Plaza: $3,442,560
• Walmart: $3,360,700
• Riverhead Centre: $1,522,159
• Costco: $619,000
• Lowe’s:  622,009
• Roanoke Plaza: $524,376
• BJ’s/Kmart $641,154
• Target $311,620
• Adchem $270,352
• Stop’n Shop $261,110

Route 58’s biggest taxpayers are among the biggest taxpayers in the town as well, according to the town’s posted tax roll.

Riverhead Supervisor Sean Walter says he sees Route 58 as a “success story.” Former town administrations “did everything they could to try to attract business to Route 58,” he said in an interview today.

Without the nearly $22 million in tax revenues brought in by Route 58 development, he said, “the average homeowners would pay $700 to $1,000 a year more in property taxes each year — not to mention the added benefit of great shopping and a tremendous savings in time and fuel.”

Despite the tax revenues brought in by Route 58, Coates  said he thinks most residents see the development and the traffic it brings as “a lifestyle-changing disruption” the town might have been better off without.

Walter disagreed. “The convenience of Route 58 cannot be estimated,” he said. “When I go door-to-door [campaigning] I hear it all the time. People love the shopping and if anything, they are always asking for more stores.”