Fate of culinary school tax abatement remains undecided

The Suffolk Industrial Development Agency again took no action on the application of Culinary Arts Riverhead for an additional 10-year tax abatement. The matter was tabled again and will next be on the IDA’s agenda of Jan. 24.

Suffolk IDA executive director Tony Catapano explained the adjournment this morning in Hauppauge by saying the IDA just received letters from the Town of Riverhead and the Riverhead Central School District that the IDA members would need to “take under advisement.”

But Ben Zwirn, Suffolk County Community College’s intergovernmental relations coordinator said the parties are negotiating and he hoped the matter would be “settled amicably” before the Jan. 24 date.

The college has 10 years left on its existing lease with Culinary Arts Riverhead LLC, a company owned by developer Ron Parr. Parr applied for a 10 year, 100-percent tax abatement to cover the remainder of the lease. The Town of Riverhead and the Riverhead Central School District strenuously objected to the application.

The application for the new exemption was made as the town and the school district were trying to collect payments due under an agreement entered between the Suffolk IDA and the property owner, which built the facility for the college with financing by the Suffolk IDA.

Town officials discovered in 2017 that the property owner had never made any payments under the 2007 agreement for payments in lieu of taxes. The payments fell through the cracks because the town tax receiver’s office does not generate a tax bill for payments in lieu of taxes. Properties subject to PILOT agreements with the Riverhead Industrial Development Agency are billed for PILOTs (payments in lieu of taxes) by the Riverhead IDA but the county IDA does not issue such invoices. As a result, no PILOT payments were ever made. Tax bills were generated — and paid by the college — for special district taxes, for which there was no abatement in place.

The town board in May authorized a lawsuit to collect the past-due PILOTs plus interest and penalties.

Riverhead assessor Laverne Tennenberg attended the meeting today and said the developer has now paid the past-due PILOT payments, with interest.

Zwirn said the amount the college is offering to pay as a PILOT going forward is about $20,000 less than the amounts the town and school district are willing to accept.

Riverhead town attorney Robert Kozakiewicz, who was not present at the IDA meeting in Hauppauge this morning, said afterward that he has not yet seen any counter-offer by Parr or the college.

According to a Dec. 3 letter from Kozakiewicz to the Suffolk IDA, the town is offering to accept a 50-percent abatement on the normal tax on the building for the next 10 years, amounting to $19,101 in taxes per year. In a Nov. 30 letter to the IDA, the school district offered to accept 25-percent of the normal tax on the building for 10 years, amounting to $24,409.64 per year. (The college would continue paying all special district taxes.)

Zwirn today produced a spreadsheet indicating a proposal by the college to pay 10 percent of the normal tax on the building for the next 10 years. 

Zwirn said he expected the college to move out of downtown Riverhead at the end of the lease, to a location where it wouldn’t have to pay property taxes — in all likelihood to one of the college’s campuses. 

He said the college would not want to keep the culinary school in Riverhead “after the comments that were made” by Supervisor Laura Jens-Smith at the Nov. 14 public hearing.

Jens-Smith said at the hearing that the culinary school “is not an economic generator for downtown,” which the town is “working hard to revitalize.” The facility, she said, “no longer conforms to what we’re looking to do downtown,” she said. “It’s closed on weekends, leaving a blank, open space. It’s closed during the summertime.” Students also use “our prime parking area,” she said.

Zwirn disputes that assessment. The school has 832 students, nine full-time staff, 14 part-time staff and 35 adjunct faculty, he said.

“Yes they park here, but they also shop here and eat here,” he said.

Zwirn, a former North Hempstead town supervisor, said he understands the town’s need for tax revenue. “But if you punish the landlord, you punish the college,” he said at the Nov. 14 IDA hearing, which was held at the culinary school facility in Riverhead. Ultimately students pay the price, he said. “There’s no way you can punish the landlord without hitting the college right between the eyes,” he said.