Market-rate apartment developer makes pitch for IDA benefits

The developer of a proposed four-story apartment building on East Main Street laid out its case for financial assistance from the Riverhead Industrial Development Agency during a public hearing held by the agency’s board of directors yesterday at Riverhead Town Hall.

The Huntington-based 331 East Main Street LLC is seeking a 20-year real property tax abatement, as well as mortgage recording tax and sales/compensating use tax exemptions from the IDA.

Without the assistance, the $13 million project could not be built, according to the developer, which is financing the project with a conventional mortgage of just under $10.4 million.

The developer is seeking an “enhanced” real property tax abatement of 20 years rather than the standard 10-year abatement period, as provided by the IDA’s uniform tax exemption policies and guidelines, the developer’s attorney, Christopher Kent, told the board. Kent cited the property’s location in a federally designated Opportunity Zone — in a “distressed census tract area” — and the project’s “significant benefits” to the area in terms of its economic impact and increased tax revenue.

The construction phase of the project will generate $7.8 million in economic impact and the operational phase will generate $1.7 million in economic impact annually, according to the project application.

The developer’s proposed PILOT (payment in lieu of taxes) agreement “represents in year one a 40% increase over current property taxes that are collected on this property,” Kent said. By year 20, the PILOT payment will represent an increase of “roughly 996%” over the current property tax bill.

Property taxes on the .36-acre parcel, improved by two now-vacant buildings, are about $14,000 in the current tax year — not including special district taxes.

In addition to the PILOT payments, the applicant would pay a separate tax bill to the town for special district taxes, based on the new assessed value of the property improved with the proposed apartment building. Kent said the current assessed value of $81,000 will increase by approximately 900%.

The proposed development consists of 36 one- and two-bedroom apartments, ranging in size from approximately 610 to 1,200 square feet, with covered terraces and a rooftop deck overlooking the Peconic River. It would be the first market-rate multifamily development built in the DC-1 zoning use district. The other multifamily developments have been built as workforce or low-income housing, using government tax credits and subsidies. Rents would likely range from about $2,300 to $2,600 per month, but will be set according to what the market will bear, the developer’s representatives said at the hearing.

The building will also include ground-floor parking and an approximately 838-square-foot ground-floor commercial space on the northwest corner.

The project represents a “new type of housing option in downtown which will provide economic balance to Riverhead’s downtown housing stock,” according to the application.

“It is a leap of faith because it’s the first market-rate development in downtown Riverhead,” said Greg DeRosa, of G2D Development Corp., builder and property manager for the project, and we want to build it to the level that we build all of our other projects.”

G2D has built and manages three rental apartment buildings and is nearing completion on a fourth in Huntington, as well as a fifth building in Hicksville.

No member of the public offered comment at the IDA hearing. The hearing record was held open for written comment until noon on Friday, Sept. 4.

The 331 East Main Street project received special permit and preliminary site plan approvals from the Riverhead Town Board earlier this month.

At the town board’s request, the developer agreed to pay $70,000 toward the cost of relocating the c. 1855 Norton House currently on the site — most recently occupied by a Subway sandwich shop — to another site to be determined by the town. The applicant amended its application to reflect an additional project cost of $100,000 in connection with the building move. The applicant increased its requested mortgage recording and sales and use tax exemptions by $610 and $5,175 respectively.