Town looks to hire Industrial Development Agency for marketing downtown projects

Riverhead Town wants to hire the Riverhead Industrial Development Agency for marketing services related to downtown redevelopment projects.

The town board Tuesday authorized a $50,000, six-month contract with the Riverhead IDA, beginning Dec. 15, for “marketing, advertising and promotion of new development” — specifically the transit-oriented mixed-use development near the railroad station, the town square project and vacant or underutilized properties in the downtown area, according to the contract.

But IDA chairman James Farley said today the IDA board has not yet authorized the contract and still needs to discuss it.

“I wasn’t expecting that resolution to actually be put forward this week,” Farley said.

He said the IDA board has had discussions to try to determine how much time IDA director Tracy Stark-James has been “spending working on town projects as opposed to specific IDA projects.”

Stark-James has been working with Community Development Director Dawn Thomas on “developing the TOD concept and rolling it out.” Farley said. “It’s really about dividing, or an attempt to assess, where Tracy’s efforts are being applied,” Farley said. “So perhaps the choice of the word ‘marketing’ is not the correct choice of words,” he said.

“I don’t perceive it as as being marketing per se,“ Farley said.

“Certainly we don’t market — Every developer that comes into town, makes their way to the IDA to find out whether or not they might possibly qualify for some IDA support,” he said.

At least one resident questioned whether that could present a conflict of interest. Barbara Blass of Jamesport raised that issue at Tuesday’s town board meeting, before the board voted on the resolution. She asked the whether the IDA marketing to developers might create an expectation that the developers would receive IDA benefits.

Town board members did not express concerns about that.

“Most APAs do have a marketing firm,” Supervisor Yvette Aguiar replied. “It’s not uncommon throughout the county and the state for an IDA to have a marketing fund — firm to market all the properties we have,” she said.

Councilman Ken Rothwell did ask where the funds would come from to pay the IDA for the services spelled out in the contract.

“Is this in our current budget that we just passed?” Rothwell asked.

“That’s coming from another fund,” Aguiar replied. “The $50,000 is coming from the community benefit — or is it coming from —“

“I was under the impression it was coming from the general fund,” Financial Administrator William Rothaar said.

“I thought it was coming from a different fund,” Aguiar said.

“My understanding was it is coming from the general fund,” he repeated.

Rothaar said the expense couldn’t be paid out of American Rescue Fund money nor did it fall within any of the funding categories in the community benefits agreement the town signed with Calverton Solar Center (NextEra.)

“But is the money in the general fund?” Rothwell asked.

“We haven’t particularly budgeted for that money,” Rothaar answered. We didn’t budget for this in the original budget, so we have to find it somewhere within the general fund — whether it’s unspent funds or other revenues that we receive,” he said.

Deputy Town Attorney Annemarie Prudenti, who drafted the agreement and the resolution on the board’s agenda, said Tuesday she didn’t designate the source of funds. The resolution’s financial impact statement was left blank where the preparer is supposed to designate the funding source for an expenditure.

“The CDA director and I had a conversation. We’re collecting rents,” Prudenti said, referring to rental income from the building at 127 East Main Street, one of three buildings the town recently purchased from Riverhead Enterprises. The town is demolishing the other two buildings.

“In addition, I informed the board, and I emailed all of you, that you have projected unanticipated funds in the amount of $500,000,” Prudenti said. “So while I didn’t designate the fund, I was confident that we had the funds to accomplish what the CDA director desired, in order to really move the town square and the TOD project forward,” Prudenti explained.

The unanticipated revenues are not reflected in the adopted budget, Prudenti said.

In an interview today, Prudenti said the town expects to receive about $500,000 from the N.Y. State shared services initiative it participated in several years ago. Riverhead purchased police communications equipment with the county, Prudenti said. She filed the paperwork with Suffolk County as required.

Rothaar said today without a signed contract he can’t add those revenues to the budget. However, he said, the town will see $875,000 in unanticipated sales tax revenues that it did not budget for. The town cut its sales tax revenue projections as recommended by the state comptroller due to the COVID crisis, but sales tax revenues didn’t drop as much as predicted.

The rent revenues Prudenti spoke of at the town board meeting are not sufficient to cover the $50,000 cost of the contract with the IDA, Rothaar said today.

Prudenti confirmed that the building currently has only three tenants: Craft’d on the ground floor and “two small tenants” on the second floor. She said the Riverhead Chamber of Commerce might occupy another ground-floor space in the building and pay for heating oil, reducing the town’s overhead costs at the building. “Otherwise we’d have to pay to heat that space,” she said.

Farley said he expects the issue to be discussed by a committee of the IDA board next week.