Architect's rendering of the proposed industrial building at 48 Kroemer Avenue, which was on display at the Riverhead Industrial Development Agency on July 11.

A wholesale propane facility and other businesses expected to occupy a four-acre site on the south end of Kroemer Avenue will generate significant job development, increased tax base over the long term and new opportunities for entrepreneurs, a developer’s representative told the Industrial Development Agency board of directors during a public hearing Monday.

The $15 million development by 48 Kroemer LLC, a company wholly owned by Frank Fisher of Southampton, will be headquarters to Fisher’s wholesale propane business, 631 Propane, his sanitation company, Go Green Sanitation, 48 Kroemer, his real estate holding company and the Fisher Organization, his property management firm, Fisher’s consultant Chris Kempner said.

Fisher bought the property to relocate and expand his businesses, Kempner said. The expansion of Fisher’s businesses are projected to create 54 new full-time and 10 new part-time jobs, she said.

The developer has obtained the required special permit for the propane distribution facility from the Town Board and final site plan approval from the Planning Board.

The town approvals allow Fisher to construct a propane distribution plant consisting of six 30,000-gallon liquid propane storage tanks on a 1.5 acre portion on the south end of the site, adjacent to an existing rail spur.

The approvals also allow the construction of a two-story industrial building providing gross floor area of 38,472 square feet, including the basement. The approved final site plan shows nine commercial/industrial bays on the first floor of the building, offices on the second floor, and a storage facility on the basement level, accessed by a vehicular ramp.

Kempner said the building will provide offices for Fisher’s businesses (4,135 square feet of office spaceI, as well as “general office, small business entrepreneurial space” (13,000 square feet) which she described as “an incubator style space.” It will include 15 offices, 12 workstations and shared operational meeting space.” The businesses can share a conference room, kitchen, filing, copying, and “logistical support support on site for all the business office needs,” she said. There will be an on-site attorney, accountant, marketing services, print services and a call center, she said. “So any business, whether they’re startup or existing, that wants to move into a one-stop shop will be able to,” Kempner said.

The building will have nine commercial rental industrial bays on the first floor, and additional parking and mini storage for tenants in the basement, Kempner said.

In addition to job and business growth opportunities, the development will provide community benefits including “energy security,” by having a locally owned propane distribution facility in the region, Kempner said. It will also add property tax base with no impact on the school district, she said.

The developer is seeking IDA benefits consisting of exemption from NYS Sales tax in the approximate amount of $848,000, exemption from the mortgage recording tax in the approximate amount of $75,000 and a 100% real property tax abatement on all improvements for 10 years.

“The current (property) taxes are about $22,000,” Kempner said. “We are proposing $30,000 for the next 10 years.”

Riverhead attorney Jonathan Brown, representing the Riverhead Fire District, expressed the district’s concern about the proposed 100% real property tax abatement for 10 years, as concerns the fire district portion of the taxes.

“There are very real costs to the fire district and the fire department to prepare and train and equip to respond at this site — and the adjacent site for that matter,” Brown said, referring to the Paraco Gas liquid propane distribution facility adjacent to the 48 Kroemer site.

“There are very real costs that are imposed by this project. And I think it’s important that the applicant cover those costs in an equitable manner the way that other taxpayers in the community cover the costs of providing fire protection services in the community,” Brown said. A “free ride” on an application like this should not burden the taxpayers of the community, he said.

“The impact of this use at this location is very real. And it’s not to be downplayed or ignored,” Brown said.

The Riverhead Fire District, citing fire safety concerns, had objected to the location of the new propane plant next to the existing one because of the volume of liquid propane that would stored in a concentrated area and the proximity of high density residential and retail uses.

The fire district’s objections led to the failure of 48 Kroemer’s site plan application to garner majority support for site plan approval in 2021. The developer sued the town over the Planning Board’s refusal to reconsider its vote. The action was quickly settled and the developer again revised its proposed site plan, reducing the number of 30,000-gallon propane tanks from eight to six. (He had initially proposed nine 30,000-gallon tanks, but reduced the number to eight during negotiations with the planning department and fire marshal’s office.)

“The application has been approved, the site plan has been approved, they’re awaiting building permits, it’s going to be a reality, but the fire district itself has to have the necessary funds in order to equip, train and be prepared to operate at this facility,” Brown said.

“We believe they can operate in a safe manner. But we have to be prepared,” he said.

“There is a cost to provide fire protection services to a facility of this type,” Brown told the IDA board.

Quint Nigro of Riverhead, speaking on behalf of the Nassau-Suffolk Building Trades Council, asked the Riverhead IDA to adopt the “Long Island First” policy adopted by the Suffolk IDA in December.

“The 48 Kroemer is a $15 million construction project and is a perfect candidate for a project labor agreement,” Nigro said. “I encourage this board to have the developer engage with the Building Trades Council in order to work towards a PLA before you grant all of your incentives,” he said. “The PLA will fulfill the mission of creating high wage and high benefit careers within the town and utilize existing apprenticeship programs to create even more opportunity for local residents.”

Barbara Blass of Jamesport told the IDA board she has followed the 48 Kroemer application over the years.

“Regardless of the merits of the application, the project in my opinion, as now described is not entirely consistent with the record thus far established by the planning board, nor the town board nor the SEQRA record, and may not be consistent with the Industrial A zoning use district,” Blass said.

“Further, as was represented during the June 6 discussion [with the IDA board] there were negotiations that had commenced regarding the reactivation of the rail spur. Just for your information, any reactivation of the rail spur will require a new special permit and a new site plan and updated SEQRA review,” Blass said. She requested an adjournment of the heating to allow the IDA to clarify this information.

Builder Ray Dickhoff of Aquebogue, who is working on the project for Fisher said the rail spur is “in no way part of this project today.” He said he has had conversations about the rail spur reactivation because he has to provide Fisher with the information he needs to grow his businesses, including the time it would take to reactivate the rail spur and the cost of the endeavor. But the reactivation is not part of the current plan.

The application initially filed with the planning department included reactivation of the rail spur, according to planning department documents reviewed by RiverheadLOCAL in 2020 pursuant to a Freedom of Information Law request. That would require the installation of a main line switch by the Long Island Rail Road and its freight operator, New York & Atlantic Railway, according to an April 18, 2019 letter from the LIRR Chief Planning Officer Donna Betty to then-Riverhead Town Planner Karin Gluth.

In an interview after the IDA meeting Monday, Blass said the Industrial A Zoning Use District does not permit general office uses as of right. They are allowed in the zoning district only if they are ” customarily incidental” to the industrial uses permitted in the district and are located on the same lot, according to the code text. It was not clear that the offices Kempner described to the IDA board were incidental to industrial uses on the site, Blass said. And the description she gave of the “incubator-style” shared services office space were not part of the applicant’s presentations at either the town board special permit hearing or the planning board site plan hearing.

Blass also said that the future potential use of the rail spur should have been part of the SEQRA review for this application. Not evaluating the environmental impacts of a future potential use at the site is “classic segmentation” of environmental review, which is prohibited by the State Environmental Review Act.

Blass acknowledged that the IDA board has no jurisdiction over zoning regulations or SEQRA review but said she was concerned about the apparent inconsistencies in the applicant’s presentations, especially if the uses being highlighted for the IDA as it considers enhanced benefits are not allowed under the code.

Dickhoff said after the meeting the second floor offices uses on the second floor — unrelated to Fisher’s own businesses — will be accessory uses for the commercial and industrial tenants occupying the rental spaces on the first floor.

The IDA board closed the public hearing Monday and will move forward with its consideration of the application.

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