Riverhead Industrial Development Agency board members gave no indication yesterday that the agency would claw back tax benefits granted to the operator of Scott’s Pointe for violating the terms of the company’s agreement with the IDA.
At the conclusion of a compliance hearing Monday evening at Town Hall, IDA board members seemed satisfied with representations from Scott’s Pointe’s operator, Island Water Park Corp., that it will do better in the future to comply with the terms of its 2021 lease agreement with the agency, which gave the company enhanced tax exemptions over a 10-year period.
IDA Executive Director Tracy Stark-James sent a letter to Island Water Park on June 28 asking the company to appear at the compliance hearing to demonstrate it has cured violations of the lease and project agreement, or explain its plans to cure the violations.
The violations of the agreement included failing to make payments in lieu of taxes and paying other fees owed to the IDA; illegally constructing a go-kart track on the property; and failing to maintain the 283 full-time employees the company promised under its agreement with the IDA, the June 28 letter said.
Violations by the Calverton amusement park of its lease agreement with the IDA gives the economic development agency the power to cancel further financial assistance and “recapture” benefits already given to the company. Island Water Park Corp. has received net tax exemptions of more than $610,000 in 2022 and 2023, according to data filed by the IDA with the state.
The company has now paid its past due payment in lieu of taxes required by the RIDA agreement, totaling more than $66,000, plus interest and penalties in the amount of $9,724.55, Stark-James said. It has also, as of Monday afternoon, paid delinquent property taxes to the county comptroller’s office, an attorney for the company told the board.
RIDA Chairman James Farley said at the end of the compliance hearing that “it’s fair to conclude from this board’s perspective, that they are in compliance with all the requirements of this board.”
During the hearing, an attorney representing Island Water Park said delays in obtaining certificates of occupancy for the property from the town resulted in a delayed opening for the facility.
The company fell far short of the 283.5 full-time equivalent employees required by its agreement with the RIverhead IDA. As of June, the company had 65 full-time equivalent employees, according to Alison LaPointe of Certilman Balin, which represented Island Water Park during Monday’s hearing.
LaPointe said the number of FTE employees is higher now because the park’s aquapark was not yet open in June. The aquapark, a giant inflatable water attraction installed in the man-made pond, is one of the park’s premier attractions. LaPointe also said the company’s 2023 compliance report, which stated it had 10 full-time equivalent employees, was an error. The number was actually 38 at that time, she said.
LaPointe told the RIDA board that, while Island Water Park’s lease and project agreement was entered into in December 2021, “it has taken two years to get… some of the property up and running and operating.”
“That number will be higher at the next reporting, but we don’t have those numbers as of yet, because, again, the full outdoor utilization of the site was not up and running in time for that reporting period,” she said. “So again, the property owner fully expects to meet the employee counts as laid forth in the agreement. But as the site is not fully operational, that number cannot quite be met yet,” she said.
LaPointe said her client is “fully in compliance with” the stop work order issued by the town on June 3. “Any of those items that were written are not in operation at this time,” LaPointe said, referring to the go-kart track, pickleball courts and second-floor event space built without permits, according to the town.
MORE COVERAGE: Scott’s Pointe issued stop-work order, cited by town for building race track without approvals
LaPointe noted that Island Water Park on June 27 submitted an application to amend its existing approved site plan and had just received a comment letter from the planning department on Aug. 2.
The letter sent to Island Water Park notified the company that its application was “an incomplete/review” letter, Riverhead Senior Planner Greg Bergman said in an email to RiverheadLOCAL today.
The past-due PILOT payments and delinquent taxes have all been paid and are up to date, LaPointe said.
MORE COVERAGE: Scott’s Pointe operator in danger of losing tax benefits for building go-kart track, failing to deliver promised jobs
Stark-James told the IDA board during the hearing that the company should submit an amended application to the IDA while it works on obtaining site plan approvals from the town.
“So I guess it’s fair to conclude from this board’s perspective, that they are in compliance with all the requirements of this board,” RIDA Chairperson James Farley asked.
“With the exception of the environmental concerns or the town violations, they have to come into compliance with that,” Stark-James replied. “But obviously, it’s going to take time. I would say the Governance Committee could meet, and perhaps I could seek guidance from the town planning to get a timeframe.”
“You don’t want it to go on forever, but that’s about it,” Stark-James said. “There’s no way to determine how long their site plan approval process will take on their behalf, but as long as they’re showing progress and initiative in trying to come into compliance, we’re good.”
“So what’s the game plan?” Farley asked LaPointe. “What’s the rollout supposed to be? When do you think you can be fully up and running and hitting those employment numbers?”
“So the goal is to — we’re seeking to be very aggressive on our end, because clearly, from a business model perspective, being fully open and functioning is the end goal,” LaPointe said. The company will proceed as quickly as possible through the review and approval process, she said. “We’ve already confirmed that there’s sufficient Suffolk County Department of Health Services approvals for what we have on site,” she said.
“What we’re facing is going through the planning process, bringing that up to speed,” LaPointe said. “The property owner’s working with the DEC for any outstanding items there — that is a very active conversation that’s happening. And the goal is to be very aggressive and to get this done as quickly as possible.”
Board member Lee Mendelson, who participated in the meeting via Zoom, asked, “Is there a reason that it took the calling of this hearing in order to get a response to the multiple inquiries that Tracy had made concerning the the PILOT payment and all of the other things that were not in compliance? This process has taken an inordinately long time, and we were either responded to with silence or promises that weren’t kept,” Mendelson said. “What I want to know is why it took until this point in order to have Island Water come and let us know what was going on.”
LaPointe said the delay in obtaining certificates of occupancy until the end of 2023 meant they were not able to “get operational” and “the ability to move money around, to have the money available to be able to make that payment was difficult for them to do,” she said. They were investing their time and energy trying to get operational, La Pointe said.
“All of that is well and good, and I can appreciate a lot of that, having worked with a lot of startup businesses over the years,” Mendelson replied. “However, in the time it took you to explain that — well, less than that — someone could have responded to the executive director and sent an email saying that we apologize, there are certain things going on. We are starting up. We expect to make the payment. There’s a reason for the delay. That took you all of about one minute to explain, and it could have been sent in an email to Tracy months ago,” he said.
LaPointe said the applicant understood.
“I will note, Lee, there was in the beginning, when I first requested a response,” Stark-James added. “And then there was some employment change for one, and then there was some illness with some staff. That was in the beginning. But then there was a little lack of communication thereafter for a couple months,” Stark-James said.
Ken Myers, who represented Island Water Park before the RIDA during the public hearing on the company’s application for financial assistance, told Mendelson “a lot of this falls on me.”
“I have heart disease and I fell behind on my medicine, and I had a bit of a thing happen with that,” Myers said. “I was dealing with Tracy and I dropped the ball with it. I would ask that you not hold the project responsible with my errors.”
He had a couple of months leave, he said. “I did send over some stuff but we also fell behind. And also there was confusion as to what’s a property tax payment, what a PILOT was. We were all new to this, and that, you know, also falls on me, because I should have educated myself,” Myers said, offering his apologies.
Mendelsohn said he respected that and hoped Myers was feeling better.
Island Water Park President and principal Eric Scott was seated with Myers in the audience but did not speak during the hearing.
RIDA board vice chairperson Lori Pipczynski asked for “an update on where the project is with the DEC process.”
LaPointe said the property owner has been working with the DEC.
The State Department of Environmental Conservation on June 26 ordered Island Water Park to cease use of the aqua park and public recreation in the pond dug on the site pursuant to a mined land reclamation permit. The state regulators said in a notice of violation the uses did not comply with Island Water Park’s mined land reclamation plan.
“A great deal of the environmental [review] on the site will be handled here in the town under the SEQR process,” LaPointe said. “They have hired their best effort consultant that is helping them navigate the DEC process, and they’re working on their compliance. It’s ongoing,” LaPointe said.
Stark-James said going forward, she and LaPointe, who she said was “newly appointed,” will be in touch at least every month to make sure the company is progressing.
“Thank you very much,” Farley told LaPointe. “We appreciate your client’s compliance promptly and, yeah, let’s make it happen,” he said, concluding the hearing.
The board did not engage in any discussion of the matter after the hearing ended.
Financial benefits granted by the RIDA to Island Water Park Corp. include a 10-year real property tax reduction and sales tax exemptions. The company received net tax exemptions of more than $610,000 in 2022 and 2023, including $427,426 in net real property tax exemptions and $182,682 in net state and county sales tax exemptions, according to the RIDA’s annual reports for 2022 and 2023 filed with the N.Y. State Authorities Budget Office. RiverheadLOCAL obtained the report from the ABO through a Freedom of Information Law request earlier this year.
Island Water Park is due back in Riverhead Justice Court this afternoon on tickets issued by town officers on June 3 for alleged town code violations. The matter was adjourned by the court on July 24, because Scott was not in attendance and the person attempting to enter a plea in settlement of the violations, Victor Prusinowski, is not an attorney.
MORE COVERAGE: Riverhead GOP official appears in town court for Scott’s Pointe, seeking to settle tickets
Alek Lewis contributed reporting.
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