The Riverhead Industrial Development Agency said in a press release today that it expects both of G2D Construction’s projects to “make their full contribution to the town’s development,” despite mechanic’s liens and lawsuits against the company and its principal. The agency is now in contact with investors in the projects in an effort to ensure they perform as intended, according to the press release.
Limited liability companies affiliated with the Huntington-based G2D Construction received financial assistance from the Riverhead IDA for mixed-use development projects in downtown Riverhead. One of the projects, located at 331 East Main Street, gained RIDA approval in October 2020 and has been completed and occupied. The other, located at 205 Osborn Avenue, approved by RIDA in July 2022, is under construction. Work at the site appears to have been at a standstill since at least May.
The projects were the first multifamily mixed-use buildings downton offering market-rate apartment rentals.
As first reported by RiverheadLOCAL on Sept. 10, the 205 Osborn Avenue property has numerous mechanics liens recorded against it by contractors claiming unpaid debts for work done at the site. The recorded mechanics liens as of today, 12 in all, total nearly $2.1 million, according to land records published on the Suffolk County Clerk’s website — including two liens totaling more than $196,000 filed by contractors since publication of the Sept. 10 story.
MORE COVERAGE: Developer of Riverhead apartment buildings mired in debt, records of lawsuits and liens show
In addition to the liens recorded against the 205 Osborn Avenue property, two major investors in the project have sued G2D and its principal, Gregory DeRosa of Oyster Bay. One of the investors, John Paci, alleges in his suit that DeRosa and G2D defrauded him out of $4.6 million invested in a Huntington office building. Paci is asking the court in that case for an order to prevent DeRosa and G2D from selling, transferring or further encumbering all real and personal property, including bank accounts and other assets held by DeRosa or the corporation that were acquired by alleged misappropriation of Paci’s $4.6 million investment.
DeRosa’s and G2D’s financial and legal woes stretch well beyond Riverhead.
There are four judgments against DeRosa personally totaling nearly $10.5 million obtained by confessions of judgment, a sworn document acknowledging that the claims made in a lawsuit are valid, due and owing by the debtor to the creditor. The confession of judgment eliminates the need to prosecute a lawsuit to collect the debt owed.
In addition, there are lawsuits pending against DeRosa and/or G2D Construction in Suffolk and Nassau counties totaling claims of nearly $13.5 million — plus another suit with no specified amount claimed.
MORE COVERAGE: Riverhead IDA warns Huntington developer it risks losing tax benefits if liens remain outstanding on stalled Osborn Avenue project
The developer is obligated by its lease and project agreement with the Riverhead IDA to get mechanic’s liens filed against 205 Osborn Avenue discharged or bonded within 30 days of filing.
Nine of the 12 mechanic’s liens currently on filed against 205 Osborn Avenue were recorded more than 30 days ago.
There is no corresponding provision requiring discharge or bonding within 30 days in the lease or project agreements for 331 East Main St.; The sole mechanic’s lien recorded against that property, for an alleged debt of just over $149,000, was filed Feb. 14 and renewed Oct. 1.
The Riverhead IDA wrote two letters to 205 Osborn Ave LLC and 331 East Main St. LLC — the limited liability companies in which Derosa is the managing member —on Sept. 18 and Oct. 7, regarding the liens and lawsuits. According to the press release issued by RIDA today, neither letter elicited a response.
The agency, “given a complete lack of response, is now in direct contact with the projects’ economic owners,” the press release said. RIDA Executive Director Tracy Stark-James said in an email following the press release, the “economic owners” referred to in the release are the investors in the projects. RIDA has made contact with the investors through their attorney, she wrote.
The agency is “working to ensure that 331 will continue to be well maintained and managed and not hinder further redevelopment of downtown Riverhead, and that 205 is completed and placed into service as part of the town’s overall vision for the Transit Oriented Development area adjacent to the town’s train station,” RIDA said in the press release.
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