Riverhead to order forensic audits of BIDMA group, hire consultant to run 2025 downtown events

(Updated – 10:30 a.m.) The Riverhead Town Board intends to hire its outside auditing firm to conduct forensic audits of the Riverhead Business Improvement District Management Association for 2023 and 2024, Supervisor Tim Hubbard announced in a press release Monday night.  

The board will also hire an outside production agency to produce two Alive on 25 street festival events this summer and the Halloween Fest on Oct. 25, the supervisor said in the release.

Resolutions taking both actions have been added to the Town Board’s agenda for tonight’s meeting.

The decision to conduct forensic audits of the BIDMA’s finances in the last two fiscal years came after the board reviewed “certain financial records provided by the Business Improvement District Management Association (BIDMA) for 2023, 2024 and the proposed budget for 2025,” Hubbard said,  “and at the advice of our Financial Administrator and Town Attorney’s office.”

The resolution on tonight’s agenda authorizes a retainer agreement with PKF O’Connor Davies to conduct the forensic audits. 

A forensic audit is a detailed investigatory audit often undertaken in preparation for litigation, according to the American Institute of CPAs.

“The BIDMA is a not-for-profit entity funded almost entirely with taxpayer monies. Accordingly, the Town Board has a fiduciary responsibility to ensure all dollars are being spent appropriately,” Hubbard said in the press release.

“The BIDMA has offered full transparency throughout this budget approval process and has nothing to hide,” BIDMA vice president Gary Hygom said in a statement. “As a not-for-profit organization, we consist of a volunteer board of directors comprised of business and nonprofit leaders dedicated to Downtown Riverhead. Our focus is and has always been on helping to drive business to and restore our historic Main Street area,” Hygom wrote. “We simply desire the Town’s cooperation and support, starting with providing the 2025 budget and funding necessary to allow us to work toward our mission.”

The Riverhead Business Improvement District is a special taxing district established by the Town of Riverhead in 1990 to benefit properties within the district, an area that encompasses most of downtown Riverhead. State law requires the town to adopt a district plan and requires a not-for-profit management association to be established for the purpose of carrying out the activities spelled out in the district plan. The Riverhead Business Improvement District Management Association was formed for that purpose. 

The BIDMA issued a statement Friday night announcing that it would “no longer be producing the Alive on 25 street festival and Halloween Fest as the Town of Riverhead has assumed operations for these events.”

MORE COVERAGE: BID Management Association announces it will no longer produce Alive on 25 and Halloween Fest

That announcement followed a tense discussion at the BIDMA board of directors meeting March 19 between town officials and BIDMA board members regarding the group’s finances. The Town Board, which is the governing body of the Business Improvement District, has not yet approved a budget or event schedule for 2025. BIDMA officers told town officials at that meeting that without the approval, the summer events were at risk of cancellation.

MORE COVERAGE: Downtown business group at odds with town over budget: Alive on 25 plans ‘frozen’ 

Town to hire Main Street Agency to run 2025 downtown events

Also on tonight’s agenda is a resolution authorizing the supervisor to sign a professional services agreement with Main Street Agency/Main Street Productions to plan, coordinate, market and manage two Alive on 25 events (July 18 with fireworks provided by the town, and Aug. 1) as well as Halloween Fest on Oct. 25, including coffin races, trick or treat and Halloween parade.) The draft agreement attached to the resolution states that the town will pay Main Street Agency/Main Street Productions a fee not to exceed $15,000 for all services. 

Main Street Agency was founded in 2016 and is owned by Diane Tucci, who is currently the Town Board coordinator. She will sign the agreement on behalf of the company. 

Tucci has experience running the downtown festivals. She worked for the BIDMA on the Alive on 25 festivals in their 2016 inaugural season. That September, Tucci was hired by the BIDMA as its executive director, a position that had then been vacant for a few years. She stepped down from the executive director post in February 2019 to run for the Riverhead Town Board on the Democratic ticket. Kristy Verity, the BIDMA’s current executive director, was hired as executive director in July 2019.

Tucci was hired as Town Board coordinator in January 2024. She currently holds that position.

The town’s code of ethics does not prohibit the town from doing business with a company owned by a town employee. It requires disclosure of an employee’s business interests and prohibits conflicts of interest. The disclosure and conflict of interest requirements of the ethics code are acknowledged in the agreement, which states that the consultant has complied with its requirements and will seek the opinion of the town’s Board of Ethics if the consultant believes a conflict of interest arises.

Editor’s note: This story was updated post-publication to add a statement from the Riverhead Business Improvement District Management Association received after it was first published.