Downtown Riverhead: Hearing on town square master developer set for Tuesday at 6 p.m.

A key public hearing for the town square project will take place tomorrow night at Riverhead Town Hall, where the Riverhead Town Board will hear testimony to determine whether the town square designated master developer is a “qualified and eligible sponsor” to fulfill the requirements of state law. 

A company owned by Joe Petrocelli, who has successfully restored and/or developed various downtown properties, including the Long Island Aquarium, Hyatt Place East End, the East Lawn building, the Preston House and Howell House, was designated by the Town Board as the master developer for the town square in April 2022. 

Since then, the town has worked on additional designs and plans for the town square project and has negotiated a master development agreement with Petrocelli (see below) and is now ready to move forward with the sale of town-owned property, including the building at 127 East Main Street to Petrocelli for redevelopment, and with the buildout of other features of the town square project that are to be undertaken or managed by Petrocelli.

The agreement contemplates Petrocelli’s construction of a five-story mixed-use hotel/condominium building with up to 76 hotel rooms,12 condominium units, ground-floor retail and restaurant space and 12 underground parking stalls. 

Under the proposed master developer agreement released by the town this week, Petrocelli’s company will pay $2.625 million for the parcels on which his company will develop the hotel project, with credits applied for contributions by the developer in support of three of the town’s grant applications ($660,000 total) and potentially for construction management fees and maintenance obligations. A down payment of 5% is required. 

The town also plans to enter into a consulting agreement with Petrocelli’s company to perform the services of construction manager for other town square features, including an amphitheater, a playground, a public gathering space, walkways etc. for a fee of 7% of the total project cost for construction. 

The property to be conveyed to Petrocell, (called the “hotel property conveyance” in the contract) includes: 

• The building at 127 East Main Street (to be demolished by Petrocelli), and part of the land south of the building. (A portion of the land south of the building to the river (now improved with a parking lot), will be retained by the town (with an easement to Petrocelli over part of it.) 

• A 14’ by 200’ portion of the presently undeveloped town square “green space” adjacent to and west of the building;

• A 14’ by 20’ portion of the presently undeveloped town square “green space;” 

• A 10’ by 220’ portion of the property at 133 East Main East End Arts Council campus (which will require the relocation, by the town, of the Davis-Corwin House, where the East End Arts gallery, shop and offices are located.)

Before the town can sign a contract of sale with the developer, it must determine that Petrocelli’s company is a “qualified and eligible sponsor,” pursuant to the New York State Urban Renewal Law. The law allows a municipality to convey real property located in  a designated urban renewal zone — such as downtown Riverhead — without a bidding process if the purchaser meets the town’s requirements for designation as a “qualified and eligible sponsor.” The town’s requirements are spelled out in its adopted rules and procedures, last amended in 2017.

At the hearing, according to the rules, the applicant will present its proposal and ability to meet the established criteria.

To conclude that the applicant is a “qualified and eligible sponsor,” according to the rules, the town must assess:

• the experience of the individual, firm or corporation with development, construction, management and financing of similar projects in size and scope to the proposed project;

• the demonstrated ability to finance the acquisition and development of specific project proposed, including the review by the CDA of pro forma financial statements for the proposed project, including sources and uses of funds, certified personal and corporate financial statements of the applicant sponsor, financial commitments of participating lenders, proposed security for the project, business plans and economic analysis of the project and past compliance with municipal laws, rules and regulations.

• the demonstrated integrity and responsibility of the applicant sponsor as determined by the CDA based upon appropriate investigation by the town attorney and consistent with case law. 

Tomorrow night’s hearing is scheduled for 6 p.m. at Riverhead Town Hall. 

There will be a second public hearing tomorrow night to hear comments on the proposed transfer of a 2,784-square-foot piece of land north of Main Street from the Riverhead Public Parking District to the Town of Riverhead as part of the planned public parking garage project.