Riverhead to pay $170K to acquire Craft’d lease, clearing the way for boutique hotel on town square

Riverhead Town has agreed to pay $170,000 to the operator of the downtown bar Craft’d in exchange for taking possession of its lease at 127 East Main Street, a town-owned building slated for demolition and redevelopment into a boutique hotel.

The settlement agreement resolves the government’s legal obligation to provide “just compensation” to the owner of any real estate interest taken using eminent domain, which allows governments to acquire property for “public use” without the owner’s consent.

On Aug. 27, a State Supreme Court judge granted the town’s petition to acquire the leasehold interest of Craft’d’s operating entity, SNR Bar 25 Corp, completing proceedings the town began in April. Shortly after the judge’s order, Craft’d announced it would close on Sept. 20. 

At the time of the judge’s order, compensation had not yet been determined. The town entered into the settlement agreement with SNR Bar 25 Corp. on Sept. 3, according to a draft Town Board resolution scheduled for a vote next week. The company must vacate the premises by Sept. 30, and the town’s payment to the company is due by Oct. 15, the resolution states. A copy of the resolution, which includes details of the agreement, was provided to the press on Tuesday; however, the full settlement agreement was not attached to the resolution.

Under a separate agreement with the town, an affiliate of the J. Petrocelli construction company of Ronkonkoma is slated to take possession of the building, demolish it, and construct a new five-story boutique hotel with a restaurant, condominiums, and retail space on the site. The redevelopment project is a major part of the town square, considered by the town the centerpiece of its downtown revitalization initiative. 

J. Petrocelli intends to demolish the building by the end of this year and begin construction on the hotel in May, according to a project schedule presented last month. The developer aims to have the hotel open by June 2027.

Craft’d co-owner Sean Kenna, who runs the bar with business partner Robert Manolio, did not return a call for comment on Wednesday. Supervisor Tim Hubbard declined to comment on the settlement Wednesday. 

The Town Board had previously authorized a settlement offer and a $120,000 budget transfer. The resolution scheduled for a vote next week authorizes an additional budget transfer of $50,000 to increase the settlement offer. 

Riverhead took title to 127 East Main Street subject to SNR Bar 25 Corp.’s lease with the building’s former owner, Riverhead Enterprises, when the town purchased the building for $2.65 million in 2021. SNR Bar 25 Corp.’s 2018 lease with Riverhead Enterprises had a five-year term, but gave the company’s options to renew the lease for two additional five-year terms with options to renew for two additional five-year terms, extending its tenancy rights through November 2033.

Craft’d will close Sept. 20. The bar’s owners announced the closure in a Facebook post on Aug. 28, the day after the judge’s order. They said the bar will host a “Drink the Bar Dry” event that day, featuring discounted drinks, a buffet and a DJ.

It is not yet known whether Craft’d will reopen at another location. The bar is a center of nightlife in Riverhead, where it is one of the few establishments open late. 

Kenna and Manolio had previously said they were seeking a new location, but Kenna said during a May hearing that leasing another space downtown came with a “ridiculous” cost. Hubbard said during the hearing that the town had worked with Kenna to try to find alternative locations for Craft’d; Kenna said communication between him and the town “fell off at some point.”   

In its Facebook post, Craft’d wrote: “This isn’t just the end of a chapter — it’s the closing of a beautiful book. One that we’ll cherish forever.”