Residents pressed the Riverhead Industrial Development Agency Monday evening to explain why the developer of a proposed Town Square hotel should receive a 20-year property tax abatement whose value has not yet been disclosed. The agency closed the hearing without deciding on the request, and its chairman announced a further public hearing after a proposed tax agreement is prepared.
That further hearing would mark a change in the agency’s process, Chairman James Farley said Monday. It had not been announced at the agency’s Sept. 28 hearing, when Farley promised to accept written comments for another week and give the public another opportunity to speak at Monday’s meeting.
J. Petrocelli Riverhead Town Square LLC is seeking sales and mortgage recording tax exemptions totaling about $1.5 million, along with a 20-year payment-in-lieu-of-taxes agreement, or PILOT, for a proposed $35.15 million, 94-room hotel on East Main Street. The dollar value of the requested property tax break remains unknown.
No members of the public attended the Sept. 28 hearing. After discussing the lack of turnout with the agency’s attorney, Farley announced that written comments would be accepted through Oct. 5 and that people could speak at the regular meeting that day. The board then voted 3-0 to close the hearing, as RiverheadLOCAL reported.
On Monday, Farley described that closure as temporary. “I closed the hearing temporarily with the express purpose of reopening it tonight,” he said. The board voted to reopen it. Speakers who supported the hotel as well as those who opposed tax breaks questioned the length of the requested PILOT. Laura Jens-Smith of Laurel said she wants the hotel to succeed but asked what analysis justifies assistance beyond the IDA’s standard 10-year PILOT.
“What is the total dollar value of the 20-year pilot, and how much more will it cost taxing jurisdictions than the IDA’s standard 10-year pilot?” she asked.
Mike Foley of Reeves Park praised developer’s record in Riverhead and supported the requested sales and mortgage tax exemptions. He urged Petrocelli to seek a standard 10-year PILOT instead of the enhanced 20-year agreement. Other speakers opposed granting tax breaks at all, arguing that the assistance would reduce revenue available to local taxing jurisdictions. Board member Lee Mendelson responded that the site is currently town-owned and generates no property taxes; residents countered that a privately owned hotel could pay full taxes without an abatement.
Representatives of the developer said the project faces substantial construction costs and financing uncertainty. Joe Petrocelli cited the cost of building on the site, including deep foundation piles, and the difficulty of attracting visitors to a new downtown hotel. Steve Shauger, the director of management and operations at the Hyatt Regency Tapestry, who discussed the project’s financial projections for the applicant, said the requested exemptions and PILOT would provide predictable costs needed to secure financing. The developer’s attorney, Eric Russo, said the company is still negotiating with lenders. It has not begun hotel construction, Russo said.
The applicant has not presented a proposed PILOT payment schedule. Farley said the agency would previously develop a proposed agreement, hold a hearing on it and then decide whether to approve assistance. This time, he said, the agency is hearing public comments before it develops a proposed PILOT.
“We’re changing the process,” Farley said. “There’s going to be a second hearing when the PILOT’s done for everyone to look at, and then we will issue our resolution.”
Farley said a draft resolution containing the proposed PILOT would be posted on the agency’s website. He did not announce when that would happen or set a date for the additional hearing.
Residents also criticized the agency’s website and the notice given for the Sept. 28 meeting. Farley said the hearing had been advertised in a newspaper as required by state law. That published notice is separate from and in addition to New York’s Open Meetings Law requirement to notify the news media of a public meeting scheduled at least a week in advance. RiverheadLOCAL received no advance meeting notice for Sept. 28. Whether the agency sent meeting notices to other news organizations has not been established.
The board voted to close Monday’s hearing. It took no vote on the developer’s request for financial assistance.
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