The Riverhead Industrial Development Agency last week approved a series of tax incentives for the redevelopment of the former Woolworth building in downtown Riverhead.
The tiered schedule requires the developer to meet certain goals before property tax incentives can be awarded.
Michael Butler of Sag Harbor, managing partner of Woolworth Revitalization LLC, is in contract to buy the mostly vacant building and restore it as a mixed-use development with apartments on the second floor and retail space on the ground level.
The building, which has been proposed for a multiplex movie theatre on several occasions — only to see those plans later fall apart — has been largely vacant since Woolworth left in 1997, save for some small shops in the building’s eastern end.
The IDA’s standard tax incentive involves exemptions on county mortgage recording tax, exemptions on sales tax for building materials and property tax exemptions on the value of the improvements to a property that start at 50 percent and decrease by 5 percent each year over 10 years.
But with the Woolworth project, the IDA will be eventually giving a 100 percent property tax reduction, requiring the applicant work up to that level by meeting certain benchmarks before those reductions are awarded. The property tax reductions apply only to improvements made to the property, so that the taxes will not be lower than what they currently are.
The approval is worded such that the quicker the job is finished, the sooner the 100 percent reduction is achieved.
“I think that’s excellent, to put benchmarks in for developers to attain and then, if they don’t attain them, they don’t get the benefits,” Riverhead Supervisor Sean Walter said in an interview about the IDA approval.
“My position has always been that the only two places that should be getting IDA benefits in this town are downtown Riverhead and EPCAL [Enterprise Park at Calverton],” he said, adding that having apartments downtown will create foot traffic, which will draw more businesses to the area.
The breakdown of the property tax reduction benchmarks is as follows, according to the IDA’s approval resolution:
• To get the 25 percent reduction, the applicant must complete the asbestos removal and demolition of the building.
• To get the 50 percent reduction in property taxes, the applicant must get permits and approvals for renovation of both the building’s facade and a 2,000-square-foot retail space on the ground floor.
• For the 75 percent reduction, the applicant must achieve “substantial completion” of ground floor renovations so that the sites are “clean and painted, with electrical service, lighting, flooring and ready-for-tenant specific improvements.”
• Finally, to receive the 100 percent property tax reduction, all site plan and building department approvals must be obtained for the second-floor apartments, on which construction must have begun.
The IDA approval, granted last Monday, was unanimous.
“We’re rebuilding Main Street and rebuilding Riverhead,” said IDA member Paul Thompson.