The 48-unit apartment complex Blue River Estates planned for the current site of the Long Island Science Center on West Main Street in Riverhead will now be an affordable rental project.
At Monday’s Riverhead Town Industrial Development Agency meeting, Marianne Garvin, the president and chief executive officer of the non-profit group Community Development Corporation of Long Island, said her company is partnering with Conifer, a Rochester-based real estate development and management company, and plans to turn the Long Island Science Center’s building into an affordable rental housing complex.
The proposal carries an estimated $17.5 million price tag, Ms. Garvin said, adding she’s hopeful the project will be completed by the spring in 2016.
Simshabs X, headed by Brooklyn developer Rafi Weiss, had previously proposed the Blue River Estates project and planned to build 48 market valued apartments at the Long Island Science Center’s building. Ms. Garvin said CDC of LI took over the project in August, and she said was unaware of when Simshabs X left.
It was not immediately clear why Simshabs X is no longer involved with the project.
The Long Island Science Center is selling its building and plans to move into a larger space at the former West Marine building downtown Riverhead.
Ms. Garvin said CDC of LI and Conifer plan to use the same site plan Simshabs X submitted, which includes demolishing the existing structure and building a new five-story apartment complex complete with 16 one-bedroom apartments, 32 two-bedroom apartments, and parking located under the building for tenants.
The plan still includes a fitness room, community room and on-site management, she said.
CDC of LI, which builds and manages affordable housing commonly referred to as “work force housing,” is planning to rent the apartments to people with incomes that are about 60 percent of the median for Suffolk County, or 80 percent of the median for Riverhead, which is lower than the county median, she said. She added the project isn’t a “Section 8” rental assistance project.
Ms. Garvin said her company is seeking a Payment in Lieu of Taxes agreement from the IDA in order to receive a reduction in property tax, but she didn’t indicate how much of an exemption her company is applying for.
“We’re looking for an amount the development can afford, and that number is something that would be negotiated,” she said.
CDC of LI and Conifer are also forming a private, for-profit corporation along with private investors, she said, adding the investors are hoping to secure grants from Suffolk County in order to offset infrastructure costs and make the rentals more affordable.
“We will have a for-profit entity that owns it, and 99 percent of the ownership is these investors that give significant private dollars to the development,” she said. “That’s what makes the numbers work. That’s how come we can offer rents below market rent, because of the equity investment, and the amount of money we have to borrow is much reduced.”
Because of this arrangement, CDC of LI is seeking tax credits from the state that these investors will receive in exchange for their investment in the project. The deadline to apply for those credits is Dec. 4, creating a tight time frame for the IDA since the tax breaks sought from it require a public hearing and IDA officials say the earliest they can hold a hearing is Dec. 1.
“The credits are what the investors want, because they can shelter some of the corporate profits,” Ms. Garvin said, adding the state Department of Homes and Community Renewal is offering the 9 percent tax credits. “So, in exchange for giving us money to put into the development, they get a tax credit off their corporate earnings. It’s desirable for them because they are sheltering some of their corporate earnings and it’s desirable for us because it’s pure equity that doesn’t have to be paid back.”
Richard Ehlers, the IDA’s attorney, said he believes the earliest the board could approve the tax exemptions is in January.
Mr. Ehlers said the IDA application filed by Simshabs X is technically still open, and the IDA will need to formally close that hearing before it can take up a new hearing on the same property. He said CDC of LI will also need to present the IDA with a binding agreement with the Long Island Science Center.
IDA chairman Tom Cruso said he’d like to hear from Conifer since no representative from the company was present Monday.
Simshabs X had applied to the IDA seeking tax exemptions on property tax, sales tax on building materials used in the construction and mortgage recording tax exemptions. The company never received approval for those exemptions.
The project also never received site plan approval from the Town Planning Board, as issues regarding access to Main Road and Peconic Avenue slowed the application.
“They needed state Department of Transportation approval for an entrance from Route 25 and they need to get a right of way agreement from [Chase] bank to get an entrance from Peconic Avenue,” said Councilman John Dunleavy, who attended the meeting.