12/20/13 6:59am

IDAscreenThe work of the Industrial Development Agency came under intense scrutiny during last year’s elections. The IDA, its executive director and board members were criticized in these pages and elsewhere for giving out scores of property tax abatements to big box stores and international corporations that didn’t need such help — and the breaks were putting an undue burden on the rest of us. Or so the narrative went.

We now find the narrative not to be entirely true. At this time, there are no big box stores in Riverhead Town that receive tax abatements, we report this week. And although names like Hilton and Marriott adorn two projects that received some form of IDA benefits, the hotels themselves are owned by a local businessman who makes a strong case for the economic benefits they bring to town in the form of visitors’ spending time here, and therefore money. When it was built, Tanger Outlets received IDA assistance on sales tax only, and not property tax breaks, and it’s now the town’s highest taxpayer — contributing more than $4 million a year.

To sum up staff writer Tim Gannon’s reporting, the total amount of taxes that will be “lost” in 2014 comes in at $1.68 million.

CLICK HERE TO READ THE FULL REPORT: ‘WHAT ARE THE COST OF IDA TAX BREAKS?’

That seems like a small price to pay for bringing economic development and jobs to the Enterprise Park at Calverton, helping establish recreational opportunities in the form of a bowling alley on Route 25 and rebuilding a downtown with a hotel and aquarium, a renovated theater and dozens of new stores and apartments. Consider also that, according to IDA executive director Tracy Stark-James, the total assessed value of the 18 properties currently receiving property tax breaks in town was about $2.4 million before the IDA incentives were granted.

Those assessed values now total $18.3 million. One day those taxes will be paid in full.

These are long-term investments, not designed to be the easiest of pills for taxpayers to swallow now.

And it seems the IDA board is picking worthy projects to support.

There is room for improvements, especially when it comes to transparency on the IDA’s website, riverheadida.org, which offers no detailed information as to who is getting property breaks in town, for how much and when those breaks are scheduled to fall off. This is information that should be at everyone’s fingertips. The IDA should take care to update these numbers annually; that doesn’t sound as if it should be so hard. As of now, the site’s “projects” page features only a Google map of Riverhead.

The last IDA budget uploaded to the website is from 2012 and the “corrective measures” from a 2012 financial audit are nowhere to be found.

Overall, the IDA appears to be fulfilling its mission of attracting businesses and helping existing businesses expand. But these board members are deciding where taxpayer money is being directed and the decisions they’re making need to be clear and accessible to the public.

Here’s a simple New Year’s resolution for them: Update the site.

11/05/13 7:48am
11/05/2013 7:48 AM
PAUL SQUIRE PHOTO | (L-R) IDA Exectu

PAUL SQUIRE PHOTO | (L-R) IDA executive director Tracy Stark-James takes notes as Skydive Long Island owner Ray Maynard and Barbara Schiano speak to the IDA board Monday night.

Plans to build a two-story tall indoor skydiving tunnel are a little bit closer to taking flight.

The proposal — a new building to house the unique attraction at Skydive Long Island in the Enterprise Park at Calverton — will be subject to a public hearing over requested tax incentives in December, after members of Riverhead’s Industrial Development Agency expressed support for the proposal, with one member of the board calling the plan a “home run.”

COURTESY PHOTO | People skydiving in a vertical wind tunnel.

COURTESY PHOTO | People skydiving in a wind tunnel.

“That’s a really great project,” said IDA executive director Tracy Stark-James at the board’s meeting Monday night in Riverhead Town Hall. “It’s truly a regional draw.”

Skydive Long Island owner Ray Maynard and Barbara Schiano, his wife, told the board their planned attraction would not only allow skydivers to practice jumps in a safe environment, but would also draw tens of thousands more into town during the typical skydiving off-season to experience the indoor wind tunnel — without having to get in a plane.

“There are many people who just go to these indoor wind tunnels to experience freefall who never go skydiving,” Ms. Schiano said.

Skydive Long Island would build a four-story tall building to house the 18-feet high, 14.5-foot wide vertical wind tunnel, which would use giant fans to lift customers into the air.

“It’s going to bring a lot more people to the town,” Mr. Maynard said, adding that the nearest indoor skydiving attractions were in New Hampshire and North Carolina.

Mr. Maynard also said that, while tunnels are used by professional skydivers to train, the general public could buy time inside the tunnel with an instructor in 2-minute blocks. Up to six experienced skydivers could use the tunnel for practicing formation diving.

The project — estimated to cost between $4.5 million to $5 million — would also feature glass running windows along the side of the tunnel, allowing onlookers to see in. It would take up to a year to build the structure, Ms. Schiano said.

Skydive Long Island — which has been in operation out of Calverton since 2000 — is asking for three types of tax incentives: a sales tax exemption, a mortgage tax exemption and a deal on its real property taxes, Ms. Stark-James said.

The sales tax exemption would apply to all construction material purchases, from building supplies to lighting fixtures for the new building.

Skydive Long Island has already secured partial funding for the project through the U.S. Small Business Administraiton, which doesn’t require mortgage tax to be paid. The local mortgage recording tax exemption would apply to the remainder not covered under the SBA and would eliminate the usual 1.05 percent tax.

The final incentive is to reduce the real property tax assessment, Ms. Stark-James said. The IDA’s standard property tax abatement reduces the assessed value of the new additions to the property by 50 percent; the assessed value of the property excluding the new additions is unaffected, meaning taxes on the existing property wouldn’t change. The property would gain an additional 5 percent on its assessed value each year until it hit the full 100 percent of its value, Ms. Stark-James said.

For example, if a property were worth $50,000 and another $10,000 in assessed value were added, the property’s abated assessed value would be $55,000 in the first year of the abatement, increasing by 5 percent each year until it reached the full $60,000.

While the 50 percent initial abatement is the typical IDA offer, Ms. Stark-James said Skydive Long Island was planning to request more of an abatement from the IDA. While board members didn’t reveal whether they would support the incentives, all expressed admiration for Mr. Maynard, a longtime local business owner.

The proposed incentives will be open for public comment at the IDA’s next meeting in early December. In the meantime, Ms. Schiano said the company is working on getting the necessary zoning permits to build the new attraction.

“This is going to be another iconic attraction [for Riverhead],” she said. “There’s nothing like it in the area.”

psquire@timesreview.com

09/07/13 8:00am
09/07/2013 8:00 AM

BARBARAELLEN KOCH FILE PHOTO | The Riverhead Free Library was one example touted by Thomas F. Cruso of the good the Riverhead IDA has done.

On behalf of the Riverhead Industrial Development Agency board of directors, this piece is written to correct statements recently published in the op/ed section of the News-Review. The agency believes it is important to disseminate accurate information about its operations.

• The agency has not induced any big box stores to open on Route 58.

• The agency, by law, is selective on what businesses it can and will induce.

• The executive director is not paid based on what tax abatements are granted.

• The agency is not supported by governmental subsidies.

If you are a patron of Riverhead Free Library or have been a patient at the newly remodeled and improved Peconic Bay Medical Center you have first-hand experience how a Riverhead IDA project can benefit our town. Yes, the expansion of the library and renovation and enlargement of Peconic Bay Medical Center were made possible through financing granted by the Riverhead IDA.

The more recent projects on Route 58 that are receiving real property tax abatements include a cancer care center, bringing innovative and state-of-the-art radiation therapy not currently available; the bowling and recreation center on Route 25, which was a blighted parcel for several years; and the first hotel to be built on Route 58.

These projects, respectively, received five-, seven- and 10-year abatements. Two older projects, an emergency veterinary clinic and a retinal care center, are fully on the tax rolls at the end of next year. Tanger Outlets has never received a real property tax abatement. Tanger received only a sales tax exemption for building materials and is now the highest taxpayer in Riverhead Town.

In keeping with the vision of the current administration, downtown has been the focus of the agency’s attention. Without agency assistance, the town would not have the Long Island Aquarium & Exhibition Center, Summerwind Square, the Dark Horse restaurant and apartments, the renovated Suffolk Theater, Ralph’s Italian Ices, Blue Duck Bakery and Papa John’s, as well as the soon-to-be-revitalized former Woolworth Building.

A world-class hotel, the Hyatt, and an exhibition center were a new project connected to the former Atlantis Marine World Aquarium, now known as the Long Island Aquarium and Exhibition Center. Surely, no Riverhead resident can question that the aquarium has been the catalyst for downtown’s revitalization, as well as the source for public infrastructure improvements to downtown that typically result from all IDA projects.

The “100 percent abatement” terminology leads the public to believe that businesses are not paying taxes to the town. On the contrary — and unlike with the Suffolk County IDA — standard Riverhead IDA projects continue to pay their current tax bill on the property, plus half of the increase in the taxes beginning the year after the company makes improvements to the property, which increases assessed value. The agency’s standard policy gradually increases taxes over a negotiated period of time. (The standard is 10 years.) Additionally, by law, businesses pay all the other ad valorem taxes on their tax bills, as set by Riverhead Town. There are instances, particularly in downtown, where the agency has used its authority to grant greater benefits to a project in an effort to ensure a project’s viability.

It doesn’t take statistics to prove that the inducements are working. Nevertheless, the public can be confident that the agency is held to strict reporting requirements by New York State.

Additionally, the agency provides other services to the community. The agency initiated and hosts the East End Employment Expo, Workforce Development Symposium and other free events and seminars open to the public. In October, the agency will tackle the highly charged subject of health care by coordinating a health care symposium with Peconic Bay Medical Center and the Riverhead Chamber of Commerce.

Riverhead residents should know that many factors go into the decision to induce a project and negotiate a Payment in Lieu of Taxes (PILOT) agreement. The current administration appointed a new board that, over the last two years, has worked diligently to negotiate shorter benefit periods while still remaining competitive. The board members each reside, work and pay taxes within the Town of Riverhead. All board members are volunteers who do not receive a stipend for their efforts. There is no personal gain for the board to grant tax abatements.

We trust this information has provided the public with some facts and clarified the inaccuracies currently being written about the agency. We work hard to uphold the integrity and character of the agency for Riverhead and do not wish the public to be misled.

If you have questions regarding Riverhead IDA projects, please contact us.

Mr. Cruso is the chairman of the board of directors for the Riverhead Industrial Development Agency. He is writing on behalf of the entire board.

08/18/13 10:00am

TIM GANNON PHOTO | A new 16,700-square-foot building on this site off Miller Way in Calverton will be home to Allied Building Products’ first East End site.

As Riverhead Town residents, our property taxes pay for the services we receive, such as town water and sewage systems, schools, police, sanitation collection, recreation and road maintenance. Our personal property taxes are supplemented by taxes collected from businesses within the town. Having a strong economic base is a necessity; therefore, new businesses should be encouraged to come to Riverhead.

The original purpose of the Riverhead Industrial Development Agency was to promote, develop, encourage and assist in acquiring, developing and equipping various business facilities, thereby advancing job opportunities and resulting in an increase in the general prosperity and economic welfare of the people of the town. The IDA has the power to abate property, sales and mortgage tax. Under federal tax law, IDAs can issue tax-exempt bonds to cover manufacturing facilities, governmental projects, nonprofit projects (a YMCA or civic facility) and exempt facilities (airports, solid waste facilities). The creation of new, well-paying jobs was expected to be a direct result of this exchange.

Adchem Corp. is one of Riverhead’s success stories. The company’s IDA process worked according to criteria that had to be met in order to be eligible to apply for tax exemptions. These included local and regional economic conditions, the creation of new jobs, the type of industrial or commercial activity, the benefit afforded to residents and the project location. After the company’s abatement period was over, substantial local jobs were created and they continue to make a significant contribution to our tax base.

I have been attending IDA meetings for almost a year. I can truthfully say that many of the projects approved met very few of these criteria. Two new businesses come to mind. In June 2013, Theriac Enterprises was granted tax abatements for the renovation of the old PC Richard & Sons building on Route 58. This company has offices in 28 states and seven foreign countries. It is well-established and its 21st Century Oncology facility will compete with a local business, North Fork Radiology, right around the corner on Roanoke Avenue. Theriac plans to occupy a third of the new building and rent out the remaining two-thirds. What criteria they met to be granted their abatement is unknown. This is outrageous!

Then, last week, Allied Building Products was granted IDA tax abatements. The public commentary was unclear but it seemed the Riverhead IDA was under the impression that, if not granted, the company would locate in Westhampton, where it was being offered Suffolk County IDA abatements. However, David Doran of Allied Business Products later admitted the company had not filed with the Suffolk County IDA at all. Again, Allied Building Products has over 180 locations and employs 3,100 people. It is well-established. Why does it need tax abatements from us to expand the business?

Has the current IDA board ever seen a proposal it didn’t like? Are we granting every application in order to create a salary base for an employee? Over the past year I have been attending IDA meetings; this board did not deny a single application, with board members often failing to ask pertinent questions along the way.

New York State Comptroller Thomas DiNapoli has continuously been critical of IDA practice statewide. You can access actual NYS IDA audits online and read how few real jobs have been created for the large tax breaks received. Mr. DiNapoli is currently sponsoring legislation that would provide taxpayers with the ability to evaluate if the IDAs are deriving the promised economic benefits, as they state. In cases where criteria are not met and jobs are not forthcoming, benefits can be “clawed-back.”

There are many fine regional examples of IDAs that share, and are proud of, their ability to grow their town’s economic base. If one were to access the Town of Islip, there is a transparent website explaining their projects, current and past, at islipida.com. They celebrate and share their success stories openly; financial reports and projects are there for all to see. In Islip Town, IDA board members and Town Board members are one and the same. They are directly responsible to the taxpayers.

Contrast theirs with ours at www.riverheadida.org and click on the “Projects” tab. There is nothing there. Information is unknown. There is no transparency for the taxpayer. This has become another runaway train.

Here’s the bottom line: Businesses that come to town immediately create the need for the additional services listed in my opening paragraph. Since the business’ taxes are abated, the burden of providing those services fall on the taxpayer. It’s time to re-evaluate the Riverhead Industrial Development Agency and send the responsibilities of the Riverhead IDA back to the Town Board.

Ann Cotten-DeGrasse is a Riverhead resident and current president of the Riverhead school board. She is running a Democratic primary for town supervisor.

08/12/13 2:00pm
08/12/2013 2:00 PM

When you drive Route 58, you shake your head and wonder how we even have town taxes. Every major chain calls Route 58 home. So, given Riverhead’s small population, how is it all of these meccas of commerce don’t throw off enough revenue to keep our taxes low? After all, Riverhead is the highest taxed, most indebted, poorest town on the East End. How can that be?

Because here in Riverhead, we give the store away.

When the national chains come a-calling, I don’t know whether they bring candy or flowers but the big guys always seem to have their way with us. Maybe we feel we are not worthy, maybe we are bad negotiators, but when it comes to granting tax breaks, Riverhead seems to roll over like a sea lion in the sun, leaving much-needed revenue on the table that could and should be adding to our tax base.

Take our Industrial Development Agency. Our IDA grants tax abatements like free smooches at the county fair kissing booth. New in town? Don’t want to pay taxes? You got it. Why do we give in so easy? Perhaps it is because our IDA director gets paid based on what the agency gives away. It’s hard to believe but the IDA director’s salary is generated by granting tax freebies. That’s as sensible as giving a raise to the bartender who pours free drinks. Tax breaks “Riverhead-style” are as lucrative as it gets. Our tax breaks are the 10-year kind. So that big box store being built today may not generate its fair share of revenue until at least 2023. I say “at least” because when they are ready to expire, we have been known to extend our tax breaks even longer, just to be neighborly.

The stores on 58 require heavy police protection, increased attention from our fire departments and a host of other services that strain our cash-strapped government to the breaking point. Those government services need to be paid for by someone — and that someone is you. You don’t like the traffic, clear cutting or ugliness Route 58 brings? You paid for it. In Brookhaven, Huntington and Islip, the commercial district subsidizes the homeowner. Here it seems the other way round. What to do?

One, performance audit IDA breaks. Are we really netting out the dollars we think we are? Let’s find out. Two, end Route 58 tax breaks. There was a time when 58 was barren. Today it’s the place everyone wants to be. Stop the giveaways. Tax abatements should instead be targeted to downtown, where we have trouble attracting suitors. Three, change the “IDA incentive.” It makes no sense to compensate an IDA director based on what he or she gives away. Retool the position to make it more results-driven. Let’s pay for net revenue in — not gross dollars out. Four, consider impact fees. When a chain wants to come here, not only should we not roll over and play dead, we should charge premiums. We should craft impact fees so that new box stores will pick up the costs of roads, traffic lights and other improvements. They do it in Florida and the Carolinas and California, why not here? Do you really think they’ll stop coming because we ask them to pay?

Right now Riverhead gets all of the bad and none of the good that comes from the parade of 58 box stores. Let’s stop giving the store away.

 Anthony Coates is a downtown resident who is running a Republican primary for a town council nomination.

Riverhead IDA sign

01/08/13 8:00am
01/08/2013 8:00 AM
PAUL SQUIRE PHOTO | Architect Martin Sendlewski presents the plans for the Woolworth building at the Riverhead IDA meeting Monday evening.

PAUL SQUIRE PHOTO | Architect Martin Sendlewski presents the plans for the Woolworth building at the Riverhead IDA meeting Monday evening.

Riverhead Industrial Development Agency members discussed setting milestones to determine what tax breaks to grant developers — and when to grant them — of East Main Street’s largely vacant Woolworth building after a public hearing on the project Monday evening.

BARBARAELLEN KOCH FILE PHOTO | The Woolworth building has been largely vacant since the former five-and-dime store closed in 1997.

Representatives for Woolworth Revitalization LLC, the company behind the proposal, said the redeveloped building would be a mixed-use construction project with storefronts on the first floor and about 20 apartments on the second floor.

“We’re very excited about this project,” said Sag Harbor resident Michael Butler, who is heading the project. “We think it’s going to be a very good one for downtown Riverhead.”

The ground floor of the building would feature 25,000 square feet of commercial space, with 15,000 square feet of studio and one-bedroom apartments on the second floor, he said.

Mr. Butler said the group is looking to invest between $5 million and $6 million into the long-neglected building to renovate and make repairs.

Riverhead architect Martin Sendlewski, who presented plans of what the interior space would include, said it would be cheaper to renovate the building than tear it down, despite its current state.

The group requested the IDA grant tax breaks on sales, mortgage and real estate taxes in order to keep yearly costs down while renovating the structure.

After the hearing was closed, board members agreed the project was “vital” for Riverhead, and discussed setting up milestones that would need to be met for the developers to qualify for tax breaks.

One hypothetical milestone would give a 25 percent abatement on the difference between total assessed and land value if the developers had a renovated commercial space available.

That abatement would increase up to 100 percent if the construction were to progress to having apartments ready on the second floor.

“If he doesn’t get anything done, he gets no abatement,” said IDA executive director Tracy Stark-James. Members of the board said they supported the idea.

“This is perfect because we’re not swinging in the breeze on it,” said board member Dawn Thomas.

Representatives from the Woolworth developers and the IDA will meet to negotiate the exact milestones. The group said they expect to close on the property in February and begin construction work right away.

While no one spoke at the public hearing, representatives from the Suffolk Theater attended to learn more about the proposed project next-door.

“I think there’s a lot of promise here,” said Suffolk Theater executive director Bob Spiotto after the hearing.

psquire@timesreview.com

12/04/12 8:01am
12/04/2012 8:01 AM
Downtown Riverhead, East Main Street, Riverhead IDA

BARBARAELLEN KOCH FILE PHOTO | The former Woolworth building on East Main Street has been largely empty since the old five-and-dime chain closed in 1997.

One of downtown Riverhead’s largest vacant buildings is slated to be renovated into new shops and apartments, but the developer is also seeking tax exemptions and other incentives from the town Industrial Development Agency.

Michael Butler of Sag Harbor, under the corporate name Woolworth Revitalization LLC, is in contract to buy the vacant Woolworth building and  has applied to the IDA for tax help, according to IDA executive director Tracy Stark James.

An IDA public hearing on that request has been scheduled for Jan. 7 at 5 p.m. in Riverhead Town Hall.

Woolworth went out of business in 1997, and the building has been empty since then, although it was purchased by Manhattan-based Apollo Real Estate Advisors in 2006, when that company proposed a $500 million downtown revitalization project that called for a multiplex theater at the site, as well as stores, restaurants and apartments in other downtown buildings.

Apollo’s plan never came to fruition, but the group still owns the building, although it now goes by the name AREA Property Partners (AREA stands for Apollo Real Estate Advisors.)

Ms. Stark James said Mr. Butler is in contract to buy the building from Apollo and plans to gut the interior, but not demolish the structure.

“He’s basically planning to renovate it, with a new facade and potential housing above the Woolworth portion of the building,” she said. “He’s using the same exterior footprint, so there will be no additional building, just renovation of the interior.”

Woolworth Revitalization LLC proposes to use the building for retail, commercial, restaurant and office space on the first floor with apartments on the second floor, according to the IDA application.

The proposal also calls for the abatement of asbestos, new utility services, a new roof, and facade improvements.

The estimated cost of the project is $5.7 million, according to the application.

Ms. Stark James said Woolworth Revitalization LLC is asking for a freeze on the property taxes for 10 years, meaning the property owner would pay taxes based on  the assessed value of the property prior to renovating it, but would not pay taxes on the improvements for a 10-year period.

This is the same exemption that the Hyatt Hotel and Atlantis Marine World, as well as the Summerwind Apartments, received, although Atlantis received an additional 10-year extension.

In addition to the property tax incentive, Woolworth Revitalization LLC is seeking exemptions on sales tax for materials used in the project and on mortgage recording tax.

Mr. Butler could not immediately be reached for comment.

A year ago, developer Ron Parr sought to buy the building from Apollo and then lease it to Regal Cinemas, the nation’s largest movie theater chain, but that deal fell apart.

Riverhead Supervisor Sean Walter said that he called every major theater company in the country trying to get one to build a movie theater in the Woolworth building, or somewhere in downtown Riverhead, but to no avial.

tgannon@timesreview.com