08/18/13 10:00am
08/18/2013 10:00 AM

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.

[email protected]

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.

[email protected]

10/22/12 7:38pm
10/22/2012 7:38 PM

PAUL SQUIRE PHOTO | Suffolk Theater owner Bob Castaldi speaks at Monday evening’s public hearing to grant tax breaks for the theater.

The Riverhead Industrial Development Agency unanimously approved a request for tax breaks by the owners of the Suffolk Theater  Monday evening.

Members of the IDA board said the tax breaks requested — a property tax exemption and sales tax exemption for purchasing equipment and supplies to complete the theater’s renovation — will be recouped by the additional sales tax generated when the theater opens.

The property tax break is a 10-year abatement that has the owners of the theater, Bob and Dianne Castaldi, pay the land value of the property while abating the payments on the improved accessed value of the property, said board general counsel Richard Ehlers.

Town assessors estimate the value of the property will go up from $62,000 to $426,700 after the renovations, Mr. Ehlers said, adding that tax abatements will not lower the tax base.

The property tax breaks amount to about $49,000 assuming current tax rates, he said. The sales tax exemption would only apply to construction equipment purchases and would total about $48,000, Mr. Ehlers said.

The Castaldis purchased the theater from the town in 2005; the building at the time “was pretty much as mess,” Mr. Castaldi said during the public comment section of a public hearing held before the vote.

Unforeseen issues in the renovations have caused the cost of the repairs to jump higher than expected, he said. Mr. Castaldi could not provide an exact cost of the renovations so far, but said the number is “in the millions.” The IDA cites the remaining project cost as being about $1.58 million.

Mr. Castaldi said he didn’t come to the board sooner for assistance because he didn’t think it would be necessary.

The theater still needs to have air conditioning installed, which is holding up the duct work that needs to be done. Without the ducts, the kitchen and basement are being delayed, and the fire marshall will not give the building a certificate of occupancy, Mr. Castaldi said.

Last month, the theater held a conference for business owners and artists called  “Arts Mean Business” while the theater lacked a CO. They were issued a violation and fined by the town as a result.

Mr. Castaldi said they are “diligently trying” to open the theater by the end of December, though he said it could possibly open later. He told the board the theater would definitely be open by spring 2013.

The only other person to speak at the public hearing was Councilman James Wooten, who said that while he supports the Castaldis and believes the theater will be a success, he has concerns about “balancing” the tax breaks allotted to businesses.

Instead of a 10-year abatement, Mr. Wooten suggested a 5-year plan with a “sliding scale.” Board members said that Mr. Castaldi may not be profitable after the first 5 years, and said the Castaldis’ savings will be repaid when the theater brings other business to downtown.

“Downtown has been an eyesore for a long time and we need to do something to get another anchor down there to help downtown get better,” said board member Lou Kalogeras. “It’s not a lot of money.”

[email protected]

10/22/12 8:00am
Downtown Riverhead, Suffolk theater, first event

BARBARAELLEN KOCH FILE PHOTO | People packed the ‘new’ Suffolk Theater’s first-ever event in September. The event was designed to bring arts and business leaders together.

The Riverhead Industrial Development Agency will hold a hearing today on a request for tax breaks to help finish the restoration of the Suffolk Theater in downtown Riverhead.

That hearing is scheduled for 5 p.m. in Town Hall.

Suffolk Theater owner Bob Castaldi said the cost of renovating the theater, which he purchased from the town in 2005 for $707,000, has exceeded the amount he anticipated, and the work is only about 80 percent done.

The IDA resolution puts the value of the work yet to be done at $1.57 million.

Mr. Castaldi is seeking to have the tax assessment on the project remain at its current level for 10 years, according to IDA director Tracy Stark-James. He also seeks sales tax exemptions on building materials and an exemption on paying mortgage recording tax.

Mr. Castaldi hopes to reopen the theater as a performing arts center by New Year’s Day. It has not operated as a movie theater since 1987.

[email protected]

10/03/12 10:00am
10/03/2012 10:00 AM

PAUL SQUIRE FILE PHOTO | Suffolk Theater executive director Bob Spiotto at the theater last month.

The owners of the Suffolk Theatre are seeking tax breaks from the Riverhead Industrial Development Agency to help them finish renovations to the 79-year-old downtown theater, which hasn’t operated as a movie theater since 1987.

Theater owner Bob Castaldi, who owns the building with his wife, Dianne, said the cost of restoring the theater has exceeded what he anticipated. He’s hoping the exemptions that the IDA can grant on mortgage recording tax, sales tax for building supplies and property taxes for improvements on the land will enable him to do more with the money he has.

He’s still hoping to open the art-deco East Main Street theater on New Year’s Eve, but said that forces beyond his control, such as regulatory agencies, could impact that decision.

“It’s something I’ve been thinking about for a long time and never got around to,’ Mr. Castaldi said of seeking IDA benefits. “We’ve got some big ticket items right now and it’s like we started with $100 to do a $100 job, and now we’ve spent the $100 and we’ve only got about 80 percent of the job done.

“To finish it off the way we started, it would be nice to have some relief from the taxes.”

Mr. Castaldi is renovating the theater to have both cabaret style seating, where dinners are served at tables, and standard theater seating, where the seats face the stage. The theater also will screen films and host live performances.

Mr. Castaldi bought the theater from Riverhead Town in 2005 for $707,000. Before that, it had been sitting unused for years after the town purchased it in 1994 but never determined what to do with it.

The IDA members voiced support for the idea and discussed scheduling a special meeting on Oct. 22 for a public hearing on the proposal.

“This is so important in revitalizing downtown,” said IDA member Lou Kalogeras.

Town officials have said they want to prioritize development downtown, where the IDA has already given 10-year, 100 percent property tax abatements on the value of improvements at the Long island Aquarium and Hyatt Hotel, as well as the Summerwind apartment complex.

[email protected]

08/02/11 12:06pm
08/02/2011 12:06 PM
Riverhead Board of Education

TIM GANNON PHOTO | Riverhead school board president Ann Cotten-DeGrasse addresses the Riverhead IDA Monday.

Two members of the Riverhead Board of Education asked the Riverhead Industrial Development Agency to deny a request for tax breaks by the Hampton Jitney bus company during an IDA hearing Monday.

They said the loss of tax revenue is hurting the school district, which already made cuts and faces a state-imposed 2 percent tax cap in the future.

But Jitney president Geoff Lynch said the proposed terminal and maintenance building on Edwards Avenue in Calverton “is a big swallow” for the family-owned company financially, which is why they are asking for IDA assistance.

The Jitney, which is located in Southampton and has operated for 40 years, is seeking to expand its business with the Calverton facility, Mr. Lynch said. They plan to continue operating out of the Southampton site while expanding into a second site in Calverton. The proposed $7 million expansion on a vacant 14-acre parcel on the west side of Edwards Avenue, just south of TS Haulers, is not expected to result in big growth for the company for several years, he said.

“In the short term, this is going to be an extraordinary endeavor for us, which is why we’re submitting the application for tax abatements,” Mr. Lynch said.

The IDA can offer mortgage tax exemptions, exemptions from sales tax on construction materials, and a 50 percent property tax abatement on the improvements, so that the tax on the vacant land will remain. The 50 percent tax abatement is over 10 years, and declines five percent per year. The property tax abatement only applies to school, town, county and fire district taxes.

Why does Hampton Jitney need the abatements?

“We’ve approached two local banks, Capital One and Bridgehampton National Bank, and  received assurances that financially, we’re in reasonable shape to take on this endeavor,” said David Mankoff, Jitney’s vice president for finance. “But from a business standpoint, we’re kind of like a grocery store, where you have to have a lot of volume to get very little on the bottom line. And that’s our problem as we move forward here. Generating enough cash on an ongoing basis, especially in the first five or seven years, is going to be a real task. So any abatements we can get on the mortgage tax, sales tax, etc., will help us significantly in meeting those cash flow needs. Especially in the first five to seven years, when it’s really going to be necessary.”

He said the company doesn’t expect to see tremendous growth in the first five to seven years, but is thinking long-range by the expansion.

Mr. Lynch said Jitney has about 300 employees and expects to move about 100 of them to the Calverton location immediately. Over time, he foresees as many as 300 employees at the Calverton site as well. The company currently has a payroll of about $8 million, he said.

“We have maxed out our Southampton faclity,” which was built in 1982, he said. Jitney also bought Sunrise Bus in 2006, and serves the North Fork.

In addition, he said the majority of the company’s drivers live in the Riverhead and Shirley areas, because they can’t afford to live in Southampton, so having the Calverton site will help recruit employees.

The pay rate for the company’s employees runs the “full scale,” he said, from janitors to technicians making up to $28 an hour to administrative staff making more than that.

But Riverhead Board of Education president Ann Cotten-DeGrasse and board member Amelia Lantz asked the IDA to deny the request for abatements.

School board members have asked the IDA to reject other such requests in the past,  going back several years.

Ms. Cotten-DeGrasse said that while the school board supports the development of businesses in the community because it increases the tax base, she can’t support a proposal that will negatively affect the school district.

“If you grant this tax abatement, it will cost the school district tens of thousands of dollars that we will have to pass on to taxpayers,” she said.

Ms. Cotten-DeGrasse said she believes many of the businesses that have been given tax breaks would have come to Riverhead without them.

But IDA member Lou Kalogeras said that in many cases, the businesses wouldn’t have come to Riverhead without the tax breaks.

And IDA member Paul Thompson said that even if the town IDA rejects a request for tax breaks, the same applicant can apply to the Suffolk County IDA and receive the same tax abatements they sought from Riverhead.

“And we’d have no control of it,” he said.

“We understand your concern, but we’re looking at it from a long-term development perspective,” Mr. Kalogeras said. After 10 years, the applicant will pay full taxes, he said.

IDA members also pointed out that the abatement only applies to the tax on new construction, so the amount of taxes received never declines.

“We took a $2.5 million decrease in state aid and we’re going to have to cut more because of the tax cap,” Ms. Cotten-DeGrasse said.

She said a recent IDA application was from a company that only had about seven jobs.

“You are hurting the school district and pushing the burden onto taxpayers,” Ms. Cotten said.

Ms. Lantz said Jitney has been in business for 40 years and “they are clearly making a profit.”

She said Atlantis Marine World was here for 10 years with an IDA abatement on property taxes, and the IDA gave them 10 more years of the same abatement.

The Atlantis abatement is a 100 percent property tax abatement on school, town, county and fire taxes, which will extend 20 years.

Mr. Thompson said Atlantis had a “50-50 chance” of getting bank financing when they came before the IDA, and even though they were granted the abatement, they ended up not getting bank financing for the new Hyatt Place hotel they built on Main Street, and had to raise money elsewhere.

He said without IDA help, that project might not have happened.

“They could have failed, and if they fail, you would have lost a lot more,” Mr. Thompson said.

“But at what point does it stop?” Ms. Lantz asked.

“It’s a burden, but it’s a burden that’s necessary to attract companies to come to our town,” Mr. Kalogeras said.

After the hearing was over and the school officials left, IDA chair Kathy Wojciechowski said that skyrocketing contractual and health care costs are the root cause of the school district’s problems. She feels the school district is using the IDA exemptions as a way of deflecting attention from those issues. She said there are ways the district could get money, such as grants, that they don’t seek.

[email protected]