A Medford-based company that took over the former Henry Perkins Home on West Main Street in Riverhead will make annual payments in lieu of taxes, or PILOT payments, to Riverhead Town for the next 30 years under an agreement approved by the Town Board Tuesday.
Concern for Independent Living, which a few years ago transformed the adult home into a 50-unit low-income apartment building for people with psychiatric disabilities, was stripped of its tax exemption by Riverhead Town in 2009 based on a legal opinion that the company that owned the property was not a nonprofit corporation.
The loss of the tax exempt status would have cost Concern for Independent Living $130,000 in property taxes for 2010 and $118,000 for 2009, according to its executive director, Ralph Fasano. The company did not pay those taxes, however, as it contested the town’s ruling that it was not eligible for tax exempt status.
When a new town administration took office in January 2010, Mr. Fasano again made a plea for the town to reverse its ruling.
“It’s enough to make the project not feasible anymore,” Mr. Fasano said at the time, pointing out that the funding his organization receives from the state does not include money for real estate taxes.
Riverhead Supervisor Sean Walter responded then that Riverhead Town had some financial problems of its own, including a projected $3 million budget deficit, and wasn’t in a position to be giving money back. Mr. Walter said the town would try to work with the group, and suggested a payment in lieu of taxes. At the time, Mr. Fasano suggested it be a nominal payment.
Mr. Fasano said on Tuesday that the state Office of Real Property Services ruled in January that Concern for Independent Living is eligible for tax-exempt status.
The agreement approved at Tuesday’s Town Board meeting would require Concern for Independent Living to make a one-time payment of $25,000, followed by annual payments of $15,000 per year for 30 years, for a total of $450,000.
These payments are in lieu of taxes for the town, county and schools, and do not apply to sewer, water or garbage district taxes, which the organization would still have to pay.
“We would have preferred to pay nothing but I think we’ve come to an agreement that works for both sides,” Mr. Fasano said.
“These guys are an asset,” Mr. Walter said Tuesday in voting to support the PILOT agreement. “They have really turned that Perkins Home around.”
Under its prior ownership, downtown business owners frequently complained that residents of the home were improperly medicated and allowed to wander around town unsupervised.
Concern for Independent Living purchased the Perkins Home for $3 million on Oct. 29, 2004, then sold it for $1 to Concern Riverhead Housing Development Fund Corp. on Sept. 6, 2006, according to town records. Both are nonprofit corporations, according to the New York Department of State.
But deputy town attorney Dan McCormick said in 2009 that in researching the deed to the property, he learned that Concern Riverhead Housing Development Fund Corp. is actually just a “nominee” for the property’s actual owner, a for-profit company called Concern Riverhead LLC. A nominee is a person or company in whose name the title to property is held, but who is not the actual owner, he said. Concern for Independent Living argued that this is traditionally the way the state recommends nonprofit entities be set up, an opinion by the state Office of Real Property Services in January, Mr. Fasano said.
The Perkins building, which dates from the late 1920s, originally housed a well-known four-story hotel, the Hotel Henry Perkins, which closed decades later and eventually became a home for the mentally disabled until Concern for Independent Living took it over in 2004.