The Riverhead Industrial Development Agency voted unanimously at a special meeting Tuesday to grant tax incentives for a proposed restaurant and boutique hotel on East Main Street and for an additional 10-year tax abatement at the Long Island Aquarium.
That part of the meeting took about 10 minutes. The dispute that followed lasted nearly an hour.
South Jamesport resident Larry Simms, who had been told that the IDA would not be accepting public comment at the meeting since a public hearing was held Jan. 4, began speaking at the podium after the meeting ended before a crowd of about 20 residents, who remained seated.
Mr. Simms was then told the town recreation advisory committee needed the board room, so he continued his presentation in the hallway as many of the residents who attended the meeting stuck around to listen.
Police were then called to the scene after Mr. Simms got into a verbal confrontation with Bryan DeLuca of Atlantis Holdings, the parent company of the aquarium, the Hyatt Place hotel and the proposed new projects, and Joe Petrocelli, co-founder of the aquarium.
After Mr. DeLuca, Mr. Petrocelli and other representatives of the applicant left, Mr. Simms then took up the argument with Riverhead Councilwoman Jodi Giglio, who argued that the aquarium has been beneficial to downtown and that it could go out of business without a continuation of the IDA benefits it has received for the past 20 years.
She was echoing the earlier remarks of the IDA.
“The aquarium and the (Hyatt Place) hotel, in my opinion, provide a special, special engine in this community to help downtown Riverhead grow,” IDA chairman Tom Cruso said.
“What we are doing is a continuation of our commitment to downtown,” added IDA member Dawn Thomas.
Atlantis Holdings and Petrocelli Development are proposing to restore the 114-year-old Preston House across the street from the aquarium into an upscale restaurant, while building a five-story, 20-room “boutique” hotel behind it. The project is on the northwest corner of East Main Street and Ostrander Avenue.
The applicants are seeking a 10-year property tax abatement on this project that would be equal to 100 percent of the value of the improvements to the property for each of ten years. That abatement only applies to town, county, school and fire district taxes and not to special districts like water and sewer. It also doesn’t apply to the underlying land or improvements that were there before construction begins.
The companies are also seeking sales tax abatements on construction materials used in the project and on county mortgage recording taxes.
Both the aquarium and the Hyatt Place East End hotel received those same abatements in 2009, and the aquarium also received them in 2000.
The current proposal before the IDA also calls for Atlantis and Petrocelli refinancing the aquarium’s existing debt, and receiving an abatement on paying mortgage recording tax on that, as well as a 10-year extension on the property tax abatement for the aquarium.
At a Jan. 4 public hearing before the IDA, Mr. DeLuca said that if not for the IDA abatements, the aquarium would have to shut its doors.
Mr. Simms argued that the IDA cost/benefit analysis he received after the Jan. 4 hearing was still marked “draft,” and that it concluded that the total tax exemption over the 10-year life of the abatement was about $1.15 million.
“You have a public hearing and you close it and you’re still passing around a draft?” he asked. “When does this become final and when do we get to see it?”
He said he received new information from the IDA about a 30 minutes before Tuesday’s meeting updating that number by about $7.8 million, the value of the refinancing and the additional 10-year abatement for the aquarium.
The $1.15 million in the previous document was only for the Preston House restaurant and boutique hotel, bringing the total to about $9 million.
“How the hell do you have an agency that treats taxpayers with such contempt? It’s beyond my comprehension,” Mr. Simms said.
When Mr. Simms challenged Atlantis’ statement that the aquarium pays $355,000 a year in taxes even with the abatements, Mr. DeLuca said Mr. Simms was spreading inaccurate information and that he could show him the cancelled checks.
Mr. Simms claimed the town assessor’s office said Atlantis paid only $271,040 in taxes and payments in lieu of taxes. Assessor Laverne Tennenberg was present when Mr. Simms made that statement.
Mr. DeLuca said the public had a chance to speak at the Jan. 4 hearing and that Mr. Simms did not do so. He said business owners showed up at that meeting and supported Atlantis.
At that point, Mr. Petrocelli walked up and stood beside Mr. Simms, staring at him while he spoke. “Do you like being in people’s faces?” Mr. Simms turned around and yelled.
“Go for it, Larry,” Mr. Petrocelli said.
The aquarium co-founder said he was trying to calm things down and that Mr. Simms was giving incorrect information, since the Treasure Cove Marina and Jerry and the Mermaid pay full property taxes.
At this point, three town police officers were called to Town Hall and Mr. Petrocelli and Mr. Deluca left.
Mr. Simms continued speaking, often shouting, and later got into an argument with Ms. Giglio.
The councilwoman said the vacancy rate downtown was at close to 70 percent before the aquarium arrived, and is now around 20 percent.
“If we lose the aquarium, we lose everything downtown,” she said.
Ms. Giglio said the aquarium could become a non-profit entity, like most aquariums in the United States, and it would pay no taxes.
Mr. Simms argued that if that happened, the Hyatt Place hotel would have to pay full taxes.
Mr. Petrocelli said after the meeting that the business is not considering making the aquarium a non-profit.
Caption: South Jamesport resident Larry Simms speaks outside the IDA meeting Tuesday. (Credit: Tim Gannon)