The developer of a 114,090-square-foot Marriott Residence Inn under construction on the west end of Route 58 across from Tanger Outlet Center is expecting the cost of the project to increase from $26,849,775 to $32,681,960, in part because of plans to install a new traffic signal on the western end of the property that will allow cars leaving the hotel property to turn east.
That’s something cars leaving the hotel currently can’t do, instead having to go west until they get to the area near Splish Splash before they can turn back east.
But because applicant Lee Browning had received Riverhead Industrial Development tax incentives for the Marriott project in 2015, the increase in the estimated cost of the project must be reported and a new public hearing was held last month since this effects the amount of the sales tax abatement the project is expected to get.
The sales tax abatement, which only applies to costs associated with the construction of the hotel, is now projected to increase by $214,000, from $759,622 to $974,449 in sales tax associated with the construction, according to IDA officials.
Mr. Browning had previously built the Hilton Garden Inn in 2007 on land adjacent to the Marriott site and that project had also received IDA tax incentives.
On Monday, the IDA voted unanimously in favor of the increased sales tax exemptions. The 140-room hotel also previously was granted partial abatements of property tax and an abatement on mortgage recording tax.
Peconic Management Group, which has already received Riverhead Industrial Development Agency tax incentives on two medical office projects it built on Roanoake Avenue in 2012 and 2015, also received IDA tax incentives Monday on a new medical office it proposes to build on Ostrander Avenue, across from the former Suffolk County National Bank site.
That’s where PMG is planning a 5,700-square foot building on a .75 acre parcel that will offer pulmonary rehabilitation for cystic fibrosis patients, according to Dr. Paayal Mehta of PMG, who spoke at a prior meeting.
Their Roanoke Avenue offices offer services such as a bariatric surgery, physical therapy, and treatment of sleep disorders.
The IDA typically grants property tax abatements on the value of the improvements being made, rather than on the value of what existed before. Its standard property tax exemption is 10 years and starting at a 50 percent exemption, then decreasing by five percent each year.
PMG had requested ten years, but since the IDA had given five-year exemptions to their two previous medicals office projects, it gave a smaller, four year property tax abatement to the new project.
The abatement will start at a 50 percent abatement in the first year, then will drop the percentage to 25 percent the second year, 20 percent the third year, and 10 percent by the fourth and final year of the abatement.
The IDA voted 4-1 in favor of the four-year abatement. IDA member Lori Pipczynski cast the lone no vote, but did not say why. The IDA also gives exemptions on sales tax associated with the construction, and on mortgage recording tax.
The IDA took no action Monday on the request for tax incentives from Georgica Green Ventures, which last month said it was seeking a 30-year tax incentive from the IDA for its 116-room mixed use affordable apartment complex called Riverview Lofts.
Rather than seek the standard IDA tax abatement, which runs about ten years, Georgica Green Ventures is proposing a 30-year payment in lieu of taxes starting at $42,000 for each of the first five years, with a 20 percent increase every five years.
The East Main Street property, which once housed McCabes stationary store and later the Dinosaur Walk Museum, also includes the property to the south of that.
Those properties are generating about $35,000 in property taxes now, which is lower than the proposed PILOT.
The Hotel Indigo on West Main Street and the Holiday Inn Express on Route 58, two hotels that currently do not have IDA tax abatements, paid $168,299 and $199,460 in property taxes respectively in 2017, according to town records.
The PILOT is still being negotiated with Georgica Green, according to IDA executive director Tracy Stark-James, who said the IDA isn’t taking any action on the request until the Town Board finishes the environmental study of the project.
The proposed PILOT would be in place of town, county, school and fire taxes. The applicant still have to pay special district taxes like water and sewer. The PILOT is paid to the IDA which divvy’s it up among the town, school, county and fire district.
Top photo: The Marriott Residence Inn under construction on Rt. 58 will include a new traffic signal. (Credit: Tim Gannon)