Riverview Lofts did not get the 30-year partial property tax abatement it originally requested from the Riverhead Industrial Development Agency to build a mixed use 116-unit apartment building downtown.
But the IDA did grant the developer, Georgica Green Ventures, a 30-year payment in lieu of taxes (PILOT) agreement, which requires the full amount of property taxes to be paid after 18 years.
The IDA doesn’t normally give property tax abatements of more than 10 years, although in recent years it has approved longer and larger tax breaks to downtown development.
“When the board is considering a tax abatement for real property taxes, it’s important to note that only school, county, town and fire taxes are abated, and those are paid through the PILOT payment,” said IDA attorney Richard Ehlers. “Special district taxes continue to be paid on the normal tax bill.”
In this case, the special district taxes — parking, sewer, water, business improvement, street lighting and ambulance services — will total an estimated $1,044,993 over the life of the agreement, whereas the annual PILOT payments — accounting for school, town, county and fire district taxes — will add up to $5,053,318 over the life of the project, for a total of $6,098,311, according to the IDA resolution.
Special district taxes will continue to be paid at full value even after with the approved abatement, Mr. Ehlers said.
Monday night’s unanimous IDA decision is one of the last approvals needed for the project, which is slated for the southwest corner of East Main Street and McDermott Avenue. The proposed five-story building would include workforce housing apartments — 31 studios, 57 one-bedrooms and 28 two-bedrooms — with monthly rents ranging from $976 for a studio to $1,995 for a two-bedroom unit.
The plan also includes two restaurants and offices on the ground floor and a total of 55 parking spaces even though parking isn’t required because the project is located within the town’s public parking district.
The project sits on two parcels that cover just under an acre. Georgica Green currently pays $34,234 in taxes, according to 2017 figures listed in an IDA synopsis of the application.
The PILOT agreement approved Monday starts at an estimated $58,000 for the first year and increases by 2 percent for each of the next 15 years, at which point it gradually rises for three years until it is back at the full amount, which starts at $260,739 in year 19 and increases by an estimated 2 percent per year to $324,197 in the final year, according to the draft resolution.
The project will generate more than $6 million in property taxes over the 30 years — $4.7 million more than the property is expected to generate in its current state, according to the IDA synopsis.
Georgica Green Ventures proposed a PILOT agreement for over 30 years that started at $42,000 for the first five years and increased by 20 percent every five years thereafter.
“The developer is not getting a 30-year abatement, but rather a 15-year abatement,” said IDA member Lori Pipzynski. “I believe this is a prudent opportunity for the town to invest in workforce housing and downtown revitalization while leveraging substantial federal, state and county funds. The mixed-use family/downtown housing model is consistent with the vision endorsed by the Town Board and the benefits and advantages of the model are endorsed by nearly every planning and economic organization in the region.”
Ms. Pipzynski said the project “removes an albatross that’s been vacant for all but four of the latest 20 years” and will serve the housing needs of qualified tenants from a mix of incomes, ranging from $46,500 to $144,000.
The IDA approved the tax incentives without letting the public speak.
Ian Lyons, a downtown business owner who asked a question during the meeting, was told by IDA chairman Tom Cruso: “You’re not authorized to speak at this meeting.”
He said Mr. Lyons had spoken for about 15 minutes at a public hearing two months ago.
“I thought you were done,” Mr. Cruso said.
“Oh, we’re not done,” said Mr. Lyons, who has started an organization opposing Riverview Lofts.
The IDA resolution also gives Georgica Green Ventures a sales tax break on the cost of construction materials associated with the development and an abatement on county mortgage recording tax.
Photo: The Riverhead IDA meeting Monday night. (Credit: Tim Gannon)