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Walter: Drug research firm agreed to no tax breaks for Peconic Care

09/27/2017 6:00 AM |

Riverhead Supervisor Sean Walter is taking a stand against tax breaks sought by a drug addiction treatment and research center proposed for the Enterprise Park at Calverton.

Mr. Walter said the developers of the proposed center, Peconic Care, had previously agreed not to seek tax incentives.

However, Peconic Care CEO Andrew Drazan said the supervisor is mistaken, adding that he never agreed not to seek Riverhead Industrial Development Agency tax breaks.

Peconic Care appeared before the IDA in early September to request a 20-year IDA property tax abatement, along with exemptions from mortgage tax payments and sales tax on building materials associated with the development.

On Sept. 15, Mr. Walter wrote a letter to fellow Town Board members pointing out that Peconic Care had previously said it would not seek IDA benefits and that it agreed to pay full property taxes as part of a March 13, 2014, Zoning Board of Appeals resolution that moved the project forward.

“When the Peconic Care facility was pitched to me many years ago, the principals in the deal said to me numerous times that they would not seek IDA benefits and if they ever became tax-exempt as a hospital or not-for-profit, they would place a covenant on the property that they would pay full taxes in the form of a PILOT [payment in lieu of taxes] payment,” Mr. Walter said.

A portion of that position was incorporated into the ZBA’s 2014 approval resolution for Peconic Care, Mr. Walter said.

The supervisor is calling for a similar covenant to be included in any future Town Board resolution related to Peconic Care, which still needs Town Board approval of its site plan.

“It is my sincere hope that the Town Board would not only incorporate the covenant aspect of the ZBA decision into the final Town Board approval, but that the Town Board would also include a prohibition in seeking IDA benefits,” Mr. Walter wrote to Town Board members.

“There’s no reason to incentivize a business that’s begging to come here,” Mr. Walter said in an interview.

Peconic Care, which is affiliated with the Garden City-based Engel Burman Group, already owns the property it wants to build on, Mr. Walter said.

The 2014 covenant Mr. Walter cited was part of a ZBA interpretation that ruled the Peconic Care project was a permitted use in the Planned Industrial Park zone at EPCAL in Calverton.

A portion of the resolution reads: “The applicant has indicated that it would obligate itself, its successors and assigns by covenant to make PILOT (payments in lieu of taxes) payments equivalent to the property taxes in the event the property was ever deemed exempt from taxation.”

Mr. Drazan said that in 2014, it was unclear if they were going to be nonprofit or for-profit.

But now, he said, Peconic Care is a for-profit business, so the ZBA covenant doesn’t apply,  and Peconic Care is not prohibited from seeking IDA tax breaks.

“The covenant talks about ‘if’ we’re ever going to be a nonprofit and exempt from taxes. It doesn’t say we negated efforts to ever go to the IDA,” Mr. Drazan said. “It’s being interpreted incorrectly.”

He said they are looking for some sort of relief from the IDA as a startup company.

“This is all privately funded,” he said.

The IDA has yet to schedule a public hearing on Peconic Care’s application for tax incentives.

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