Twin Fork Beer was awarded tax abatements by the Riverhead Industrial Development Agency Monday night for construction of an 11,480-square-foot building on two acres of vacant land on Raynor Avenue in Riverhead.
The company, headed by twin brothers Pete and Dan Chekijan, will receive double the IDA’s uniform tax abatement policy in that they will start off with a 100 percent abatement over 10 years, an amount that will reduce by 10 percent each year for another decade.
The normal policy is 50 percent over five years, with the amount of the abatement dropping five percent per year over ten years.
In either case, the property tax abatement applies only to the value of the improvements built on the property, and it applies only to town, county, school and fire district taxes.
Twin Fork will also receive abatements on sales tax used toward construction of the facility and on county mortgage recording taxes.
The IDA vote Monday was 4-1, with newly appointed board member Larry Simms voting no.
Mr. Simms, who has been critical of some IDA decisions in recent years, was appointed to the IDA by the Town Board last month.
Mr. Simms questioned why the IDA gave “double” benefits to Twin Fork.
Tracy Stark-James, the IDA’s executive director, said it has been the board’s informal policy to grant double benefits to manufacturing projects since the Suffolk County IDA and others do so as a matter of policy.
The Riverhead IDA’s formal policies, which are on its website, do not mention anything about giving double benefits to manufacturing projects. The town’s policies do say that the Riverhead IDA will match any incentives offered by Suffolk County on a project in Riverhead.
“Suffolk County, back around 2001, had a $1 billion tourism business, which has now grown to $5 billion,” said IDA member Bob Kern, who is also president of the Riverhead Chamber of Commerce. “I think it’s our responsibility to be a part of that.”
Mr. Simms said the town may want to formalize that policy in the future, but until then, he feels the IDA should stick to its formal policies.
Mr. Simms also said he felt the amount of the abatement offered to Twin Fork Beer should be less because 10 percent of their building will be used as a tasting room, which is considered retail, and not eligible for IDA benefits.
He also questioned why the land value is included in the cost of the project when the applicant leases the land.
Richard Ehlers, the IDA’s attorney, said he advised the applicant to include the land value because “it would not be cost effective to ask them to order a $5,000 real estate appraisal.”
Twin Fork Beer estimates the new building will enable it to increase the number of barrels it sells per year from 800 to about 15,000, according to Pete Chekijan.
The company was formed in 2014 and has been contracting and warehousing with two local breweries, and has its own distribution system that allows the brothers to sell their beer in restaurants throughout Long Island, New York City and the Hudson Valley.
Now they are seeking to build their own brewery, which will include a tasting room.
The total building cost of the project is estimated at $1.49 million.
Mr. Simms also cast the only vote against an application by Peconic Management Group to refinance a $1.8 million medical building it built on 715 Roanoke Avenue in Riverhead.
In that case, he said he had only just seen the application and wasn’t comfortable voting without looking at the terms of the new loan and the old one.