The owners of the Riverhead Culinary Arts building on East Main Street are seeking a new 10-year property tax abatement from the Suffolk County Industrial Development Agency.
But Riverhead Town officials say the owners of the building have never paid any of the amount owed through a prior payment in lieu of taxes from the previous 10-year Suffolk County IDA abatement it was granted.
With penalties and interest, the total owed to the town, school district and library district is $328,005, according to assessor Mason Haas.
That abatement expires at the end of the year, after which the property owners will pay full taxes on the property for the first time.
Despite this, the Town Board voted 4-1 Wednesday to enter into a settlement with the building owner, Culinary Arts Riverhead, LLC, headed by builder Ron Parr.
Councilwoman Jodi Giglio cast the lone “no” vote.
The Town and the Riverhead School District took Culinary Arts Riverhead LLC to court over the matter earlier this year.
Without saying the exact amount of the proposed settlement, Town Attorney Bob Kozakiewicz admitted that the amount the town would receive in the proposed settlement is less that the full amount it was owed. But he said going to litigation is always risky and would also delay the settlement and recovery of the money.
Mr. Kozakiewicz’s estimate of the amount owed was $258,114, much lower than what Mr. Haas estimated.
Mr. Haas urged the Town Board Wednesday not to settle, and to go to the upcoming IDA hearing on the proposed extension.
“They haven’t paid the PILOT at all and we’ve been talking to them about it,” Mr. Haas said. “Now they are looking for another 10 years? If we’re looking to settle and not get our full money, to me, it’s premature. Let’s go to this meeting and ask in front of everybody for the full amount that’s owed.”
Councilman Jim Wooten said the settlement and the new IDA application are two separate issues. Supervisor Laura Jens-Smith agreed.
The IDA abatements still require the property owner to pay special district taxes like sewer and water, as well as taxes based on whatever was there before construction began.
But it exempts the school, town, and county taxes based on the value of what was newly built.
According to tax receiver Laurie Zaneski, Culinary Arts Riverhead LLC paid $18,850 in taxes this current year, a number that represents special district taxes and taxes based on the land value but not the structure.
Had Culinary Arts Riverhead LLC been required to pay full taxes, its bill for this year would have been $126,241, she said.
Meanwhile, the Suffolk County IDA has scheduled a new public hearing on an application to grant the 10-year extension to the culinary center’s tax abatement.
That hearing is scheduled for 11 a.m. Nov. 14 at the Culinary Arts building and pertains to a request for an additional 10 years, with another PILOT agreement.
It was advertised in the legal notices of the Nov. 3 issue of Newsday.
“Let’s go to this meeting and ask for the money they owe,” Mr. Haas said.
But Mr. Parr says he is not the one responsible for the PILOT payments, and that Suffolk County Community College, which leases the building from him, is responsible, he said.
The college maintains that while it is responsible for paying property taxes, which it has done, Mr. Parr is responsible for the PILOT payments, college spokesperson Drew Biondo said earlier this year.
Mr. Parr said Wednesday that it was the college’s decision to seek the initial IDA abatement and it is the college’s decision to seek the extension. He said the only reason his company is involved is because the IDA abatements are required to be given to the property owner, and not to a tenant.
Mr. Parr sent a reporter two documents Wednesday to prove his point.
One is the 2007 lease agreement with the county which states, “the college shall pay all real estate taxes,” and defines “real estate taxes” as “all real estate taxes, assessments, county taxes, transit taxes, or any other governmental charge of a similar nature.”
The other is a 2007 compliance agreement between the IDA and the college which says, essentially, that if the college fails to pay any payments in lieu of taxes pursuant to the PILOT agreement, the IDA may pay that amount within 10 days of the notice to pay, and it will be reimbursed with one percent interest.
But Mr. Biondo said that a PILOT agreement states that Mr. Parr’s company is responsible for the payment of the PILOT.
Mr. Parr contends that the PILOT agreement is superseded by the lease and the compliance agreement with the IDA, and that the PILOT wasn’t even in place until two years after the building was constructed, and the college sought the PILOT as a means of reducing costs. He admits he signed the PILOT agreement, which must be signed by the owner of the property.