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Culinary tax break ruling postponed; settlement proposed

The Suffolk County Industrial Development Agency on Friday postponed a vote on Culinary Arts Riverhead LLC’s request for another 10-year property tax abatement on the culinary arts building in downtown Riverhead.

The building is leased to Suffolk County Community College. The decision was put off for a second time and is now scheduled for the IDA’s Jan. 24 board meeting.

Both Riverhead Town and the Riverhead Central School District have offered potential settlements in the debate in which the town and school contend that building owner Ron Parr has not made any of the payments in lieu of taxes owed to the school and town from a previous tax abatement issued by the Suffolk IDA 10 years ago.

The settlement offer from the town and school amounts to an annual property tax payment of $62,511 while the settlement officer from the college amounts to $40,544, according to Ben Zwirn, the college’s director of community affairs.

“Our legal department has received it,” Mr. Zwirn said outside the IDA meeting. “We’ll review it and see if we can reach a compromise or some sort of agreement. Otherwise, the IDA will get it back in a few weeks and they will have to make a decision.”

The college has 10 years remaining on its lease with Mr. Parr.

Mr. Zwirn said that if the college had to pay property taxes at the end of the lease, it would likely move the culinary school to either its Brentwood or Selden campus.

Mr. Parr argued that it was the college’s responsibility to pay those PILOTs, according to agreements it signed with him. He said he only agreed to be part of the IDA application because the property owner, not the tenant, is required to apply for IDA benefits.

The college said that it has paid special district taxes on the property, such as water and sewer, but that Mr. Parr is responsible for the PILOT.

Riverhead Assessor Mason Haas said the unpaid amount owed to the town, school and library from the initial payment in lieu of taxes is $328,005.

Town Attorney Bob Kozakiewicz said the town and the school districts have both been paid a PILOT amount. He said the town has recently received $81,196 from the college, and the school district received a total of $176,917 in two payments: a $75,000 payment from Mr. Parr and a $101,917 payment from the college.

That $258,113 total is less than the amount Mr. Haas stated because he also included a one percent penalty for each month the PILOT was unpaid over the 10 years, Mr. Kozakiewicz said.

The town attorney said he was unaware of the offer made by the college.

Mr. Zwirn said the college is non-profit and would ordinarily not even have to pay taxes were it not leasing a privately-owned building.

The new proposal Culinary Arts made before the IDA calls for and abatement of all property taxes, whereas the previous one, which expires at the end of this year, only applied to town, school and library taxes.

The numbers proposed by the town and school were annual flat fees based on Mr. Parr paying 100 percent of the land tax for town and school taxes and 50 percent of the building tax for town taxes, and 25 percent of the school taxes, according to letters sent to the county IDA by Mr. Kozakiewicz and school district deputy superintendent Sam Schneider within the past few weeks.

These numbers translate to an annual flat rate of $19,101 for town taxes, $24,409 for school taxes and $19,000 in special district taxes. If the building owners had to pay the full taxes on the property, that bill would be $126,241, Mr. Zwirn said.

Photo caption: Suffolk IDA members at Friday’s meeting. (Credit: Tim Gannon)

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