The Riverhead Central School District voiced concerns about how a payment in lieu of taxes arrangement would affect the district’s tax base in a letter submitted as part of a public hearing on a request for Industrial Development Agency property tax abatements.
The application, from 205 Osborn Ave. LLC, proposed a five-story, 39-unit, multi-family residential apartment project at the corner of Court Street and Osborn Avenue.
The developer, Greg DeRosa of Huntington-based G2D Group, is also close to completion on a five-story, 36-unit apartment complex at 331 East Main St. in Riverhead. That project also sought tax incentives from the IDA , which were granted in 2020.
On Monday, the school district sent a letter written by attorney Michael Raniere of Ingerman Smith LLP and asked that it be part of the record of the hearing.
G2D Group is seeking the IDA’s uniform tax exemption, which involves abatements of sales tax on building materials used in project construction and, country mortgage recording tax, along with a 10-year property tax abatement that starts at 50% of the value of the additions, and decreases by 5% annually until full value is reached. The payments are collected by the IDA in lieu of taxes, and revenues received are remitted to the appropriate taxing jurisdictions, according to the IDA policy on PILOTs.
“The School District’s primary source of revenue is raised through tax levies on the residential and commercial properties located within the geographical boundaries of the school district,” Mr. Raniere wrote. “The school district relies almost exclusively on local, real property taxation to fund the public schools.”
The letter also noted that a PILOT cannot be considered revenue when determining the district’s tax cap, which gives exemptions determined by tax base growth.
The property currently contains a long-vacant building last occupied by Long Island Diagnostic Imaging.
“This building is proposed in direct response to the Town of Riverhead enacting their Railroad Avenue Urban Renewal Overlay District,” said Peter Curry, the attorney for the applicant. “In our mind, this represents an instance of the town studying a situation, a neighborhood that it found detrimental to the overall economic health of the town and created a comprehensive solution to that problem.”
The apartments will be rented at market rates, according to the applicant.
“This would not be a financially feasible project without assistance from the IDA,” Mr. Curry said.
The 39 apartments would be located on the second through fifth floors, and would include 27 one-bedroom units, four studio units and eight two-bedroom units. An office area and a gym for building residents would occupy the ground floor.
The units will be marketed to younger tenants or renters who have sold their houses, Mr. Curry said.
Mr. Curry said the applicant has also submitted a report indicating that the project would provide the town with an $11.5 million economic boost, including the generation of 120 construction jobs.
Projected annual spending by building residents and employees would be $1.7 million, Mr. Curry said.
A study from the Real Estate institute of Stony Brook University found that this type of project would generate one school child for every 11 units and that, using that analysis, there would be slightly more than three students among the 13 grades, Mr. DeRosa said, adding that his apartment projects generally house no school-aged children.
The school district said that data is not consistent with its prior experience with apartment complexes.
The site plan application for 205 Osborn was also subject to a public hearing before the Town Board Tuesday.
Speakers raised concerns about the project’s effect on the Riverhead Free Library and Suffolk County Historical Society properties. Library officials had concerns about tenant parking overflowing into the library’s lots.
Mr. DeRosa said he would be happy to meet with officials from the library and the historical society to discuss their concerns.