Craft’D, Riverhead officials at odds over eminent domain

Sean Kenna, co-owner of the cocktail bar Craft’D, attempted one final plea before the Riverhead Town Board at a public hearing on May 21 for council members to delay eminent domain proceedings to acquire the 127 East Main St. for its long-running Town Square project while he tries to find a new space for his restaurant. 

Days after Riverhead officials announced they would no longer pursue eminent domain proceedings to acquire the Long Island Science Center building — allowing the organization to move forward with expansion plans at 111 East Main St. — Mr. Kenna posed one question for the Town Board: “How did we get left out of that conversation?” 

“I feel like it’s happening very fast, without the communication,” Mr. Kenna said to the board. “I’m all about the [Town Square] project — we have to somehow come to an agreement, where it comes to make sense, because I feel like I’m getting pushed to the curb.” 

Supervisor Tim Hubbard stressed that officials are working with Craft’D to find a new location on Main Street, and several properties have been considered. At the federal level, Dawn Thomas, the town’s community development administrator, said the town has also consulted with the Department of Housing and Urban Development to investigate the possibility of securing Community Development Block Grant funds to assist in the restaurant’s relocation. 

“We have worked with a possible location, a possible tenant or owner of a building, and hopefully we ‘re very close to making that happen … there’s still time left that we could try to make this work out,” Mr. Hubbard said. “If it does in a timely fashion, we will be able to stop the condemnation and actually let this process flow naturally, where [Craft’D] can move into a different location and hit the ground running again.”

Ms. Thomas said Craft’D is one of three properties acquired by the town in 2021 for the Town Square development. At the time, the 127 East Main St. building was purchased for $2.65 million. In 2022, two of the three purchased buildings adjacent to the Science Center storefront were demolished to open a greenspace for the public. 

These two buildings were vacant when they were acquired, while Craft’D was still under a lease, Ms. Thomas added. As the Town Square project plan was refined through public engagement, she said, it became clear the Craft’D building needed to be removed for the project to go forward, which required the condemnation of the leasehold interest of Craft’D’s operating entity, SNR Bar 25 Corp. 

The 127 East Main St. building is the planned location for the proposed redevelopment of nearly 76 hotel rooms, 12 condominium units and restaurant and retail space. Ms. Thomas said that a 2021 market study conducted by StreetSense recommended a hotel on the Town Square as the “highest and best use of the property to generate the most economic activity.” 

Mr. Hubbard previously said at a recent LI Science Center press conference that it’s anticipated these plans will be presented by the appointed master developer — J. Petrocelli Development Associates — before the public in a qualified and eligible sponsor hearing in early July. 

Town attorney Erik Howard said that under general municipal law, the Town Square properties are “urban renewal properties” and do not require a Request for Proposal, or RFP, to be issued. Four years ago, the town attorney’s office did get authorization to begin negotiations with Mr. Petrocelli, but even though he was selected, the developer still needs to go through the qualified and eligible hearing. 

“In order to demolish 127 East Main St., whether you have a deal with the qualified and eligible sponsor or not, we need to condemn that leasehold; that’s what this proceeding is,” Mr. Howard said. “It wasn’t going to happen if [Mr. Kenna] agreed to terminate [the] lease early. That’s the only way that this wouldn’t be happening.”

Following the public hearing, Frank Isler of Smith, Finkelstein, Lundberg, Isler and Yakaboski LLP, the attorney hired by the town to represent them in the eminent domain proceedings, said town officials have 90 days to adopt a resolution determining whether to go forward with the acquisition and if this decision is in the public interest. 

Once the resolution is adopted, the town attorney’s office can then file a proceeding in the Supreme Court that grants Riverhead Town an order from a judge to direct Mr. Kenna to terminate the leasehold by a specific date. Once that happens, the leasehold title will be in the town’s name, giving officials full control of the building. 

The town is required to pay the owners of Craft’D “just compensation” for the value of the balance of the leasehold interest. Mr. Kenna expressed his concern about not being able to obtain a new lease agreement within the 90-day timeframe, and urged the Town Board to consider extending the court filing. 

He also stressed he and his business partner, Robert Manolio, were supportive of the Town Square project from the beginning, but felt they were slowly being “pushed out” and any claims they knew they were “getting bought out” were false. 

When Mr. Kenna alleged that Craft’D was no longer included in the redevelopment plan for the proposed food and beverage space in the proposed hotel, Mr. Hubbard said Mr. Petrocelli offered the Craft’D owners the space over two years ago, but Mr. Kenna turned it down. 

Mr. Kenna denied this, saying he hasn’t spoken to Mr. Petrocelli in over two years and even if there had been conversations about the potential use of this space, the restaurateur claimed he never received or signed an actual lease agreement with Mr. Petrocelli. 

“I fully understand where [the Town Board] is coming from. I’m all about the project, but me and Rob are gonna lose in this scenario because we don’t know what’s going to happen,” Mr. Kenna said. “We invested a lot of money downtown between Cucina 25 and Craft’D — we were going to build another spot … no way; until this gets rectified, there’s no way.” 

Although a determination must be made within 90 days, Mr. Isler said town officials can stop the eminent domain process at any point and can negotiate anything it wishes with Craft’D. 

John McAuliff questioned the motives of Town Board officials in its decision-making, specifically how Mr. Petrocelli’s potential campaign contributions may be impacting this push for the eminent domain process. He also urged the Town Board to reconsider the redevelopment plan in terms of how the additional five-story building on the east side of the Town Square will impact the “vista” of the Peconic River.

“Eminent domain is inherently for public good, not for private profit,” Mr. McAuliff said. “If you’re on the other side of the street, or you’re experiencing the Town Square, the difference of a five-story building sitting there versus a two-story building is the vista question, is the feel — and I just urge all members of the [town] board to take a walk down there before you finalize this.”

Mr. Howard confirmed any town official who received $1,000 or more during an election cycle must disclose that figure, however, they are not required to recuse themselves from voting on certain matters. 

When other community members pressed further on these campaign contributions, Mr. Hubbard said Mr. Petrocelli is “far from [his] biggest campaign donor,” adding that he has only received $500 from the developer.