July 22 hearing set for Town Square master developer
The qualified and eligible sponsor hearing for the designation of J. Petrocelli as master developer of the Town Square project is scheduled for Tuesday, July 22, at 6 p.m. and the 130-page draft of the agreement is now available for the public to review.
The Riverhead Town Board approved a resolution in April 2022 to designate J. Petrocelli Development Associates as master developer for the Town Square project. Joe Petrocelli has been credited for his previous contributions to Riverhead’s downtown revitalization, from the Long Island Aquarium to Hyatt Place East End to the Preston House.
If officially deemed the qualified and eligible sponsor for the Town Square project, the $2.65 million sale of three East Main Street properties to J. Petrocelli would be approved. The buildings at 117 and 121 East Main St. were demolished by the town in 2022, and 127 East Main St., where Craft’D eatery resides, may be acquired through eminent domain proceedings.
The Town Square project has six components: the upper and lower Town Square, including a proposed playground and splashpad; the amphitheater; “complete streets” or streetscapes; a boutique hotel; and a parking garage. This initiative is possible thanks to multiple funding grants the town has obtained over the years, including a $24 million federal RAISE grant and a $10 million state Downtown Revitalization grant.
Two historic East End Arts Council buildings at 133 and 141 East Main St. will be uprooted and relocated to create the “sustainable and flood resilient amphitheater” to be located on a portion of these parcels. The property’s grading will be changed to protect the campus from flooding and the EEAC will temporarily operate out of 206 Griffing Ave. during this construction period.
J. Petrocelli’s hotel project consists of a five-story, mixed used building with up to 76 hotel rooms and 12 condominium units, along with restaurant and retail space at 127 East Main St. and 12 underground parking stalls. The $2.65 million total price tag also includes funding commitments of up to $660,000 through grant applications made by J. Petrocelli for the hotel and Town Square projects. The contract stated the master developer would be responsible for the operation and maintenance of the Town Square for 10 years at a rate of $150,000 per year.
The contract stated J. Petrocelli may formally apply for a payment in lieu of taxes — or PILOT – an agreement from the Riverhead IDA “to secure economic benefits related to the project.” This means the developer would be exempt from paying standard property taxes in full, but would instead negotiate an agreement with the Riverhead IDA to make these payments in phases or increments.
In cultivating its Recommended Action Plan, or RAP, the master developer would work with outside consultants and town planning, engineering, water and sewer district staff to produce concepts, designs and a construction schedule. The RAP would also include any necessary zoning code amendments. Once members are identified for the Master Developer Project and the Town Project teams, the individuals will be responsible for meeting monthly, and within 30 days of the agreement’s execution, the team can establish a list of milestones and target dates.
The co-created RAP can be submitted within four months of the approval of the master developer agreement. A final RAP and related SEQR materials will be presented to the Town Board, then a timeline will be established on when it is expected to hit certain milestones in the project. The contract said “the RAP will include such reports, public input processes and analysis related to [the] Town Square Project and Hotel Project, which input is socially, environmentally and economically responsible, to ensure a sustainable development outcome.”
Potential environmental impacts would be considered by the Town Board, the agreement stated, and all the properties involved, including the hotel, are currently zoned for their intended uses and will not require any zoning changes.
Additionally, the document contains consulting agreements with J. Petrocelli that deems the company the construction manager for an amphitheater, a playground, public gathering space, walkways and other Town Square features. The town will pay the company 7% of the total construction costs.
J. Petrocelli will also agree to terms listed in a temporary non-exclusive license agreement for construction staging and construction parking. Portions of 121 and 127 East Main St. would be used for staging of material and equipment for the hotel development, as well as construction vehicle and employee parking.
These employees would access the hotel project site via Peconic Avenue to Heidi Behr Way, which is “specifically intended to avoid and/or minimize impacts to the business and residential community” near Main Street and not disrupt any historic and programmed events, such as Alive on 25, the Country Fair and Mosaic Festival.
Unless the master developer obtains special approval from the town, there would be no access to the hotel project site and construction staging area from Main Street to McDermott Avenue to Heidi Behr Way from 7:30 a.m. to 4:30 p.m.
The approval of a Utility and Drainage Easement Area surrounding the hotel project property would allow J. Petrocelli to construct, install, operate, maintain, repair and reconstruct necessary utilities and drainage facilities for the development.
The reduced compensation for the construction staging and parking areas, easement for utilities to serve the hotel project, and the easement for entering and exiting the hotel project parking to Heidi Behr Way would not exceed 7% of the total combined project cost for construction.
Amid questions about the public’s desire for a hotel, Annemarie Prudenti, deputy town attorney, said at a July 2 Town Board meeting that the hotel concept was recommended through a market study conducted in 2020 and the matter has been publicly discussed. In terms of the public parking garage portion of the project planned for the north side of Main Street, Ms. Prudenti clarified that Mr. Petrocelli would not be managing the parking garage.
She stressed that the master development agreement was “an arm’s length transaction,” with the Riverhead Town Attorney’s office taking the lead on negotiations with Mr. Petrocelli. The Riverhead Town Board did make “good recommendations” incorporated into the agreement, but Ms. Prudenti “did not dictate any contract provision, any term in the master developer agreement, or in the approximately 10 agreements annexed thereto and made a part thereof.”
“There’s a lot of different elements contained in the master developer agreement, and I’m confident that when the public reads all the exhibits annexed thereto, they will agree that it’s a very good agreement for the Town of Riverhead,” Ms. Prudenti said.
The full master development agreement is posted on the Riverhead Town website townofrivereadny.gov, under Divisions and Departments, and then the Town Clerk tab.
