Officials invited the public to “witness Riverhead history” at the groundbreaking ceremony at noon at 127 E. Main St.

This announcement comes four months after J. Petrocelli Development Associates was named the master developer by the Riverhead Town Board to construct the $32.6 million Town Square project.

“This has been a long time coming. It’s very exciting,” Mr. Hubbard said during the morning work session.

The plans include a five-story, 78,000-square-foot mixed-used building with up to 76 hotel rooms and 12 condominium units, along with restaurant and retail space and 12 underground parking stalls.

The town purchased three East Main Street properties for $2.65 million in a non-competitive sale over the summer.

It demolished buildings at 117 and 121 East Main St. in 2022, then acquired the former Craft’D eatery space at 127 E. Main St. through eminent domain after the owner accepted a $170,000 settlement offer in September.

The ceremony was originally scheduled for October but was postponed while town officials waited to confirm with the governor’s office on who could attend.

“We have all the dignitaries from the state, the county and different organizations that have funded this project will be present along with elected officials,” Mr. Hubbard said.

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This decision comes after the 70-year-old family-run construction firm gave a presentation on July 22 before the Riverhead Town Board and community members demonstrating why it believes the company has the necessary qualifications, expertise, and most importantly, the financial wherewithal to serve as the master developer and complete this extensive project.

Some applause broke out from the audience following the unanimous approval of the resolution, including from Joe Petrocelli and his attorney Eric Russo. Dawn Thomas, the town’s community development administrator, got emotional as she concluded the CDA portion of the meeting authorizing J. Petrocelli as master developer.

The town presented 20 letters from the community in the record, in which a majority expressed their hesitations or opposition for the project. Others showed their support in letters and public comment, including East End Arts, the Riverhead BID, Suffolk Theater owner Bob Castaldi, JJ Armory owner Joseph Oliver and Georgica Green Ventures president David Gallo.

“[We’re] very excited … It’s probably been four years in the making, but finally, we’re ready to go,” Mr. Petrocelli said after the vote. He added there may be an idea of a groundbreaking date in the next couple of weeks. Mr. Petrocelli previously said during his qualified and eligible sponsor presentation that he is looking to start the project as early as November.

Riverhead Town Supervisor Tim Hubbard addressed the audience and expressed his frustrations with some of the negativity surrounding the project, and specifically with community members requesting that the decision to appoint J. Petrocelli as master developer be pushed off.

The supervisor described those against the appointment as “the party of stagnation,” alluding to the idea that some people’s displeasure of certain political affiliations — specifically Republicans — are fueling the opposition to project.

“It seems every good thing that you want to do — everything that at the end of the day is the whole picture of Riverhead, and good for the whole of Riverhead — somebody just has to come out to oppose it, sometimes for no other reason other than I have an ‘R’ after my name, as opposed to somebody having a ‘D’ after theirs — and that’s wrong,” Mr. Hubbard said.

“This is decades in the making from when it first started … I can’t wait to get shovels in the ground for this project,” he continued. “What is best for the town of Riverhead is in the golden hand of Mr. Petrocelli, and the projects that he has built over the years and helped put Riverhead on the map.”

Now that J. Petrocelli has been deemed the qualified and eligible sponsor by the Town Board, the $2.65 million sale of three East Main Street properties to the company will go through without competitive bidding. 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 to allow for the $32.6 million construction of a five-story, 78,000-square-foot mixed-used building with up to 76 hotel rooms and 12 condominium units, along with restaurant and retail space and 12 underground parking stalls.

A petition has been filed to begin condemnation proceedings to acquire the leasehold interest property of Craft’D. At Tuesday afternoon’s meeting, the town board voted to approve a budget adjustment to make a $120,000 settlement offer to Craft’D’s owner SNR Bar 25 Corp.

Erik Howard, town attorney, said the town did get an appraisal, but it has not been finalized for litigation purposes yet. The $120,000 was based on this appraisal, as well as prior conversations with Craft’D, and will be presented Wednesday, Aug. 27, at the Central Islip courthouse, according to court filings.

“If we got to a number that both sides were comfortable with, we could do a settlement agreement, [which would] say the date they’re going to vacate and then we give them the money,” Mr. Howard said. “It really becomes up to [Craft’D] if it’s worth the cost of litigation to try to get more or if we can sort of come to a middle ground before we even file the petition.”

Following the July 22 public hearing, the town board requested Ms. Thomas, town attorney Mr. Howard, financial administrator Jeanette DiPaola and deputy town attorney Danielle Hurley to review and inspect certain pieces of J. Petrocelli Contracting Inc.’s financial information, as well as meet with the construction company’s legal counsel.

In a memo dated Aug. 1, the town personnel tasked with reviewing these financial documents determined they “sufficiently meet the criteria required” and demonstrated that J. Petrocelli Contracting Inc. and affiliates, including Atlantis Marine World LLC, possessed “sufficient monetary resources and available sources of funding to complete the proposed project.”

Some community members criticized town officials for not making this memo available to the public to review. Mr. Howard said the memo was filed with the town clerk on Aug. 1 and should have been posted to the town website; however, this information was available for the public to FOIL. The Riverhead News-Review submitted a FOIL request for this information, but did not receive it by press time.

Others who spoke at the meeting also found fault in the town board’s July 31 work session, where they claim board members “made their minds up” on Mr. Petrocelli being master developer the day before the public comment period ended. At that work session, town board members did give Mr. Howard the greenlight to draft a resolution to vote on Mr. Petrocelli’s appointment.

“Mr. Petrocelli may indeed be qualified and eligible to be the master developer, I’m not questioning that, but the sham and mockery you made of the legal process to reach that finding is deplorable. It underscores your disdain and disregard for public input,” said Kathy McGraw of Northville. “You made it clear your minds were made up the day before the public comment period closed, and you failed to share information that we the public were entitled to see and comment upon before a decision was made.”

Mr. Howard clarified that the CDA rules do not say the town board can’t form an opinion before the conclusion of an open comment period. Mr. Hubbard further stressed that no legal process was violated in the qualified and eligible hearing.

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(Credit: courtesy)

The purpose of the qualified and eligible public hearing is for the applicant to provide evidence it has the necessary qualifications, expertise and, most importantly, the financial wherewithal to serve as the master developer and complete this extensive project.

Joseph Petrocelli, head of the 70-year-old family-run construction firm, has been credited for his previous contributions to Riverhead’s downtown revitalization, from the Long Island Aquarium to Hyatt Place East End to Treasure Cove Resort Marina. His construction company has also worked to preserve three historic buildings on Main Street, including East Lawn House, Howell House and the Preston House.

The Riverhead Town Board approved a resolution in April 2022 designating J. Petrocelli as master developer for the Town Square project. If it is deemed the qualified and eligible sponsor by the Town Board, the $2.65 million sale of three East Main Street properties to the company would be approved without competitive bidding.

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 to allow for the construction of a five-story, 78,000-square-foot mixed-used building with up to 76 hotel rooms and 12 condominium units, along with restaurant and retail space and 12 underground parking stalls.

In a breakdown of its Riverhead Town Square Development budget summary, J. Petrocelli estimated the total project costs for the hotel would be $32.6 million, which includes the $2.65 million for land acquisition, $26 million in hard construction costs, $3.36 million for architectural and engineering work and other soft costs, as well as $603,000 in contingency.

A construction loan of $19.6 million, $12 million in developer equity and the $1 million Restore NY Grant awarded to J. Petrocelli in 2024 would cover these costs, according to the company’s presentation. Mr. Petrocelli said his company would coordinate with the town to create a Recommended Action Plan, or RAP, detailing plans for the development; set up a project team; and hold regular meetings to stay on track with established goals and milestones. The site plan process can also begin within 60 days of the study period.

If granted approval by the town, Mr. Petrocelli said he is looking to start the project as early as November. In the agreement, J. Petrocelli would be responsible for the operation and maintenance of the Town Square development for 10 years at a rate of $150,000 per year.

“Activation is the key word of the whole [Town] Square project … because we need to hand-pick and go after clients or people that will fill our space, that are going to create that activation,” Mr. Petrocelli said. “We’ve come a long way — I appreciate the opportunity to come here once again. [Let’s] try to make Riverhead great again.”

Alongside Mr. Petrocelli were his attorney, Eric Russo, leading the presentation; Long Island Aquarium executive director Brian DeLuca; Huntington-based architect Andrew Giambertone; Hyatt hotel manager Steve Schoeder; and Kevin Walsh, who would serve as chief engineer for the project. His nephews, John and James Petrocelli, also offered the public insight on the company’s history and overall mission.

Mr. Petrocelli said he is in talks with three international chain hotel brands that are interested in the Main Street project. The fifth floor of the proposed hotel will consist of 12 condominium units, ranging from studios to two-bedrooms, and dedicated parking for condo owners would be below a portion of the building, with access to Heidi Behr Way.

On the topic of parking, once the proposed First Street parking garage is completed, guests of the hotel would be able to park there. In the interim, Mr. Petrocelli said parking will be made available to guests behind The Suffolk.

In its projected revenue performance, the company has predicted a steady growth of economic revenue from the hotel project — from $5.2 million at 72% occupancy in its first year to $6.2 million at 78% occupancy by year 10.

In addition to the hotel portion, the Town Square project in its entirety has five other components: the upper and lower Town Square, including a proposed playground and splashpad; the amphitheater; “complete streets” or streetscapes; 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 raised and ultimately repositioned to make room for the “sustainable and flood-resilient amphitheater” on a portion of those parcels. The property’s grading will be changed to protect the campus from flooding and EEA will temporarily operate out of 206 Griffing Ave. during this construction period.

Mr. Giambertone said the hotel project building was designed with flooding in mind, which is why it is slated to be at a level 13 elevation, where the current Peconic riverfront is at a level 4.

Severals letters were submitted in support of naming J. Petrocelli the master developer of the Town Square project, from the Riverhead Chamber of Commerce, the Riverhead Rotary, Larry Oxman of the Long Island Science Center, Discover Long Island, Jerry and the Mermaid restaurant and East End Arts. The company’s accountant, Liberty Mutual, and TD Bank also provided bonding and other financial information to boost credibility.

Joseph Yaiullo, curator and cofounder of the Long Island Aquarium, said he experienced “being in the trenches” with Mr. Petrocelli when they were trying to get the aquarium off the ground, and said that without his vision, artistry and dedication, “there would be no Long Island Aquarium.”

Richard Wines, chair of the town’s Landmarks Preservation Committee, voiced his support for Mr. Petrocelli and the repositioning of the historic East End Arts buildings.

“We see this as a very positive way to enhance the historic fabric of downtown Riverhead,” Mr. Wines said. “I think this project has the ability to enhance [East End Arts], by slightly shifting the buildings, giving them a little more air [and] getting them up out of the flood plain.”

Those who came up to the podium to express concerns or opposition to the hotel project posed questions about any potential burdens to the taxpayers and the company’s option to apply for Riverhead IDA tax abatements and requested an extended public hearing to 30 days.

“The information that has just been presented does not allow us an opportunity to ask questions and have discussion and dialogue, which is part of what a public hearing on qualified and eligible should be about,” said Angela DeVito of South Jamesport. “What we will be able to do is write in comments, but not ask questions, so that we can act in a reasonable and responsible manner as residents of this town.”

Riverhead Town Supervisor Tim Hubbard said the open comment period will run for 10 days and end on Friday, Aug. 1. The full presentation from J. Petrocelli Development Associates is now live on the Riverhead Town website.

The post J. Petrocelli makes its case for Town Square master developer appeared first on Riverhead News 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.

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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.

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