Atlantis reps: Tax breaks keep downtown aquarium’s doors open

The Long Island Aquarium would go out of business if it had to pay its full property tax bill, according to representatives of its parent company, who made a pitch to the Riverhead Industrial Development Agency yesterday.

“Based on our assessed valuation we’d be paying over $900,000 per year in taxes. We could not afford that. We would have to close our doors,” Bryan DeLuca, executive director of Atlantis Holdings, told the IDA board during a public hearing.

Atlantis Holdings owns and operates the L.I. Aquarium, Sea Star Ballroom and Hyatt Place East End. It also owns Treasure Cove Marina and the Jerry and the Mermaid restaurant site, as well as properties on Ostrander Avenue purchased for parking purposes.

Among the financial benefits the company requested yesterday was a 10-year extension of property tax abatements for the aquarium property and additional abatements and exemptions for a planned restaurant and boutique hotel across the street.

The company currently pays $355,000 in annual property taxes — special district taxes which are not exempt, such as the business improvement district, the parking district, the street lighting and sewer districts.

Yesterday’s hearing was called on the application of Atlantis Holdings and J. Petrocelli Development Associates for financial assistance in connection with the proposed $9 million renovation of the Preston House at 428 E. Main St. and the construction of an attached five-story, 20-room “boutique” extended-stay hotel.

The assistance sought includes: an exemption from real property taxes on the restaurant and five-story boutique hotel; a 10-year extension of the real property tax exemption of the aquarium facility; refinancing the $15.25 million debt on the aquarium facility; a mortgage tax exemption, and a sales tax exemption in connection with the renovation and construction of the Preston House and new hotel property.

We brought people here but the town didn’t grow with it

Joe Petrocelli, a principal in Atlantis Holdings and J. Petrocelli Development Associates, told the IDA board that progress in downtown Riverhead’s long-sought revitalization has been disappointing.

“We brought people here but the town didn’t grow with it,” Petrocelli said. “The town is still empty. The aquarium was intended ignite the town. I quite frankly still don’t see that. Sometimes I feel very alone here,” Petrocelli said.

Petrocelli said in order for an aquarium to thrive and continue to be a tourism magnet, Riverhead needs to have other attractions for people who are visiting the aquarium, including shops and restaurants on Main Street, within walking distance.

“We need better shopping experiences. We need to get people to stay, to give them other reasons to be here,” he said.

“But my family has so much in the game here, we’re not going anywhere.”

DeLuca said the company is operating on “razor-thin margins” due to high overhead, especially its utility costs, which are about $1 million per year.

The aquarium’s bottom line is dependent on 100 days of the year — summer and school breaks, when schools are not in session.

“If we have a snowstorm during a holiday break, it hurts,” DeLuca said. “There were years that the Petrocelli and Bissett families have had to put their own money into the business to keep it going,” he said. Joe Petrocelli has never taken a salary from the business in its 18 years of operation, DeLuca said.

“We have operated on the cusp.”

DeLuca, who said he’s done extensive research into marketing the aquarium, expanded on Petrocelli’s comments about downtown Riverhead.

“People come to an aquarium for two or three hours. Other successful aquariums all have thriving, walkable downtowns,” DeLuca said. “People who travel to an aquarium all want other things to do nearby.” Visitors to the aquarium, who are generally traveling with children, aren’t going to go to the aquarium and also go shopping at Tanger or pumpkin-picking, DeLuca said. They want to walk to shops and restaurants. “We need a thriving, walkable downtown,” DeLuca said.

He discussed his efforts to boost the downtown district and help create the kind of downtown he said the aquarium needs. They include founding the East End Tourism Alliance and producing events such as Paddle Battle and a craft brew festival on the riverfront.

Riverhead’s original plans for aquarium

Riverhead Town bought the site where the aquarium now stands from Riverhead Building Supply in 1995 for $1.3 million.

It rented the property to a nonprofit organization, the Okeanos Ocean Research Foundation, which hoped to build an aquarium there, and ran a marine mammal and turtle rescue program on the property. The town planned to float $30 million in bonds to finance the construction of an aquarium, but Okeanos, mired in debt, could not meet its payroll or expenses, defaulted on its agreement with the town.

Some of the Okeanos board members founded the Riverhead Foundation for Marine Research and Preservation in 1996.

The town sold the site to Petrocelli and Bisset in 1999 for $1.75 million.

It was not producing any property taxes and was contaminated with kerosene and other chemicals, Petrocelli said at yesterday’s hearing.

The town added the property to the downtown parking district and promised to provide parking for the aquarium’s visitors, a promise the town has failed to keep, according to the applicant’s attorney, Eric Russo. The company purchased other property on Ostrander Avenue for parking purposes, he said, even as it build the hotel and ballroom.

The company is also asking the town to add the new hotel and restaurant to the parking district, which would eliminated the requirement that it provide off-street parking on site.

That matter, as well as the design and dimensions of the hotel building and the renovation of the Preston House itself, are matters to be decided by other town entities, not the IDA, the board’s attorney Richard Ehlers reminded the board and public at the hearing.

The Riverhead Foundation, with the support of Atlantis, continues to successfully operate at the site. Atlantis provides free rent, a research vessel, a 4×4 truck and $100,000 a year, Petrocelli said. The company will continue to support the foundation, he said.

“We support the foundation, we support the town,” he said.

Russo submitted letters of support for the application from Riverhead business owners Kyle Conklin of L.I. Ice and Fuel and Kevin McKillop of Riverhead Beverage. He also submitted a letter of support from the Rotary Club of Riverhead.

Support, opposition and a call for more time

Jamesport-South Jamesport Civic Association president Angela DeVito asked the IDA board to keep the hearing open to allow the public more time to review the proposal. She noted that the hearing notice was published in the newspaper on Dec. 24, which was followed by a three day weekend and then an abbreviated work week due to the New Year’s holiday.

“Essentially there have been just five working days on which members of public could have retrieved information” at town hall, DeVito said. “Please put your decision off. Perhaps convene again next week or the week after, to give the public time to review and make reasoned comments.”

John Peragine, owner of PeraBell East Food Bar, which opened on East Main Street in June, spoke in support of the application.

“If it wasn’t for the overflow from the aquarium and the hotel, we’d be on rocky footing,” Peragine said.

Peragine, an owner of PeraBell Food Bar in Patchogue for nine years, said Riverhead reminds him of Patchogue a decade ago.

He said a hotel and aquarium in Patchogue would have made a huge difference there. In Riverhead, without the hotel and aquarium he might close his restaurant from January to March because there’s not a lot going on downtown.

“I fully support of this,” he said. “It’s great for Main Street and great for business.”

But not everyone who spoke saw it that way.

Colin Palmer of Aquebogue read a letter from his mother, Christine Richard Palmer, who is the executrix of the estate of her mother, Elizabeth Crabtree Richard.

In the letter, Christine Richard Palmer told the board to consider what the aquarium has “meant to the surrounding area,” in terms of its impacts with parking and litter. She said her parents’ home, where she grew up, adjoins the proposed Preston House hotel site on the north.

“In 2011, it was assessed at $550,000. Today we have it listed at $350,000 and we can’t even get an offer of $300,000 for it,” she wrote. “It used to be a wonderful neighborhood.

Jane Crabtree Stark, Palmer’s aunt, whose sister lived in the house next door, took the podium to voice her opposition to the proposed new hotel.

“I am a 60-year resident of the Town of Riverhead. My husband [N.Y. State Supreme Court Justice Thomas Stark] was born and died here. I have also seen the neighborhood go down and I have been horrified,” Stark said.

“I could barely visit my sister there was always so little parking available,” said Stark, who relies on a walker to get around. “There’s no parking anywhere
because so much is taken up by the aquarium.”

She said it would be wrong to allow the hotel to be built “right up to the property line.”

The IDA attorney later said that was inaccurate; there are proposed setbacks of in excess of 20 feet, he said. In any case, that is a matter for the planning board, which has jurisdiction over site plan review.

The IDA chairman Tom Cruso closed the meeting, but the board then considered if it should be reconvened or held open for written comment, which is what the board ultimately decided.

The hearing record was left open until Jan. 10 for written comment and the board agreed to meet again on Jan. 12 to act on three resolutions: one would grant the mortgage tax exemption on the aquarium’s refinancing; one would approve the Preston House exemptions and abatements; and a third would extend the aquarium’s abatement by 10 years. (It would otherwise expire in four years, Ehlers said.)

“This is the quintessential public-private partnership,” board member Dawn Thomas said. “I’m fully in favor of all three.”

The other board members, when polled by Cruso, all said they felt the same way.