Editor’s Note 7/24/25: Documents associated with the application are now available here and here.
The Riverhead Town Board will likely vote in August to approve an agreement for the Petrocelli family’s development companies to build a new Town Square in downtown Riverhead, along with a five-story ‘branded’ hotel adjacent to the square.
“It could be as quick as Aug. 5 or Aug. 19,” Town Supervisor Tim Hubbard told a crowd that gathered to weigh in at a hearing July 22 to determine whether Petrocelli Riverhead Town Square, LLC, a new Limited Liability formed by J. Petrocelli Development Associates for the project, is “Qualified & Eligible” to purchase the property.
The project, which is likely to reshape the face of Riverhead’s downtown, makes use of three Main Street properties the town purchased in 2021 with the intention of creating the Town Square, along with portions of municipal parking lots alongside the Peconic River and behind the East End Arts campus just to the east of the properties.
The creation of the Town Square was one of the goals of the town’s Comprehensive Plan update adopted last year, which included community input on what the public would like to see at the site, though a hotel wasn’t a use the public had advocated for. A market study prepared later by the town included a recommendation for hotel and mixed-use development.
Two buildings at the site have already been torn down to make way for the Town Square, which is slated to include a playground and an amphitheater. It would be designed with terraced tiers to move it out of the floodplain, stepping up gradually from the riverfront, at 4 feet of elevation, to the 13 foot elevation of Main Street.
A third town-owned property, which currently includes a building that houses a popular bar, Craft’d, would be sold to Petrocelli’s new LLC for just over $2.6 million, along with slivers of adjacent properties, in order to build a 76-room hotel, with 12 penthouse condos on the fifth floor, three retail shops and a restaurant facing onto the Town Square, and parking spaces for the condos under the building. The Town Board has already voted to terminate Craft’d’s lease in anticipation of the demolition of the existing building.
Petrocelli’s attorney, Eric Russo of VanBrunt Juzwiak & Russo, PC, told the town board at the hearing that the developers estimate the project will cost nearly $32.7 million, and they are seeking financing from three sources for $19 million in construction loans in anticipation of receiving grant funding.
The town has received a significant amount of grant funding for the project, including a $10 million New York State Downtown Revitalization Grant and a $25 million federal Rebuilding American Infrastructure with Sustainability and Equity Grant.
The proposed contract, the only document associated with the project available for public review before the hearing, requires that the developer apply for tax abatements from the Riverhead Industrial Development Agency, and says they will be paid $150,000 per year for ten years to operate and maintain the Town Square.
Joseph Petrocelli, the principal of his family’s development company, and his business partners, highlighted the company’s commitment to Riverhead, which began with its construction of Atlantis Marine World, now the Long Island Aquarium and Exhibition Center, 25 years ago. The company also constructed the Hyatt Place hotel and Sea Star Ballroom adjacent to the aquarium, renovated a historic building as a boutique hotel, Preston House, across the street from the aquarium complex, and has been involved with the renovation of several Riverhead Town-owned properties, including the new Town Hall.
Mr. Petrocelli said his company’s involvement in Riverhead has always been about “kids and families,” saying that, while he believes the Town Square is a “risky investment,” “I think we know more about this town than most developers, and I think that will make this a very successful project.”
He said the hotel building would include three retail spaces of about 900 square feet facing onto the Town Square, and a full-service restaurant on the back of the building overlooking the river.
“We propose to build a branded hotel, and are in conversation with some of the top branded hotels that you know about,” said Mr. Petrocelli at the Qualified & Eligible hearing.
In the architectural renderings prepared by town consultant Urban Design Associates, the restaurant’s name is Swezey’s, a nod to the defunct department store of the same name, which long anchored Riverhead’s Main Street and closed in 2003. A portion of the Swezey’s complex was demolished in order to build the Town Square, though Swezey’s original building remains and will be redeveloped on the west side of the Town Square by the Long Island Science Center.
“Swezey’s was a big part of our town, and I think we need to carry that recognition forward,” said Mr. Petrocelli, adding that, when he initially began building in Riverhead, “the idea of an aquarium gave us an attraction, but it didn’t give us a destination. The more attractions we create, the bigger the destination. That’s going to fill hotels and bring people downtown.”
Public reaction to the proposal, which was solicited after an approximately hour-long presentation by the developers, was mixed, and Town Board members seemed visibly irritated with many who questioned it.
Town Supervisor Tim Hubbard repeatedly told speakers who questioned the project to stick to a discussion of whether J. Petrocelli was “qualified and eligible,” though many speakers said they had no way to tell if the firm was qualified and eligible due to lack of access to documents.
Mr. Russo, the developers’ attorney, read a letter from J. Petroccelli’s accountant of 20 years, Steven J. Giammarese, that, based on audited financial statements, he certifies the companies have “financial resources to successfully undertake and complete the Riverhead project.”
No financial information was included in a bound PowerPoint presentation given to the press prior to the hearing, which included numerous photos of Petrocelli’s other projects and architectural renderings and floor plans of the Town Square project.
“The only document available publicly … was the 130-page proposed contract,” said Angela DeVito of Jamesport.
“We were treated to a great history, and no doubt Petrocelli has done great things all over Long Island,” she added, but pointed out that the LLC for the town square project is a brand new company and “we don’t have information about that LLC’s projects and finances anywhere.”
“The information that has just been presented doesn’t give us the opportunity to ask questions and have discussions and dialogue, which is what a Q&E hearing should be about,” she said.
Mr. Hubbard said that information would be posted on the town’s website, and the public can send in written comments until Aug. 1, which will be entered into the public hearing record.
Ron Myers, who has lived in Riverhead for 40 years, said he “remembers when downtown Riverhead was Downtown, and we lost that,” adding that when Petrocelli began building in Riverhead 25 years ago, that began a revitalization that led Forbes magazine to list Riverhead as a top place to visit in 2023.
“Based on that, I think we should give these gentlemen a chance,” he said. “We’ve seen what Westhampton Beach, Greenport and Patchogue have done. It’s time we stop being the laughingstock of Long Island and move forward with this plan.”
Richard Wines of Jamesport, the chair of the town’s Landmarks Preservation Commission, said the Commission is “delighted to see the Town Square and hotel proposal. We believe it has the capability of being a big component of enhancing the historic nature of downtown Riverhead.”
He added that Petrocelli has “really done wonderful things for preserving Riverhead’s historic fabric, and that the project includes raising the 19th Century East End Arts campus just to the east of the proposed hotel, out of the floodplain.
“Those are several of the most important historic buildings downtown. This project has the ability to enhance that, shifting the buildings, giving them more air, getting them up out of the floodplain and reconfiguring them to make them more useful,” he said.
John McAuliff of Riverhead has frequently commented about the massing of the hotel building, which he said at the hearing would dwarf neighboring properties.
When Mr. Hubbard asked him to stick to commenting on whether Petrocelli is qualified and eligible, Mr. McAuliff said the lack of information makes it “very hard to have a full discussion and conversation about what this project means.”
“I hope in the course of this, we’ll look at the fundamental question of whether the people of Riverhead want to have a third hotel on Main Street,” said Mr. McAuliff. “I wish he would have come up with a two-story project that would maintain Craft’D.”
He added that the East End Arts campus, which will be between the hotel and another five-story building being built by Heatherwood, “is now going to be between two five-story buildings. It is going to be in their shadow, literally and figuratively.”
Councilwoman Denise Merrifield pointed out that East End Arts Executive Director Wendy Weiss had submitted a letter supporting the project, but Mr. McAuliff questioned whether that letter was written under duress.
“There are costs in the way you are approaching this,” he said, making clear that he was referring to the unquantifiable disruption to the community.
“I have a PhD in history, but I concentrate on people,” said retired Suffolk County Community College History Professor Barbara Ripple. “What I heard through much of this conversation was money. I understand that’s a big word today. The second thing I heard today was ‘tourists.’ What about the people of Riverhead, the residents? A five story building on Main Street — is that good for residents? Are our taxes just going to drop into nothing? I don’t think so.”
“I feel this Town Square project should be open to other bidders, to invite competing visions that might better serve the community,” said Gina Ristau of Aquebogue. “I strongly oppose another five story building on Main Street.”
She added that the hotel building has just 12 parking spaces, for the condos, while the Town Square would remove numerous parking spaces from near the river. A parking garage is proposed for an area of First Street north of Main Street, but it is not as far along in the development process and will not be build by the time the Town Square opens, if it meets its timeline. Mr. Petrocelli said his company would like to begin the 14-month construction in November of this year.
“I can’t imagine either of my adult daughters wanting to live in that environment, especially with the current kind of people wandering around the streets after dark,” added Ms. Ristau. “Southold and Greenport have put a lot of thought into what they were doing. What historic town has five-story buildings on its Main Street? That’s what I want to know. Our parking is ridiculous downtown.”
“The presentation was dynamic, and the plans are very well done, but there’s no financial information,” said Claudette Bianco of Baiting Hollow. “That’s the ‘eligible’ part of ‘qualified and eligible.’ I haven’t seen anything that says ‘you’re eligible.’ And I wonder why you felt it was necessary to put in a provision in the agreement guaranteeing IDA benefits. They will use town resources — water, sewage and police. I don’t understand why you feel they need tax abatements. As a taxpayer, I’d like tax abatements too.”
Mike Foley of Reeves Park said that, while he believes “Joe Petrocelli is not only qualified and eligible, but I’m thankful for what he’s done for downtown,” he is concerned that much of the funding for the project is coming from federal sources at a time when the federal government is “clawing back” funding it has already allocated. He also said he believed more should be done to help Craft’D find a new home.
Mr. Hubbard said Town Community Development Director Dawn Thomas “has assured us this will not be affected by any money being clawed back by the federal government.”
“Not yet,” said Laurie Lauterbach of Aquebogue dramatically, referring to the potential for funding cuts, as she prepared to speak at the podium.
“I find you’re favoring people you know, and people you agree with,” she said to Mr. Hubbard, saying that he insisted that some of the people that didn’t agree with him keep their comments focused on the qualifications and eligibility of the application, and was favoring speakers who agreed with the proposal and “not giving the rest of the people the same consideration.”
“I find that abominable, but thank you for letting me talk,” she said.
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