Dispute Over Aquarium Tax Exemption Figures Draws Police to Riverhead Town Hall

Riverhead Town’s Industrial Development Agency approved tax abatement credits on the Atlantis Holdings’ plan to build a new boutique hotel and restaurant on East Main Street at a special meeting Jan. 12, as part of a series of proposed tax abatements that include a 10-year extension of tax exemptions on their existing aquarium and hotel.

Prior to a Jan. 4 public hearing on the application, the board had estimated the value of the tax benefits requested by aquarium owners Atlantis Holdings at about $1.15 million, but half an hour before the vote last night, they provided a new draft cost-benefit analysis that showed additional benefits valued at $7.85 million, after South Jamesport community activist Larry Simms questioned their original numbers, bringing the total to just over $9 million. Mr. Simms had estimated the value of the tax exemptions at $9.9 million.

About 30 members of the public showed up to question the board’s actions, but were told it was too late to speak because the hearing had been closed. The police were called to keep order as a heated discussion ensued, first in the board room and then in the lobby of town hall.

“I appreciate your all coming here, but there’s no part of this meeting to gather more information,” said IDA chairman Tom Cruso before the 10-minute meeting at which the board unanimously approved the extension of the tax exemptions.

At the Jan. 4 hearing, Joe Petrocelli and Bryan DeLuca of Atlantis Holdings told the IDA the aquarium may need to close its doors if it doesn’t receive the tax exemptions.

The IDA’s attorney, Richard Ehlers, explained that Atlantis Holdings is refinancing $15.25 million of the aquarium’s debt, and has a commitment to close the loan by this Friday. He said the aquarium’s bank’s low interest rate was contingent on the extension of the tax abatement and a mortgage tax exemption being offered by the IDA.

To Mr. Simms, this didn’t seem reason enough to push the IDA into a hasty decision. After the meeting was closed, he grabbed a podium from the corner, turned to face the audience with a thick sheaf of papers, and said he was calling the real meeting to order. While members of the IDA grumbled and asked him if he had permission to use the room, Mr. Simms and the gathered crowd eventually moved to the lobby of town hall so a Recreation Advisory Committee meeting could be held in the town hall meeting room.

“They say they’re operating on razor-thin margins. Maybe it’s true. Maybe it’s not. I’ve been asking for evidence since day one, but nobody does that. Nobody asks substantive questions,” said Mr. Simms as he stood in the hall with his papers, adding that he found it “offensive and contemptuous” that the board held a public hearing based on a draft cost-benefit analysis that was off by $8 million.

“How the hell do you have an agency that treats the taxpayers with such contempt?” he asked.

Mr. Simms told the crowd in the hallway that, while Atlantis Holdings told the public they pay $355,000 in taxes, the town’s tax receiver had provided him with figures that show they pay just $240,0155 in taxes.

Mr. DeLuca of Atlantis Holdings, who was in the hall for the discussion along with Mr. Petrocelli, interrupted Mr. Simms to say that he has cancelled checks to prove his company pays $355,000 in taxes, and asked why he was making a scene now when he could have spoken at the public hearing on Jan. 4. Mr. Simms was unable to attend that hearing.

Mr. Petrocelli then walked up next to Mr. Simms, staring him in the eye and walking around him.

“Do you like being in peoples’ faces?” asked Mr. Simms, visibly agitated, just as three police officers walked into town hall and escorted Mr. Petrocelli outside. Mr. Simms told the police that some people were having a quiet discussion in the hallway, and he’d leave it up to Councilwoman Jodi Giglio, who was in the building, as to whether the discussion could continue.

Ms. Giglio sat with the crowd and defended the aquarium for nearly an hour after that, as the police stood by.

“If we lose the aquarium, we lose everything downtown,” she said, adding that, when the aquarium opened, 70 percent of the stores downtown were vacant. Now, she said, just 25 to 30 percent are empty.

Neil Krupnick of Northville said he didn’t understand the logic that the vacancy rate of stores downtown was tied to the aquarium if aquarium attendance had decreased during the same time that more stores were occupied.

Ms. Giglio said the aquarium could chose to become a non-profit, after which it wouldn’t pay property taxes at all, but Mr. Simms said the Hyatt Place Hotel and the Sea Star Ballroom catering hall, as well as the proposed new construction of a boutique hotel and restaurant across the street, wouldn’t be part of the non-profit and would pay property taxes if the IDA tax exemptions were stopped.

He estimated their tax payments would then be more than $500,000 per year.

“I say let’s do it. Let them take the aquarium non-profit. We’ll be ahead,” he said.

The public notice of the Jan. 4 public hearing was placed just before Christmas, even though it was approved the first week in December, and Jamesport-South Jamesport Civic Association President Angela DeVito had asked at the hearing that it be held open due to the fact that few people had a chance to review the proposal over the holidays. Her request was denied.

“The business has a deadline, not the IDA,” she said Tuesday night. “They may lose their specific deal.”

“At the core of this is an agency that doesn’t do its homework,” she added. “Why are we waiting until two days before they have to go to the bank and close?”

Ms. Giglio seemed surprised when Mr. Simms told her the total value of the abatement was $8 million more than originally estimated.

“It’s $8 million?” she asked. “The fact that the information was not made available to the public is upsetting.”