Pictured Above: Margaret Steinbugler and Theresa Dilworth outside Town Hall Dec. 11.

Only one member of the Suffolk County Industrial Development Agency board came out to Southold to hear what residents had to say about $2.7 million in tax breaks the agency is considering for the proposed luxury resort hotel “The Enclaves” on the Main Road in Southold at a hearing Monday, Dec. 11, but if the other members of the board read the minutes from the evening, they’ll get an earful of criticism.

In nearly two hours of testimony at Southold Town Hall Dec. 11, all but four people who spoke were opposed to the tax breaks, which include $245,000 in relief from mortgage recording taxes for the financing of the project, $1.8 million in sales tax abatements for materials and equipment and, most relevant locally, property tax abatements that would phase in payment of property taxes — which pay for local schools, governments, fire protection and EMS services — over the next 15 years, which would save the applicant an estimated $700,000 in property taxes over that time.

The project, proposed by Jonathan Tibbett, who has been involved in the stone industry and recently worked on North Fork projects to renovate Einstein Square, the North Fork Table and Inn and The Shoals hotel; architect Andrew Giambertone; and real estate investor Ed Glackin, is slated to include renovation of an existing house for use as a restaurant that will be open to the public on the 6.75-acre site. The project will also include a 40-room hotel, four guest cottages, another restaurant for hotel guests only, a spa, meeting rooms, lounges and 100-person-capacity event space in nearly 73,000 square feet of new buildings. The total cost is expected to be $44 million.

It was first pitched to the IDA at its Sept. 28 meeting in Hauppauge, far from the watchful eye of Southold residents, who have long been concerned about the project’s potential impacts on the community.

Andrew Gianbertone discusses a model of the project with Southold residents.

“There is nothing comparable on the North Fork. It is truly going to be one-of-a-kind, best in the nation, fully amenitized, with multiple restaurants,” Glakin told the IDA on Sept. 28. “We’re really trying to be of the North Fork, showcasing the oysters, and the wines and the farms and the natural beauty.”

He added that the project is now expecting to face double-digit interest rates and rising construction costs given the current economic climate. The property owners also own a neighboring property, he said, where they may be able to provide employee housing.

“Without these benefits, the project will not move forward,” said Dan Baker, a consultant to the applicants, at the Southold hearing, after which the overflow crowd burst into applause at the prospect of it not happening.

IDA Chairperson Sarah Lansdale was the only member of the IDA board present, along with the agency’s attorney and Acting Executive Director Kelly Murphy.

“This project is absolutely, completely the wrong project for this government-backed support,” Southold Planning Board Vice Chairman James Rich told IDA representatives. The Planning Board granted the project conditional approval in the summer of 2023. “It was approved by the ZBA and our Planning Board because, legally and zoning-wise, it was almost impossible to deny their application. We believe this is the worst project that has ever come before the Southold Town Planning Board. It offers nothing beneficial to our community and residents.”

He added that, of the permanent 51 jobs developers plan to provide, just 11 will be well-compensated, with the rest having an average salary of $33,993 per year.

“Those are poverty-level jobs, ” he said.

Suffolk County Legislator Al Krupski, who will become Southold Town Supervisor in the new year, said he hopes the verbatim transcript of the hearing is provided quickly to other members of the IDA who did not attend.

“So noted, the IDA board did not actually come here to consider this,” he said. “Take this very seriously, because we do.”

“A lot of people are going to speak to the lack of public benefit here,” he added. “This is a private development, for profit, but their property tax relief is going to be spread out throughout the entire community. Suffolk County lives on sales tax for revenue. Why would we forego all this sales tax? … More development adds more pressure to schools, volunteer firefighters, police and more traffic.”

David Levy of Laurel, who said he had once served on an Industrial Development Agency, said that “every applicant says ‘if we don’t get our benefits, we can’t do our project.”

“An IDA is not allowed to do a project unless it’s for the benefit of the community. The applicant must say that. They all say that,” he said.

He added that he attends a lot of civic meetings, and at those meetings “nobody ever says ‘You know what we need? A luxury hotel in Southold. It never comes up.’ If you needed a hotel, it would be booked a lot, and you would be able to pay your tax bills just like everybody else.”

The existing house is slated to be renovated for use as a restaurant.

In its application for tax benefits, developers said the high-end project “will be very expensive to construct and equip,” citing a $2 million on-site sewage treatment plant and design elements and materials that “could be replaced with less expensive alternatives but the result would not be consistent with the caliber of resort that will be The Enclaves.”

Many in attendance took issue with the need for tax breaks for high-end design elements.

“Because they can’t afford that quality of doorknob or faucet, we’re giving all this money for a luxury item?” said Carol Brown of Southold. “They’re taking $430,000 out of the schools (over 15 years). I’m a former school administrator… In general, I’m very much against giving money to the rich so the rich can get richer and the poor can get poorer.”

Anne Murray of East Marion said that she’s spoken with many local business owners who’ve told her that tourism has decreased quite a bit since Southold was a pandemic-era hot spot.

“That’s a warning, flashing signal, I think, for the developers,” she said. “It’s outrageous that the number of people in this town suffering food insecurity has doubled.”

She urged the IDA to make sure in the future that residents of local towns and villages receive advance warning before it considers tax break applications.

Theresa Dilworth of Mattituck, a tax attorney, took issue with the developers’ statement that its financial returns would be ‘marginal,’ adding that their own projections found that total net cash flow after expenses would be $18 million over the next 15 years. She added that about $7.5 million in hotel taxes were included as expenses, when hotel taxes are surcharges paid by people who stay at hotels.

“It appears to be financially feasible, and providing tax abatements will, in fact, constitute undue enrichment to the developers,” she said.

Nancy Butkus of Southold said she didn’t see how the project met the IDA’s goals stated on their website of promoting transit-oriented development, housing opportunities and walkable downtowns.

Ellen Zimmerman of East Marion said the fact that 40 of the 51 jobs are minimum wage jobs is not consistent with the applicant’s claim of “high cost labor,” and added that many local businesses have already shortened their hours because of lack of available workers.

“Tourism has made our property values so high, there’s no affordable housing in the area,” she said. “Local businesses have declared the lack of workers as their most important problem.”

Jan Nicholson of Peconic said that CAST, a community support non-profit in Southold, is feeding 1,308 families every day — 3,200 people, one in eight people in Southold Town.

“Ninety percent of those families are working families,” she said. “This project is just adding more jobs at that very low end. These people will have one convenience — The Enclaves is close to CAST. They can walk down the street and get food.”

Margaret Steinbugler of Southold said the project lacks several features the IDA is supposed to consider in its decisions, including support from local government officials, a market study that doesn’t compare the hotel to other North Fork hotels and no commitment to LEED green building standards.

“It’s really hard to believe that a $44 million project won’t be built if it doesn’t receive $2.7 million in tax incentives,” said Katie Stokes of Southold. “They strike me as too sophisticated for the whole thing to fall apart if they don’t get $2.7 million. If they pay their full tax bill, they can make a difference in this town. We should not be forgiving millions of dollars. Lots of us make plans, and costs go up and we make alternative plans. We’re asking them to do the same thing.”

“The forgiveness of taxes, I think, is horrendous,” said Walter Strohmeyer of Orient. “It will change the environment of the little village of Southold, and the Town of Southold, drastically.

Paul Romanelli of Cutchogue struck a different tone as the hearing was winding down, stating that he believed most of the people who spoke before him were addressing issues like planning and zoning, not the tax breaks, after being told by the IDA that zoning and planning issues weren’t within the purview of the comments they would consider.

“They’ve invested in four other projects in town — buildings that were falling down and decrepit and dumpy,” said Mr. Romanelli, whose business, Suffolk Security, provides alarm systems on the North Fork. “I work with a lot of hotels out here… all of them are booked solid… I think this project is good for the town and can make a difference.”

Vincent Guastamacchia of Southold said that overnight visitors are “what we need in Southold for agriculture to sustain.”

He added that the property owners are only paying $14,000 per year in real estate taxes now, and will be paying more than that, even with the tax abatements, once the site is developed.

“If we have to wait 15 years (for the tax revenue), I believe we should start now to get there,” he said.

John Ingrilli of Cutchogue, a partner in the Peconic Bay Yacht Club, a catering hall on Mill Creek between Southold and Greenport, said that most of the people who have events there buy local agricultural products and local gifts for their guests, and guests also “pay sales tax and support the restaurants and stores that are currently here.”

“They’re here not just for the event,” he said. “That brings a lot of dollars to this community.”

Written comments are being accepted through Jan. 16, 2024 at 3 p.m to info@suffolkida.com or by mail to Suffolk County Industrial Development Agency, 100 Veterans Memorial Highway, Third Floor, PO Box 6100, Hauppauge, NY 11788.

The materials presented to the IDA by the applicants are online here under the Sept. 28 meeting tab. Videos of both the Sept. 28 meeting and the Dec. 11 hearing are on the IDA’s YouTube channel.

Beth Young
Beth Young is an award-winning local journalist who has been covering the East End since the 1990s. She began her career at the Sag Harbor Express and, after receiving her Masters from the Columbia University Graduate School of Journalism, has reported for the Southampton Press, the East Hampton Press and the Times/Review Media Group. She founded the East End Beacon website in 2013, and a print edition in 2017. Beth was born and raised on the North Fork. In her spare time, she tinkers with bicycles, tries not to drown in the Peconic Bay and hopes to grow the perfect tomato. You can send her a message at editor@eastendbeacon.com

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