The joint master developers of the long-anticipated revitalization project near the blighted Long Island Rail Road station area in Riverhead presented their financial and development qualifications last night in pursuit of an agreement to develop two multimillion dollar mixed-use buildings on municipal properties.
Representatives from RXR and Georgica Green Ventures (GGV), the two real estate development firms designated joint master developers of the project earlier this year, gave a presentation on their proposed project to the Town Board and the public during the “qualified and eligible” hearing process necessary under New York State Urban Renewal Law for the town to sell or lease property it owns in the area.
The developers have proposed building a four- and five-story, mixed-use building with 243 apartments, and “podium” parking on an internal portion of the ground floor, lined by perimeter uses on the two-acre, town-owned parking lot between Court Street and Railroad Avenue. Additionally, they proposed building a mixed-use, multi-level building with 36 workforce apartments, 332 public parking spaces and retail shops on a county-owned parking lot on Griffing Avenue.
According to the draft of the town’s master development agreement, the developers would acquire the town-owned site on Railroad Avenue for $7.29 million. The Town of Riverhead would then obtain the Suffolk County property on Griffing Avenue, part of which will be transferred to the developers for development of the mixed-use space. The other part of the property will be retained by the town as the public parking structure.
The town would commit $7 million from the sale of the Railroad Avenue site for development of the Griffing Avenue parking structure, according to the draft agreement.
RXR/GGV representatives gave examples of work on similar projects and outlined their plans to finance the total project cost of approximately $135 million. The developers plan to obtain a construction loan of around $70 million, around $40 million from the companies’ private equity funds, and around $16 million in financial assistance and grants from governments, according to Joe Graziose, RXR’s executive vice president of residential construction and development.
The project was recommended for $2.75 million in state Downtown Revitalization Initiative funding by Riverhead’s DRI local planning committee.
Under Riverhead’s rules and procedures for making a determination that a proposed purchaser or lessee is a qualified and eligible sponsor, last amended in June 2017, prospective sponsors must establish the following criteria:
- experience of the individual, firm or corporation with development, construction, management and financing of similar projects in size and scope to the proposed project;
- demonstrated ability to finance the acquisition and development of specific project proposed including the review by the CDA of pro forma financial statements for the proposed project, including sources and uses of funds, certified personal and corporate financial statements of the applicant sponsor, financial commitments of participating lenders, proposed security for the project, business plans and economic analysis of the project and past compliance with municipal laws, rules and regulations.
- demonstrated integrity and responsibility of the applicant sponsor as determined by the CDA based upon appropriate investigation by the Town Attorney and consistent with case law as reiterated in the Memorandum to Supervisor Phil Cardinale and Town Attorney Dawn Thomas dated March 12, 2004 from Randolph Mayer, Willkie Fair Farr & Gallagher, LLP;
- presentation of the applicant sponsor to the public at the prescribed hearing upon due notice at a public meeting of the CDA providing an opportunity for the applicant sponsor to present its proposal and ability to meet the established criteria for designation by the CDA as a “qualified and eligible” sponsor pursuant to Section 507 (2) (c) of Article 15 of New York State General Municipal Law.”
If the Town Board determines after last night’s hearing that the developer is qualified and eligible, the town can proceed to authorize the signing of a master developer agreement with RXR/GGV to move forward with the purchase of town-owned land.
The developers filed letters with the town clerk from lenders interested in financing the project and those that they are currently working with or have previously worked with; the companies’ chief financial officers to demonstrate the ability to supply private equity to the project and certifying the strong financial position of the firms; and recommendations from politicians and leaders of municipal agencies from municipalities that the groups have had successful public-private partnerships with.
The firms did not file with the clerk a business plan or economic analysis of the project, a certified financial statement from an independent auditor, financial commitments of participating lenders, nor proposed security for the project, according to the documents obtained via Freedom of Information Law. RXR-GGV-Documents
The firms also presented examples of projects they’ve developed similar to the proposed project in Riverhead.
Representatives from RXR pointed to the firm’s work on other major development projects in New York, including the 56-acre Garvies Point site in the City of Glen Cove, downtown in the City of New Rochelle and transit-oriented development in the City of Yonkers.
Similarly, GGV representatives pointed to its experience in its own developments, including transit-oriented developments in Speonk in Southampton Town and Amagansett in East Hampton Town, along with the firm’s previous experience in Riverhead with the Riverview Lofts project downtown. The two firms also have partnerships in several of these projects, Graziose said.
“What’s important to recognize is that RXR, GGV, this is not our first time together,’ Graziose said. “So we talked about Garvies, we talked about New Rochelle, we talked about Yonkers, we’re talking about Riverhead, we’re already partners in all these projects. And it’s very important that people recognize that we already have a relationship.”
“And when you combine our relationships, and you look at what we have in operation right now, we have combined over 8,000 units of apartments in operation, over 1,300 in construction, 3,400 in pre-development, 5,000 in our active pipeline,” which totals more than 18,000 apartments, Graziose said. “And just to put that into perspective, we’re talking about building around 240 here. So obviously, when we’re talking about our capabilities, I mean, this is not something that we haven’t done before.”
Erik Aulestia, a principal in the proposed project’s planning and architecture firm Tori Gallas + Partners, said the firm has a “significant amount of experience” in transit-oriented development, which he said includes more than 100 TOD projects in more than 50 cities.
Aulestia went through the proposal for the two mixed-use buildings, which also includes a plaza in front of the railroad station. He said the design considered downtown design and planning documents, including the pattern book. The development would make the area more “pedestrian friendly,” more walkable and connect it to Main Street.
“One of the things that we realized here is that while… you think of Main Street as being the front door, but for people who are coming on the train, this is what they see,” Aulestia said. “This is the front door. This is the image that people have of what Riverhead is about. So we wanted to recognize that and really create a welcoming front door.”
Graziose said the project will create more than 600 construction jobs and anywhere from 35-50 permanent jobs, depending on the use of the flex space in the mixed-use buildings. TOR-Railroad-St-TOD-Redevelopment-2
At the start of the hearing, Community Development Director Dawn Thomas gave the history of the journey to restore the blighted Railroad Avenue area — a goal since the corridor was designated an urban renewal area with the adoption of an urban renewal plan in 1997.
“This hearing is the culmination of 25 years of planning work and public engagement by the Town of Riverhead in an effort to bring the most blighted area of our town back to life,” she said.
She said planning documents commissioned by the Town Board since the urban renewal plan was adopted have recommended the addition of mixed-use development in the area. The town issued a request for qualifications seeking proposals for the transit-oriented development project in March 2021, and designated RXR/GGV joint master developers in February 2022. Proposals received by the town in response to the RFQ were vetted by a committee formed to review the proposals.
“I know it may have seemed quiet since then, but there’s been a tremendous amount of work done over the past several months to get us to this point in the town attorney’s office the CDA, the IDA, the towns consultants and National Development Council have been working continuously with RXR/GGV, as well as the County of Suffolk, who has been incredibly supportive of the project to refine the details of the plan funding sources as well as contracts the purchase and sale of various properties,” Thomas said.
The board responded positively to RXR/GGV’s presentation.
“It’s great to see this. You’re looking at Riverhead’s most blighted area,” Supervisor Yvette Aguiar said. “And it’s quite touching to see that two well-known developers, people who had a great reputation, who have the experience to develop TODs, who’s already developed here, have interest in us.”
“I think the key to the success of this is the access to the LIRR and what it will offer to this redevelopment and what it will bring to the town — not just in the Railroad Avenue area, but also in the new [town] square and bridged by the new Town Hall,” Council Member Frank Beyrodt said. “I think we have a really great opportunity here and these guys have made it pretty clear that they are going to do a great job.”
Council Member Tim Hubbard said that the area has been blighted for years and that the development is one of many that is helping to transform the town.
“If you look at the picture, the big picture of what this has potential can be, all these pieces are like pieces to a puzzle. And when they’re all completed and all done, including the town square, people are going to be begging to get into the Town of Riverhead to live here,” Hubbard said. “This is going to be an absolutely beautiful town. And to have this successful town you need amenities and there are many amenities that come with these projects.”
After the presentation, RXR and GGV representatives fielded questions from the public about the proposal. Reeves Park resident Mike Foley, who spoke through Zoom, praised the presentation, but also expressed concerns of safety in the area and the impact the project may have on the Riverhead Central School District.
“My concern here is that when we are building hundreds of units — not just this very large project, which is very impressive to me, and I support — but my concerns are how we deal with the growing pains, not only in the school system, but in security and parking,” he said.
Aguiar said that the town is addressing security concerns by planning to put a police substation in the area and “working behind the scenes” to enhance the department. Graziose said that the buildings RXR builds usually have cameras and security systems that stretch “well beyond the centerline of the streets” that local police departments have utilized.
Ashley Pope, a partner at the Riverhead Central School District’s counsel Guercio & Guercio, also emphasized concerns about the proposed development’s impact on the school district. She said that the development is in the Roanoke Avenue Elementary School enrollment zone and that the school is already at capacity.
Roughly a quarter of the apartments in both developments would be two-bedroom units, while half would be one-bedroom units and the other quarter studio units, the developer’s representatives said during the hearing.
“270 additional apartments could bring a significant influx of additional students, depending on the breakdown of the apartments,” Pope said. “Further, this is not the only redevelopment project contemplated for this area expected to bring in a significant increase in residential density.”
The development also plans to make an application to the Riverhead Industrial Development Agency for benefits that would “effectively keep the property tax exempt while increasing the district’s obligations that depend on support from property taxes,” Pope said.
“We urge the town to take a hard look at the district’s concern and consider as part of this qualified and eligible review the developers’ commitment to adequately assessing and mitigating the impact of this proposed development on the district financial and otherwise,” she said
Several other public comments during the hearing were from representatives of labor unions who urged the board to adopt a project labor agreement. The agreement would be a collective bargaining agreement between building trade unions and contractors, and ensure the construction workers are from Long Island. The board heard from representatives from Sheet Metal Workers Local 28, the Nassau Suffolk Building Trades Council and General Building Laborers Local 66. Master-Developer-Agreement
Correction 9/29/22: This article has been amended post publication to corrected two reporting errors. Approximately 600 construction jobs will be created by the construction of the TOD project, not 6,000. The Griffing Avenue mixed-use project is planned to have 36 workforce apartments, not 30.
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