Proposed Melville extended-stay hotel wins $10.6 million in tax breaks from Suffolk County

The developer of a luxury extended-stay hotel proposed for the Route 110 corridor in Melville has won preliminary approval for $10.6 million in tax breaks over 15 years, officials said.

The board of the Suffolk County Industrial Development Agency voted unanimously to approve the incentives for the Beechwood Organization, which is best known for constructing more than 5,500 houses on Long Island.

Jericho-based Beechwood wants to build a four-story, 299-room hotel at 125 Spagnoli Rd. The Ferncliff Hotel, with a price tag of $137.5 million, would open in August 2027 and have at least 22 employees, the officials said.

In return for the jobs and investment, the IDA aid includes a sales-tax exemption of up to $5 million on the purchase of construction materials, equipment and furnishings as well as $5 million off property taxes for 15 years, or a 29% savings.

“We need the benefits in order to move this project forward … Without [them], I don’t think that we can,” said Steven Dubb, a Beechwood principal, citing the higher interest rates and tougher lending environment than existed four years ago when the hotel was first discussed.

He said the proposed Ferncliff would cater to a different clientele than the Huntington Hilton and Extended Stay America-Melville, the hotels that are directly across the street.

“There is so much demand from empty nesters, snowbirds and corporate executives who want to stay a couple of weeks, a month or two, or six months,” Dubb told the IDA meeting last month.

“There are people that have had house fires or floods who need somewhere to live while the repairs are being done as well as people who are moving to Long Island and need somewhere to land while they look for a house," he said.

The Ferncliff will offer studio, one-bedroom, two-bedroom and three-bedroom suites with hardwood floors and full-size appliances. There will be a restaurant and bar, fitness center, swimming pool, bocce courts, dog parks and a rooftop patio.

“There are some hotels [along the Route 110] but they’re not quite as nice as this,” said Dubb, whose father, Michael, founded Beechwood in 1985 and serves as CEO.

The Ferncliff would charge $194 per night, on average, or $5,820 per month. The projected occupancy rate would be 83%, according to an analysis by the research firm Grow America in Manhattan, which was hired by the IDA.

Beechwood already offers extended-stay suites at its apartment buildings in Westbury: the Selby and the Vanderbilt. Both were awarded tax breaks by the Hempstead Town IDA.

The Ferncliff project is compatible with efforts by Huntington Town to transform Melville’s Route 110 corridor into a walkable downtown with new uses for vacant office buildings. The hotel “is an amenity that’s going to make the corridor even more attractive,” said Daniel P. Deegan, Beechwood’s real estate attorney.

The Ferncliff would be built on land used by Poly-Pak Industries Inc. since the mid-1970s to manufacture plastic bags. Beechwood would pay $21 million for the property, according to the application for IDA assistance.

Peter Levy, president of Poly-Pak, confirmed that it plans to move its factory and warehouse off Long Island but will maintain an office in the region. He declined to say where the new production facility will be located.

Poly-Pak has about 300 employees “and all are welcome to come with us,” Levy said in an interview.

Kelly Murphy, the IDA’s acting executive director, said the Ferncliff “would be way, way different” from the surrounding hotels and therefore not undermine their sales. “This is not your common extended-stay hotel,” she said.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.