Oheka Castle auction prompts anxiety in the neighborhood around it

Dozens of condos? A new hedge fund owner? 

With Oheka Castle up for auction next month, speculation is swirling over the future of the storied property. It's raising fresh concern among neighbors about what will become of their community.

An auction of the historic Huntington property, which is in the midst of bankruptcy proceedings, is scheduled for Oct. 27, according to federal court filings. 

One thing is nearly certain — dozens of condos rising on the roughly 21-acre castle grounds. In 2023, the Huntington Town Board authorized plans for 95 condos at Oheka, and real estate experts say the development rights hold the key to the estate's value.

But those who live near the castle, nestled in the Cold Spring Hills neighborhood, say they're uneasy about an ownership change.

The neighborhood, tucked neatly north of Jericho Turnpike, comprises stately homes on narrow leafy streets next to the Cold Spring Country Club.

“The way Oheka goes, so goes Cold Spring Hills,” Brian Block, who lives in Cold Spring Hills, told Newsday. 

Gayle Snyder, chair of the Cold Spring Hills Civic Association, which represents 215 households, said neighbors are worried about a change in ownership.

“Of course, the whole neighborhood is very distressed about it; we’re very sad. Gary put a lot of money, time and energy into that building, and it’s scary for the neighborhood," Snyder said, referring to Gary Melius, who purchased and restored the property. 

Looking for a 'crown jewel'

Kahn Property Owner LLC, the entity that owns Oheka Castle, filed for federal Chapter 11 bankruptcy protection last year in a bid to hold off foreclosure.

Melius, 82, has an ownership stake in a group that controls Kahn Property Owner LLC, court filings show. Melius purchased the property in 1984 and runs it. Over the years, Melius restored the castle into a top destination for weddings and became a top political power broker. The property was famous for its Monday night poker games with VIPs and over the years hosted political fundraisers. Taylor Swift filmed the music video for "Blank Slate" there in 2014.

Joseph S. Maniscalco, the lawyer for the LLC, said Melius owes about $60 million to investment firm Taconic Capital. Melius also owes between $8 million and $10 million to unsecured creditors and for professional fees, Maniscalco has said.

On the auction block will be the real estate, development rights and hospitality operations. Maniscalco said as part of the court-approved bid procedures for the auction, all weddings booked through March 31, 2028, will be honored by the new owner.

As for the auction, Maniscalco said in an interview he’s looking to attract a developer who would eventually partner with a "high-end" hospitality group to make Oheka a "crown jewel."

"It’s going to be the place to be," he said.

Condos on tap

In March 2023, the Huntington Town Board eased the path for the addition of condominiums to the castle grounds. The board approved an additional use permit for Kahn Property Owner LLC, allowing the entity to build a four-story condominium with 95 units on the west side of East Gate Drive, north of Colonial Drive. It was to be called Residences at Oheka II.

At the time, the units were expected to start at $1.8 million.

Town spokeswoman Christine Geed said the approval is still in effect. She said in an email that “the applicant” has not yet completed a site plan application with the planning board, which is the next step in the process.

“If a new owner completes the site plan application and is granted approval by the Planning Board, the housing development could proceed,” Geed said. Her email said the owner “would have to comply with all the conditions established by the Town Board in approving the use.”

'A long game in mind'

Despite the pre-approvals, a new owner could face hurdles, said James Izzo, a licensed real estate broker and a trustee for Northport Village.

“What he was approved for yesterday may not fly today,” said Izzo, owner of Cow Harbor Realty in Northport. “You have different administrations and new people can get involved who could put up roadblocks and speed bumps.”

He speculated that a hedge fund or a group of investors could purchase the property.

“The entity that is going to buy that has a long game in mind,” he said.

“It boils down to numbers and we’re talking some serious numbers. If people want a return on investment, it’s going to be a long-term play.”

Bram Weber, an attorney with the Weber Law Group in Melville, said the castle, with a restaurant and luxurious catering hall for hosting high-end venues, holds significant value. But he said the real money is in the condominiums.

“The value to be unlocked are the development rights," Weber said in an interview.

Concierge Auctions will oversee the sale, which will be held both in-person and virtually in New York City.

'Worth saving'

Block, who lives in the neighborhood, said his biggest concern was the impact on traffic on the area’s narrow back streets.

“If they put up condos, that’s going to be a lot more in-and-out around here. And there’s hardly any streetlights because we kind of keep it the old-fashioned, quiet way,” he said.

Block described Oheka as a neighborhood linchpin, telling Newsday the castle’s upkeep has an effect on the whole neighborhood.

Barry McLaughlin, who also lives near Oheka, said he’s concerned about whether Melius’ departure will spell the end of Christmas and Easter events that are popular with neighborhood kids.

“The Easter egg hunt at the castle, that’s just great for the kids and the community,” he told Newsday on Thursday. “We’re just hoping that things like that continue with whoever the new owner is.”

Town Supervisor Ed Smyth said that if there is going to be a new owner, he’s looking forward to working with them to “make sure the legacy of preservation is carried on and that a financially viable project is built there."

"It’s a historic site worth saving," Smyth said.