Riverhead breaks ground on town square project

Onlookers whooped and applauded as an excavator punched through the facade of a commercial building on Main Street in Riverhead Friday, marking the start of a “transformative” $32.7 million downtown revitalization project there.

About 100 people gathered for the groundbreaking ceremony for the town square, a long-planned project designed to turn Riverhead into a destination by better linking the downtown area to the Peconic River via a public plaza with green space, an amphitheater, playground and new walkways.

“This project belongs to the people of Riverhead,” town Supervisor Tim Hubbard said Friday, moments before concrete came crumbling down. “For decades, residents have imagined a downtown that fully embraces the riverfront, supports local businesses and offers a welcoming space for concerts, community events and everyday moments with family and friends.”

Demolition began Friday on a building that formerly housed Craft’D, a cocktail bar that closed in September after settling an eminent domain deal with the town for $170,000.

It will be replaced by a five-story building with 80 hotel rooms, condos, retail shops and a restaurant, according to Joe Petrocelli, whose development firm was named the project’s master developer in August. Petrocelli said the hotel will be part of the Tapestry Collection by Hilton, an upscale boutique brand.

The public plaza will be flanked by the new Long Island Science Center on one side and Petrocelli’s mixed-use project on the other. Flood resiliency improvements are also planned, officials said.

Petrocelli’s firm is also handling construction of the town square plaza, playground and outdoor theater and will be paid 7% of construction costs, plus $150,000 annually for 10 years to maintain the square, according to an agreement with the town.

A 'game changer'

Riverhead has a mix of county, state and federal funding for the projects and was among the winners of a $10 million state Downtown Revitalization Initiative grant in 2022. The project also won a $24 million grant from the U.S. Department of Transportation last year.

New York Secretary of State Walter T. Mosley said the DRI program began in 2016 and has invested $1.2 billion in 151 communities statewide.

Mosley in an interview said the project will be a “game changer” for Riverhead.

“It has the rippling effect of bringing more life back to the downtown corridor of Riverhead,” he said. “It’s a force multiplier in terms of economic development, job growth and revenue to the township.” 

Officials are banking on the project to flip the script on decades of downtown decline.

“For 25 years, we looked at blighted, unoccupied buildings downtown and every town board along the way has focused on taking those buildings down and creating community spaces and making it so that our downtown is walkable, enjoyable, and people want to come,” said Assemb. Jodi Giglio, a former Riverhead councilwoman.

Riverhead Town acquired three buildings, including Craft’D, in 2021 and previously demolished two to make way for the project.

Petrocelli is deeply linked to downtown development in Riverhead and built the Long Island Aquarium, which opened in 2000, and later the Hyatt Place and Preston House hotels.

“The aquarium was the tourist attraction,” Petrocelli said in an interview. “I guess I expected it to revitalize quicker. … You’re not going to do it overnight.”

'Growing pains'

Residents have raised concerns about the master developer process, parking disruptions during construction and the scale a five-story building would have on the riverfront.

Hubbard, who leaves office at the end of the month, acknowledged there would be “growing pains” but said the future benefits will outweigh inconveniences.

“This is the real deal," he said Friday. "I’m so glad I was here to see this day happen.”

Residents also raised concerns with a clause in Petrocelli’s agreement with the town that references making payments in lieu of taxes, or PILOTs, a “material requirement” for the project and that failing to secure them would have an “adverse impact on the economics” of the project.

Town records show Petrocelli has submitted an application for benefits for the town square from the Riverhead Industrial Development Agency, though specific terms were not available Friday.

The developer saved nearly $2.1 million on property taxes in 2023 and 2024 on his other downtown ventures, according to the most recent available reports from the state Authorities Budget Office, which regulates IDAs.

Construction is expected to take place throughout 2026, and Petrocelli envisions the hotel opening in June 2027.