The Hempstead Town Board has reserved its decision on a controversial plan to build a $90 million, 172-unit luxury housing development in Island Park.

More than 100 people showed up for the board's two-hour public hearing Tuesday to consider a petition to lift a restrictive covenant that would allow turning a former oil storage and distribution site in Harbor Isle, part of Island Park, into the Battery at Harbor Isle & Avalon Yacht View. It would have 140 rental apartment units and 32 condos near the water with boat slips.

Residents at the hearing said they worry that the 172-unit development planned for the site, on Island Parkway South and Sheridan Place, among 490 single-family homes in Harbor Isle would change the character of the neighborhood, increase traffic, make parking at the local train station more difficult and increase school taxes.

"We're a small community," Jacqueline Horvath, 46, who has lived in Harbor Isle for 12 years, told the board. "We are not used to corporate sharks. We need a bigger boat and that's you."

Others in support of the development said it would provide needed rental housing stock and an economic boost for the Sandy-ravaged community.

"Developments like these help support local businesses that were harmed by Hurricane Sandy by adding to the customer base," said Eric Alexander, executive director of Vision Long Island, a nonprofit planning group.

Farmingdale-based Posillico had received town approval in 2008 to build 172 condos on the nearly 11-acre site, vacant for more than a decade. The town board modified the previous covenant in 2010 to allow for up to 10 percent of the units to be rentals. Posillico has been asking since March for the town to lift a restrictive covenant on rentals so Virginia-based AvalonBay Communities Inc. can construct eight apartment buildings.

"We will invest in Island Park if we are able to get the approvals in place," AvalonBay's senior vice president of development Matthew Whalen said.

The development could help fulfill the housing needs of young professionals and "empty nesters," Whalen said. The rents could range from $2,800 for a one-bedroom unit to $5,000 for a three-bedroom apartment.

Senior Town Councilman Anthony Santino criticized the affordability of the rents. The site is part of the New York State Brownfield program, which seeks to clean up toxic waste sites. As theLandowner, Posillico would have until Dec. 31, 2015, to complete the estimated $12 million cleanup to be eligible for the program's tax credits, developers have said.

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