Patchogue hotel developers seek $5 million state grant, 20 years of tax breaks

The developers behind what would be Patchogue’s first hotel in decades are seeking local tax breaks and state funding to build the five-story Tapestry by Hilton.

Yair Yaish, a member of The Watch Hill Hotel Group, asked the Brookhaven Industrial Development Agency on July 15 for 20 years of tax breaks for the proposed 122-room hotel.

Later that day, he outlined plans to seek a roughly $5 million New York State grant during a meeting of the Long Island Regional Economic Development Council.

“This project is about delivering a missing piece of infrastructure for one of Long Island's most successful downtowns and revitalized areas,” Yaish told the council.

The group hopes to begin construction in October and complete the hotel by 2028. The developers originally planned to build a Tempo by Hilton, but switched to a Tapestry to gain more flexibility in the design, Yaish said during the IDA meeting.

The hotel is one of a handful planned or under construction on Long Island, as demand for new hotel rooms has grown across the region, Newsday reported.

The entire project would cost around $47.4 million, and Watch Hill plans to secure a $44.4 million loan to build the hotel, according to the application.

Watch Hill requested up to $333,000 in mortgage recording tax exemptions, up to $1.8 million in sales tax exemptions and 20 years of property tax savings, according to the application. The IDA has not approved those benefits, but voted July 15 to consider the incentives.

Without those benefits, the developer’s attorney, Dan Deegan, said that the group may be unable to get a loan to build the hotel.

Similarly, Yaish told the  Long Island Regional Economic Development Council that the state grant was needed because construction costs have risen alongside interest rates, which have made it more expensive to secure debt. Tariffs, too, have increased the cost of building, Yaish wrote in a July letter to the IDA.

The IDA agreed to commission a report to examine what level of tax incentives are needed to get the project off the ground.

Public support — through grants or tax incentives — would make a project more attractive to a lender, and banks do expect developers to have a higher overall budget in case tariffs impact the cost of construction, said Emil Iskandar, a senior vice president of capital markets for the Loveland, Colorado, hospitality consulting firm HVS.

But banks usually don’t decide whether to lend based solely on the presence of tax incentives, Iskandar said. Instead, they look at the entire project, whether it meets the bank’s lending requirements, and whether the developer can afford the monthly payments on the loan.

Restaurant and retail space

Plans for the hotel have been in the works since 2024, when Patchogue officials hoped to cap off the village’s nearly two-decade revitalization with a hotel, Newsday reported.

Once built, the hotel would include an 8,160-square-foot rooftop restaurant and bar, plus two ground-floor retail spaces. It is expected to create 100 construction jobs and 40 permanent jobs within two years, according to the IDA application.

“It creates jobs," and "leverages significant private investment, and fills a clear market gap,” Yaish told the development council.

Patchogue Mayor Paul Pontieri told Newsday on Friday that the public funding was worth bringing a hotel to the village. 

"It’s an asset that we need and an asset that will make us a better place," Pontieri said.

Demand for hotels on Long Island has grown even as the number of hotels has increased, Newsday reported. The area’s dense population, high number of college students and growing leisure travel have all pushed up prices, Newsday reported.  

The average daily rate of nearby Suffolk County hotel rooms hit a record of $181.34 last year, according to a study that Manhattan-based consultants LW Hospitality Advisors prepared for The Watch Hill Hotel Group.