Riverhead approves developer for town square, clearing final 'hurdle'

The Riverhead Town Board approved an agreement with developer Joe Petrocelli on Tuesday, paving the way for a new town square with a five-story hotel, public space, a playground and amphitheater on the Peconic riverfront.

Officials said the town square plan will be a catalyst for downtown revitalization.

“This is decades in the making,” Supervisor Tim Hubbard said at the board meeting. “I can’t wait to get the shovels in the ground for this project.”

The town board voted unanimously 5-0 to approve the agreement, despite some objections from residents about the “qualified and eligible” process in which Petrocelli was vetted.

Under the agreement, the town will sell property at 127 East Main St. to Petrocelli for $2.6 million. Petrocelli said he intends to demolish the existing building to develop a five story, $32 million project with 76 hotel rooms, 12 penthouse condominiums, a waterfront restaurant and shops.

Separately Tuesday, the board approved a $120,000 settlement offer with the owners of Craft’D, a bar that currently leases the 127 East Main St. storefront. The offer is part of an eminent domain proceeding, though it’s unclear if the business will accept. Sean Kenna, a co-owner of the business, did not respond to a request for comment.

The agreement also tasks Petrocelli’s development firm with building other parts of the project, including a playground, public gathering space and an outdoor theater. The design is tiered to shore up against flooding threats.

Petrocelli’s firm would be paid 7% of those construction costs to manage the project and once completed, receive $150,000 per year to manage the park.

Several people criticized plans for the five-story hotel, questioning what benefits it would have for residents.

According to the resolution, town officials reviewed financial audits, statements and other documents but did not make them public because of their "sensitive nature.” Based on those documents and Petrocelli’s track record — he built the Long Island Aquarium and two other downtown hotels — the board determined that he has “the financial resources to successfully undertake and complete the project.”

Some town residents criticized the selection, saying the town should have made the documents available to the public, including a memo summarizing Petrocelli's financial resources. 

Newsday submitted a Freedom of Information Law request for the memo.

Kathy McGraw, a Northville resident, said the public should have had the chance to review the finances before the board selected Petrocelli. “The public is entitled to the information the board is using to make its findings,” she said Tuesday, describing the process as a “sham.”

Other residents and business owners lauded the decision, saying the project would boost tourism and make the riverfront more resilient to flooding.

“Downtown Riverhead has waited long enough,” said Joseph Oliver, who owns JJ Armory, a gun shop downtown. The project "will bring foot traffic and revitalization, our businesses need to thrive.”

Hubbard addressed critics of the project directly during the hearing, accusing some opponents of politicizing the project.

“It should be about what’s best for the town of Riverhead,” he said. “And what is best for the town of Riverhead is the golden hand of Mr. Petrocelli and the projects that he has built over the years and helped to put Riverhead on the map.”

Dawn Thomas, the town’s Community Development director who is spearheading the project, said by approving the agreement the town had cleared a “huge hurdle.” She expects construction to start in spring 2026.