'The Enclaves,' a luxury hotel-restaurant project in Southold wins preliminary approval for $2.7 million in IDA tax breaks

Plans for an upscale hotel in downtown Southold took a step forward last week when the Suffolk County Industrial Development Agency gave preliminary approval for a $2.7 million tax break package for the project, despite traffic concerns raised by residents.

The $44 million hotel proposal, called The Enclaves, has been touted by its developers as a "world-class" facility that would fill a need for luxury hotels in the North Fork's lucrative wine country.

The complex — including a 40-room hotel, four detached cottages, a 74-seat restaurant, indoor and outdoor swimming pools and a spa — would be built at the former Hedges bed-and-breakfast inn on Main Road. The inn would be converted into a restaurant. 

Suffolk IDA board members voted 7-0 on Thursday to grant preliminary approval of a package of mortgage and sales tax abatements and a 15-year schedule of payments in lieu of taxes, or PILOTs.

Huntington real estate developer Edward Glackin, one of three partners involved in the project, said the IDA benefits would help to pay construction costs, including a $2 million on-site sewage treatment system.

Construction of the hotel is expected to take up to two years, Glackin said. His partners had previously said construction was expected to begin this fall. 

“There is nothing comparable on the North Fork and, I think, anywhere on the eastern end of Long Island,” he told IDA members before they voted. "We think it will bring a lot of tourists to the North Fork in the winter season when … it can be pretty quiet out there.” 

Some Southold residents have opposed the project, citing environmental issues and a possible increase in traffic.

Southold Supervisor Scott Russell declined to comment on the hotel proposal Thursday, saying it would be inappropriate because the developers are seeking town site plan approvals.

But he said he shared residents' worries about the size of the project.

“In my view, it is a little out of scale with what you would expect in the village,” he said. 

Russell noted a zoning change is not required because the property already is zoned for use as a hotel.

The town zoning board of appeals in 2021 approved restrictions prohibiting outdoor events, outdoor music and events with more than 100 guests. The board also said hotel amenities, such as the pools, cabanas and spa, must be reserved for hotel guests only. 

Russell also said he generally thinks IDA benefits packages are unnecessary for projects such as hotels.

“In Southold, businesses don’t need those incentives," Russell said. "They’re going to get done whether there are IDA benefits or not.” 

The package approved by the IDA on a preliminary basis includes $1.8 million in sales tax reductions and $246,000 in reduced mortgage tax payments to help cut construction costs.

The PILOT payments would yield an additional $700,000 in savings, officials said.

An IDA analysis showed total PILOT payments over 15 years would be roughly the equivalent of 64% of what would be owed without the PILOT plan.

The analysis showed, however, that the hotel would generate $8.5 million in tax revenue over 15 years, about $6 million more than tax cuts contained in the benefits package.

CORRECTION: An earlier version of this story misstated the nature of the Suffolk County Industrial Development Agency's approval on tax breaks and the project's cost estimate.

By Carl MacGowan

carl.macgowan@newsday.comCarlMacGowan

Carl MacGowan is a Long Island native who covers Brookhaven Town after having previously covered Smithtown, Suffolk County courts and numerous spot news and feature stories over his 20-plus year career at Newsday.