Enclaves hotel project nets tax breaks for local jobs, tax revenue

A local developer’s plans for The Enclaves, a $43.9 million luxury hotel in downtown Southold forged ahead after a $2.7 million tax-break incentive package was granted by the Suffolk County Industrial Development Agency.

Developer Jonathan Tibbett’s proposal, The Enclaves, calls for construction of a 72,979-square-foot, two-story hotel with 40 units, four detached cottages, an accessory event space, indoor and outdoor swimming pools and a spa at the site of the former Hedges bed and breakfast on Main Road in Southold. Plans for the 6.75-acre parcel also call for conversion of the historic inn, which Tibbett purchased in 2015, into a 74-seat restaurant, one of two the hotel will feature. The complex will also include an on-site sewer treatment plant, which will account for approximately $2 million of the project’s budget.

Board members of the IDA, a public-benefit county agency that provides financial incentives to promote economic development within Suffolk County, voted 7-0 Sept. 28 to approve a package of mortgage and sales tax abatements plus a 15-year schedule of payments in lieu of taxes, or PILOT for the Enclaves. The cost-cutting benefits include:

• $1.8 million in reductions on sales tax for building materials and equipment, 

• $246,000 in reduced mortgage tax payments and

• $700,000 in savings courtesy of the 15-year PILOT.

The developers originally sought a 20-year PILOT schedule, according to IDA documents.

The IDA allocates tax breaks based on how each proposal will benefit its respective community, according to Kelly Murphy, acting executive director of the Suffolk County IDA.

“We are a public-benefit agency, so in exchange for the tax abatements that we award, we look for a return on that investment to the benefit of the residents,” she said of the Enclaves. “So job creation is number one … And, especially in a case like this, the increase in [tax revenue] to the community.”

According to IDA documents, the project will create 51 full-time jobs and generate more than $8.5 million in municipal tax revenue over 15 years.

In the years since The Enclaves was first proposed, Southold residents have repeatedly expressed concerns about its potential impacts on traffic, noise and the environment. Critics have argued that the project doesn’t fit in with the overall character of the community.

In December 2021, Southold’s Zoning Board of Appeals outlined conditions for the project’s approval, which included stipulations prohibiting outdoor events, indoor events with more than 100 guests or other “special events,” as defined in the town code. Outdoor music will also be prohibited, and the number of approved hotel units may not be expanded. Residents have also raised concerns about the town’s ability to effectively enforce those event-size restrictions.

The developers contend that the project will fulfill market demand that has only increased on the North Fork in recent years.

“Because they’ve been so careful about preserving what’s special about the North Fork and not letting it become the South Fork, the North Fork is becoming more desirable than the South Fork,” said Andrew Giambertone, architect and partner in the project. “In order to accommodate an influx of tourists, which will ultimately bring all kinds of dollars to local businesses, they need a place to stay, a destination place to stay. And that’s what we’re hoping the Enclaves will provide.”

Although he would not comment on the Enclaves proposal specifically because the developers are still seeking approvals from Southold Town, Supervisor Scott Russell described the granting of IDA benefits to attract tourists as “gratuitous.”

“Industrial development agencies are meant to promote and encourage investment in certain industries in certain locations at certain times, generally in economies where the interest in investment isn’t necessarily there,” Mr. Russell said. “The tourism-based industry in Southold does not need incentives … The interest in investing is there. Nobody’s going to stop what they want to do because the IDA didn’t give them huge tax breaks.”

While site plans for The Enclaves are still awaiting approval, developers hope to begin the 18- to 24-month construction process soon. “We’re hoping to be filing with the building department within the next four weeks,” Mr. Giambertone said, “and hoping to break ground before the end of the year.”