Southampton Town Makes Offer To Buy 2 Main Street Building To Expand Sag Harbor's Steinbeck Park

Southampton Town has made an offer to buy the commercial building at 2 Main Street in Sag Harbor, which would be razed and added to John Steinbeck Waterfront Park as part of the effort to redevelop the neighboring Water Street Shops property as a new home for Bay Street Theater.

Supervisor Jay Schneiderman on Friday said the town had received two appraisals for the building, which currently houses K Pasa restaurant, Espresso Da Asporto takeout, the Yummylicious! ice cream parlor, and Havens, a women’s clothing and accessories shop.

A group of investors, 2 Main Street LLC, purchased the property from Rose Cheng in August 2021 for a reported $18 million.

“The board has agreed to make an offer on the property,” Schneiderman said. “The number is substantially lower than what was reported as having been paid for it.”

He would not disclose the amount of the offer, because the matter remains a subject of negotiations.

The town would use money from its Community Preservation Fund for the purchase and is restricted from paying more than fair market value, which has typically been interpreted as meaning no more than 10 percent above the appraised value.

Schneiderman said the town was waiting to hear from the property owners and that any sale would be conditioned on a favorable response at a public hearing.

Mayor Jim Larocca has supported the purchase of the property so that the park, which he has championed since joining the Village Board in 2015, could be enlarged. Although he was an early skeptic of Bay Street’s plans to build on the West Water Shops site, which he also wanted for the park, he has called its offer to donate the 2 Main Street site for the park a “game changer.”

Last year, Adam Potter, the chairman of Friends of Bay Street, the nonprofit created to find a theater a new home, said that the investors who purchased the 2 Main Street building, known locally as “Fort Apache,” would be willing to sell it to the town at a loss as part of the broader effort to build a new theater complex.

In fall of 2020, Friends of Bay street paid $13.1 million for the Water Street Shops building. The theater currently leases space in the Malloy complex east of Long Wharf.

Since those acquisitions, there has been much speculation as to who is the source of the money behind them. The local rumor mill has pointed to Stephen M. Ross, the chairman of the Related Companies, a global real estate firm. Neither the Related Companies nor Potter, nor any others involved in the Bay Street effort, have either confirmed or denied that he is involved.

Bay Street representatives have kept a decidedly low profile, declining numerous requests for interviews since last spring, when they unveiled preliminary plans for the new theater building and were met by more catcalls than applause. Many in the village said they feared the theater proposal was a Trojan horse obscuring a much broader effort to develop much of the village’s waterfront.

Bay Street’s standing was not helped when Potter revealed that he and other investors had purchased a number of buildings to the south of the Sag Harbor Post Office, between Meadow, Rose and Bay streets.

Numerous sources, speaking on condition of anonymity, have said the plan is to develop the site with mixed-use buildings, with commercial uses on the first floor and apartments on the upper floors. Reportedly, the plan is to create as many as 70 affordable apartments in the area, though no formal applications have been filed — and the village is still working on its own affordable housing legislation, which, in part, could impact properties behind Main Street.

An application has also not been submitted for a new theater building. When Friends of Bay Street announced it had purchased the West Water Shops building, it said it planned to break ground on a new theater in the summer of 2021 and complete the building by 2023.

A year-and-a-half-long waterfront moratorium derailed any effort to move forward with planning and zoning review, but Bay Street has still not given any indication it plans to file an application any time soon. The village adopted its waterfront zoning code in early January, and a moratorium has not been in place since.