Riverhead Supervisor Sean Walter has signed the letter of intent with Luminati Aerospace for the sale of nearly all of the town’s remaining acreage at the Calverton Enterprise Park for $40 million.
“The clock starts ticking today,” Walter said this morning.
On Thursday, after RiverheadLOCAL reported the departure of key members of what Luminati founder Daniel Preston called the company’s “dream team,” Walter said he would not sign the letter of intent until he met with Luminati’s financial backers. He said he expected that meeting to take place on Friday. Today Walter said the meeting would not be possible for another week or two, so he decided to go ahead and sign the letter.
“We still have the due diligence period and we still have the qualified and eligible process,” Walter said. “I thought about it all weekend and — people can make fun of me for this if they want — I prayed about it. I decided there was no reason to delay the beginning of the due diligence period.”
The town board on Tuesday authorized the supervisor to sign the letter of intent.
The letter requires the Town of Riverhead and Luminati to begin negotiating a binding “definitive agreement” for the sale of the site. It allows the parties 30 days to negotiate the terms of a definitive agreement “in principle.” If the parties can’t agree on the terms within 30 days, either side may cancel the letter of intent.
Once the parties agree to the terms of the definitive agreement “in principle,” the town will schedule a public hearing for the purpose of determining whether Luminati is a “qualified and eligible sponsor” under governing state law. If the town board determines Luminati is a “qualified and eligible sponsor” the parties will sign the definitive agreement within 10 days after the “qualified and eligible sponsor” determination is made by the town. If the town determines Luminati is not a “qualified and eligible sponsor” the letter of intent is terminated.
The letter allows the buyer a 90-day “due diligence” period — beginning on the date it’s signed by both parties — to investigate site conditions.
Riverhead Town will look to redraw the subdivision map it has been pursuing for the past several years, Walter said. The new map will create two large lots to be sold to Luminati and three to five other parcels that the town will retain, he said, including the sewage treatment plant, the Pfeiffer Community Center, Veterans Memorial Park, and land within the pine barrens core preservation area.
In total the town would convey to Luminati about 1,400 acres, Walter said today, stressing that only about 600 of those acres, including the runways, are developable because of environmental conditions and regulations. The town announced the proposed sale on March 30, a day after Preston made the deal public in a RiverheadLOCAL interview.
The definitive agreement between the town and Luminati, if one is signed, will be subject to final subdivision approval, Walter said.
Vetting the buyer will include looking at the company’s financial statements and interviewing its lenders and investors, the supervisor said.
“We probably know as much as there is to know about Luminati,” Walter said. “The real function now is to talk about who are his lenders, see how deep their pockets are and what their vision is,” he said.
Walter said the town would ask to see the company’s contracts to supply aircraft as well as proposals or bids for contracts with the U.S. Department of Defense or its subcontracts. “I’m not sure they’d be allowed to show them to us, though,” he added.
Democratic supervisor candidate Laura Jens-Smith, who has been critical of the town’s approach to redevelop the former Grumman site, has called on Walter and the town board to be transparent in the vetting process. She has also questioned Luminati’s intentions for the site and the ability of the company to perform as it promises.
Among other things, Jens-Smith points to controversy over the plane Luminati flew over Calverton last June (pictured above), which German manufacturer PC-Aero claimed was designed and built by it — not Luminati. Preston said a team of Luminati engineers substantially modified the aircraft and the German company had retracted a press release issued last July regarding the design and manufacture of it. The principal of the German company told RiverheadLOCAL last week no such retraction had every been issued.
“This needs to be vetted very very carefully,” Jens-Smith said in an interview last week, “to make sure that the claims are realistic, especially the jobs being promised, in today’s economy and in the aerospace industry.”