Riverhead Town will sign a letter of intent to sell nearly all of its remaining acreage inside the Calverton Enterprise Park to Luminati Aerospace and begin the negotiation of a formal contract of sale.
The town board yesterday unanimously approved a resolution authorizing Supervisor Sean Walter, as chairman of the Riverhead Community Development Agency, to sign the five-page letter of intent.
The letter, which has already been signed by Luminati Aerospace CEO Daniel Preston, calls for the sale to Luminati of nearly all of the town’s remaining acreage at the site for $40 million.
Preston says Luminati Aerospace will manufacture ultralight aircraft for commercial and military uses at the site and will ultimately employ 2,000 people there.
It is a non-binding agreement except in its requirement that the parties begin negotiating a binding “definitive agreement” for the sale of the site and agree to the terms of the definitive agreement “in principle” within 30 days of the letter being signed by the supervisor. 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 to investigate site conditions. The buyer may extend the due diligence period by another 90 days, but that extension triggers payment of half of a $1 million contract down payment (to be made when the definitive agreement is signed); that $500,000 payment to the town would be nonrefundable. The provisions of the letter concerning the extension and payment of the $500,000 to the town are binding on both parties. The remaining $500,000 down payment will be held in escrow pending closing.
The letter of intent does not set a closing date for the transfer.
Laura Jens-Smith of Laurel, a Democratic candidate for town supervisor questioned the process that the town will use to vett the prospective purchaser.
“This is the biggest thing Riverhead has done or will do in our lifetime,” she said. “Are they a serious buyer? Who’s doing this vetting? Is it Sean [Walter]? Is it a committee? If so, what’s their background?” she asked.
“This must be properly scrutinized and the public needs to be very much aware of the process,” Jens-Smith said.
Walter said the buyer will be thoroughly vetted by the town with its attorneys. He said after 18 months on the market [with real estate brokerage firm Cushman and Wakefield], Luminati is presently the only serious offer on the table. Suffolk County Industrial, a prospective buyer previously touted by town, ceased active negotiations with the town early this year, the supervisor said.