The tables have turned for the land deal with Luminati after the announcement this weekend that billionaire John Catsimatidis is interested in financing the Calverton aerospace startup’s purchase of a large tract of land at the Calverton Enterprise Park.
A majority of the Riverhead Town Board now favors allowing Luminati Aerospace more time to negotiate a contract with the town.
Luminati founder and CEO Daniel Preston held one-on-one meetings today with three council members at the enterprise park and changed at least one mind. Following his meeting with Preston this morning, Councilman John Dunleavy reversed his position on canceling the letter of intent entered into by the town and Luminati in April. Councilman Tim Hubbard, who met with Preston this afternoon, says he won’t move to cancel the town’s letter of intent tomorrow, as he’d originally planned.
“Luminati returned marked-up contracts to us Friday, so they tried to do the right thing and meet the deadline the town imposed,” Hubbard said. On June 28, the town’s special counsel Frank Isler sent Luminati’s lawyers a letter stating that unless a draft contract of sale was negotiated by July 17, the town would cancel the letter of intent.
Luminati’s attorneys returned contracts to the town’s lawyers with comments on Friday. In a cover letter, Luminati attorney Robert Hasday said he would be available to discuss the contracts all weekend and on Monday. Those discussions have not yet taken place, Hubbard said.
In the letter, a copy of which was obtained by RiverheadLOCAL, Hasday objected to any move to terminate the letter of intent. He said the town did not get proposed contracts to Luminati until June 1, rather than April 26 “as promised,” he wrote. The lawyer placed blame on the town.
“The delay in delivering the drafts resulted in an extended period of time during which political opponents could plant unfavorable and misleading articles about Luminati in the press, making Luminati’s financing efforts much more difficult,” Hasday wrote.
Though the contract is not finalized, the ball is now in the town’s court, Hubbard said.
“I don’t want to get us into a legal jam,” he said. “I’m asking that we put this off for two weeks.” But Hubbard is still not convinced the prospective purchaser should get a “qualified and eligible hearing.” Under state law, a municipality can sell land at less than market value or without an appraisal if it’s in an urban renewal zone and the purchaser establishes it is “qualified and eligible” to use the property in a way that will accomplish the purposes of the urban renewal program.
Councilwoman Jodi Giglio, who said she declined to meet with Preston today, said in an interview she still favors canceling the letter of intent — despite the interest expressed by
Catsimatidis in financing the deal.
Dunleavy, on the other hand, now believes the town should hold the qualified and eligible hearing.
“I’m ready to give him another chance,” Dunleavy said after his meeting with Preston at Luminati’s facility inside the Plant Six building at the enterprise park.
Earlier this month, Dunleavy and Giglio both said they would vote to cancel the deal because of “red flags” about Preston including questions about his ability to fund the $40 million land purchase or fulfill his stated ambition to bring aerospace manufacturing back to the former Grumman site in Calverton. That left Councilman James Wooten and Supervisor Sean Walter in the minority favoring moving forward with Luminati.
But today’s meeting — Dunleavy’s first one-on-one with Preston, he said — changed the mind of the board’s longest-serving member.
“He seems to be an honest guy,” Dunleavy said in a phone interview after the meeting.
Dunleavy said he was impressed by Preston’s intelligence and accomplishments, but believes Preston is “just not a businessman.” Preston “has people managing each division. He doesn’t like to manage people. So he hires other people to do the managing,” Dunleavy said.
“He has a cocoa farm in the Dominican Republic. He has a big farm upstate — 2,000 acres — where he grows corn,” Dunleavy said. “It’s amazing what he does.”
Preston is “wealthy,” Dunleavy said. “He told me he sold a business for $45 million.” Dunleavy acknowledged he did not ask what business it was. “He has plenty of money. He can write a check himself,” Dunleavy said. The councilman was impressed by the amount of money Preston has apparently invested in Riverhead — in the facilities and equipment at the enterprise park and in several homes he’s purchased around town.
“You hear a lot and you read a lot and then you speak to somebody and they can change your mind,” Dunleavy said. “Speaking to him, personally I think we should give him another chance. You have to put your foot forward sometimes. You have to believe in people.”
Hubbard was less impressed. He’s concerned, he said, about how Preston’s plans for EPCAL seem to keep changing. For example, instead of building planes there, as Preston has said he intended, today he said he plans to manufacture parts of — and for — aircraft, according to Hubbard. And instead of pursuing Department of Defense contracts, Preston says he is negotiating with a Canadian company — a contract Preston told him will be far more lucrative, Hubbard said.
“I asked him for his business plan and he basically said his idea is his plan, that he’s very successful at what he does. When he takes on a project, he said, he competes it and is very successful,” Hubbard said.
Hubbard said he questioned Preston about Atair Aerospace, a company he started in 2001, then sold a controlling interest in to a major hedge-fund investor, that fired him in 2009, according to a lawsuit brought against him by Atair.
“He told me, ‘That’s what you’re reading in the papers. It’s not true,’” Hubbard said.
Neither Preston nor a spokesperson for Luminati returned calls seeking a comments on the lawsuit.
Hubbard — like Dunleavy — said “Preston is not a people person.” He said the first thing Preston did today was inform him that his IQ is 180 and explain that because of his exceptional intelligence, he has a hard time communicating with people.
“It’s difficult for him to communicate with people on their level,” Hubbard said with a chuckle.
He was less amused by Preston’s contention that the town should be giving away the land, not selling it.
“He said that’s what the plan said, that the town should give it away for free,” Hubbard said. “That’s not how I see it at all. It was given to the town [by the federal government] for economic development and part of that is being able to sell it.”
Giglio said she believes the town should cancel the letter of intent, which she said is preventing the town from entertaining other offers.
“Daniel can always come back and make another offer,” she said.
Giglio said any sale of the land should include “performance standards” tied to job creation.
“We should sell him 100 acres and if he creates a certain number of jobs, he can buy more land,” Giglio said. She said she would not favor a sale structured any other way.
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