Riverhead officials today debated whether additional — and more complete — financial disclosure by Triple Five must be required before the town board can determine if the company is a “qualified and eligible” sponsor as per the requirements of state law governing a no-bid sale in a designated urban renewal zone.
Town board members are not in agreement about whether the company adequately responded to the board’s request for financial documentation of their ability to acquire and develop the site.
The prior town board at its last meeting in December authorized a $40 million land deal with Calverton Aviation and Technology LLC, a company controlled by Triple Five, subject to the purchaser being found by the board a “qualified and eligible” sponsor. Calverton Aviation and Technology would buy 1,643 acres of vacant land within the Calverton Enterprise Park for development as an aviation technology park.
The board requested the applicant (CAT) to submit financial statements for the LLC’s members and a “pro forma” financial statement indicating the applicant’s financial wherewithal to carry out its plans for the development.
Triple Five, a privately held company owned by the Ghermezian family and based in Edmonton, Canada, has declined to submit the financial and pro forma statements requested by the town. The family cites privacy concerns.
Triple Five instead submitted a report prepared for the company and the town by Grant Thornton, one of the largest public accounting firms in the world — it was ranked sixth globally in 2017 — certifying that “Triple Five Group of Companies’ available cash balance at March 9, 2018 is in excess of $40,000,000 for use in connection with the purchase of the property in question.”
Riverhead financial administrator William Rothaar was asked by the supervisor to review Triple Five’s submissions. He sat with the board today to discuss the applicant’s documentation and confirmed for the board that what had been submitted was not what the board requested.
Supervisor Laura Jens-Smith told council members she believes the town’s rules for the qualified and eligible process mandate the review of the applicant’s financial statements. She read aloud from the rules pertaining to the review of financial statements:
“The CDA [Community Development Agency] shall then ascertain whether the applicant is “qualified and eligible” … in accordance with the following criteria: … b. demonstrated ability to finance the acquisition and development of specific project proposed including the review by the CDA of pro forma financial statements for the proposed project, including sources and uses of funds, certified personal and corporate financial statements of the applicant sponsor, financial commitments of participating lenders, proposed security for the project, business plans and economic analysis of the project and past compliance with municipal laws, rules and regulations.”
“It says shall — it’s not may,” Jens-Smith said.
Council members James Wooten and Jodi Giglio pushed back, arguing that past boards made Q&E determinations without seeing financial statements.
Jens-Smith reminded them that previously there was a “vetting entity” — the Riverhead Development Corp. — charged with examining prospective applicants before they got to the town board, which sits as the governing body of the Riverhead CDA.
The supervisor said if the town board wants to alter the rules, it must adopt a resolution to do it. Again, Wooten and Giglio pushed back, arguing that a statement in the resolution determining the applicant’s “qualified and eligible” status would suffice.
Giglio asked Rothaar to examine the record of testimony about the applicant’s financial position that was given during the qualified and eligible hearing, which took place in two sessions in February and March.
Wooten agreed. “He came in here with very limited information,” the councilman said, referring to Rothaar.
“He was commenting on the documents we received,” Jens-Smith replied. “Bill will you share with the board the documents you received —”
Wooten grew irritated. “I don’t want to know,” he said, rising to his feet. “I move to adjourn. I think it’s ridiculous, OK? It’s a dog and pony show and I don’t like it.”
“To look at the financial documents?” Jens-Smith asked.
“To bring a man in here —” Wooten started but the supervisor interrupted him.
“Are you actually leaving the board — getting up and walking out?” she asked.
“I can do what I want,” he snapped back.
“EPCAL is one of the biggest deals — I’m having a conversation with you,” Jens-Smith said.
“I’ve been dealing with EPCAL for 11 years now, not 11 months,” Wooten told her. “I know it’s a big deal.”
“And that’s why it’s so important to be able to have accurate financial statements,” Jens-Smith said.
“But financial statements from our town controller who has very limited information,” Wooten interjected. “I think he needs to research it now. I’m going to give him the record,” he said.
“I’m satisfied with what I got,” Wooten said.
“I’m surprised you don’t have a problem with the documents requested not being presented for us,” Councilwoman Catherine Kent said.
Triple Five chairman Nader Ghermezian, who was seated in the audience, tried to speak to the board but was shut down by Jens-Smith, who told him the work session was not a public comment session.
Ghermezian said Rothaar was giving the town board “wrong information.”
After the meeting, Triple Five representative Stuart Bienenstock said it was “extremely frustrating because everything is being misrepresented.”
“It was very clear that the person being asked to discuss the information did not thoroughly go through the documentation that we presented,” Bienenstock said. “The Grant Thornton report makes it clear those funds were allocated to this project, makes clear that the cash is available unencumbered, specifically for this project.”
Bienenstock also expressed frustration at Triple Five never being invited by the board to sit down with them at a public work session to discuss their plans.
“We’re being treated like we’re enemies,” Bienenstock said. “Some members seem to have preconceived notions about us — because of how we came into this deal. It doesn’t feel like we’re being given a true opportunity by some,” he said.
“We obviously qualify for this project — it’s clear. This is silly. It seems like we’re dealing with a very political battle.”