(Updated: July 18, 2018) Triple Five Group will be required to submit to an examination of its financial condition before town officials will decide on the merits of its application to buy 1,643 acres of undeveloped land at the Calverton Enterprise Park.
Deputy Supervisor Tim Hubbard, who said as recently as Friday evening that he was prepared to move forward without the financial disclosure previously requested by the town, announced at Tuesday’s town board meeting that he had changed his mind.
“I don’t feel I have enough information to make a qualified decision based on the information they gave us,” Hubbard said.
He said in an interview before the meeting he had struggled with the decision.
“It has weighed so heavily on my mind. I have gone back and forth and in my heart I know I can’t make a decision without it,” Hubbard said. “This is a huge decision, a massive project. To take it basically on somebody’s word — I can’t do that. I’m not comfortable with that. The people of the town deserve better.”
Hubbard also said he would not agree to have a confidential review of the company’s finances done at the town’s expense.
“It can’t be done on the taxpayer’s dime,” he said. Triple Five had offered to submit to such a review but only if the town would pay for it. “They will pay for it and they will provide it to us if they want this project,” Hubbard said.
Town Supervisor Laura Jens-Smith and Councilwoman Catherine Kent have not wavered in their belief that the town must have financial disclosure. Hubbard’s change of heart means a three-member majority of the board will require it.
“We’ve already requested the information,” Jens-Smith said. “This will give them one more shot to have them produce their financials in the best interest of Riverhead taxpayers.”
But Councilwoman Jodi Giglio said the company has “all along” offered to submit their financial statements — but on the condition that the town “enter into a bona fide confidentiality agreement.”
Giglio also said she does not think a “forensic audit” would be necessary. She said the town’s request in the past would have necessitated an expense of $50,000 to $100,000.
Jens-Smith said after the meeting that the town never requested a forensic audit of Triple Five — or any audit of their books, for that matter.
“We asked them to submit certified financial statements and a pro forma statement for this project prepared by their own accountants,” Jens-Smith said. “They declined.”
Jens-Smith said Riverhead financial administrator William Rothaar, who also serves as CFO of the Riverhead Community Development Agency, which owns and manages the EPCAL site, is “perfectly capable” of reviewing the company’s financial statements.
The idea of an outside accounting firm reviewing their statements and reporting to the board was a compromise but Triple Five would not pick up the tab, she said.
Triple Five spokesperson Stuart Bienenstock has said in interviews the company believes it has submitted financial information adequate for the town to make a “qualified and eligible” determination. It has submitted a letter from an accounting firm stating that a list of accounts provided to the firm by Triple Five totaled an amount “in excess of $40 million.” It also submitted documentation of financing in connection with the American Dream project in New Jersey.
Citing those documents, Councilman James Wooten opposed the move to require more disclosure. He said Triple Five has been networking outside Riverhead to further their goal of bringing the aeronautical industry back to Riverhead.
“This has been the town that couldn’t get it done for 20 yrs,” Wooten said. “The bottom line is jobs and creating that type of use for that property — which is really in the middle of nowhere,” Wooten said.
“This was never about the money we could sell it for,” Wooten said. “It was about jobs.” Still, he said, the sale would generate much-needed revenue for the town. “All the infrastructure is falling down around us,” Wooten said. “That $40 million could go into debt service, capital improvements, stabilizing our tax base. I may be more optimistic than some, but I’m not naive.”
The Edmonton, Canada-based company has offered the Riverhead Community Development Agency $40 million for the site through an affiliate LLC it owns jointly with Luminati Aerospace.
Town officials had requested financial disclosure from Triple Five earlier this year, but the company declined — its representatives stating that the privately owned family company did not want to make its financial documents public. Town officials said Triple Five would submit to review by an independent accounting firm but only if the town paid the cost of the review.
Riverhead Town’s rules for determining whether an entity is “qualified and eligible” to buy and develop land in a designated urban renewal area — such as the enterprise park — state that the town shall review “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.”
Town board members say the the town’s outside counsel have advised them that the board has broad discretion in making the “qualified and eligible determination” and could choose to find the company is a “qualified and eligible sponsor” without reviewing the financial statements called out by the adopted rules.
Before today, a majority of the town board was prepared to go forward with the deal without the financial statements.
A representative of Triple Five could not immediately be reached for comment.
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