Riverhead green-lights Triple Five land deal at EPCAL

The prospective purchaser of Riverhead’s remaining vacant land at the former Grumman site in Calverton cleared a major hurdle Wednesday night at Riverhead Town Hall.

Calverton Aviation and Technology was designated “qualified and eligible” to buy and develop 1,643 acres of vacant land for $40 million pursuant to a purchase agreement negotiated and approved last year.

The company, a Delaware limited liability company formed last fall by Luminati Aerospace and an affiliate of Triple Five Group for the purpose of buying the site, is controlled by Triple Five, the Edmonton, Canada-based developer best known for building and owning large retail-entertainment complexes.

Going into last night’s meeting, a special meeting of the Riverhead Community Development Agency, which owns the land — the town board sits as its governing body — it was clear that Deputy Supervisor Tim Hubbard held the deciding vote. Councilman James Wooten and Councilwoman Jodi Giglio had already announced their support of the approval and Supervisor Laura Jens-Smith and Councilwoman Catherine Kent have been outspoken opponents of the deal.

The town hall meeting room was packed beyond its capacity with a crowd that overflowed into the hallway. Dozens of union members turned out to show support for the deal and members of an organization advocating drag-racing at the site also crowded into the small auditorium.

Members of a civic coalition opposed to the sale spoke to urge board members to vote against a finding that CAT is “qualified and eligible,” as did a handful of other residents. Some residents and local business owners took the podium to urge support for the deal.

The purchaser did not offer any comment at the meeting, though Triple Five representatives Stuart Bienenstock and Justin Ghermezian had seats in the front row.

Each board member gave a statement before casting a vote on the application, with all but Wooten reading written statements into the record.

Hubbard said he believes the decision is the most significant he will ever be called on to make as an elected official. He acknowledged it was difficult, especially in light of the issues with the deal that caused him to vote against the contract last year — including the sale of 1,000 acres that town officials say can’t be developed due to environmental constraints, which Hubbard described as having been thrown in “for free” by the town.

“But this is a different vote,” Hubbard said. “Is CAT qualified and eligible to purchase and develop EPCAL as per the agreement?”

“I spent countless hours reading up on and conducting my own research on Triple Five,” he said. He reviewed “confidential material” provided to board members by their attorneys and listened to “dozens and dozens of town residents” both for and against the deal.

“I requested more financial disclosure and Triple Five provided that requested information,” he said.

“After a long and sometimes arduous task of making a determination on this hearing, I believe I have come to a correct decision for the residents of the Town of Riverhead. As such, I hereby find Calverton Aviation and Technology qualified and eligible to move forward with the purchase of EPCAL. My vote is yes,” Hubbard concluded, to a burst of applause from most of the standing-room only crowd in the packed meeting room.

The “qualified and eligible” determination was necessary because the property is in a designated urban renewal area and the sale is not the result of a competitive bidding process. A municipality can sell or lease an asset in a designated urban renewal area without a bidding process and without an appraisal if the purchaser presents a development plan that furthers to the town’s adopted urban renewal plan and if the purchaser is found to be “qualified and eligible” to complete the sale and develop the site as it has proposed.

Before casting her vote in favor of the applicant, Giglio recounted her past opposition to the deal, which she described as rooted largely in the lack of performance of CAT partner Luminati Aerospace, which initially negotiated a letter of intent with the town to purchase the site early in 2017.

Luminati was supposed to “improve the runways and create 100 high-paying jobs,” she said. “None of that happened.”

Though she “voted no all the way through,” the councilwoman said she insisted on revisions to the contract that would leave the entire rec trail in town ownership and prohibit the development of housing and commercial aviation uses there.

Giglio again defended her decision to meet privately with Triple Five in Manhattan while the qualified and eligible hearing was pending, which she has time and again argued was doing her own due diligence on the applicant. At that meeting, she said last night, she was satisfied that Luminati would be a minority, nonvoting partner when she was given a letter to that effect signed by Luminati principal Daniel Preston.

That meeting, which took place on March 12, gave rise to ethics complaints that delayed the board’s decision on the application for seven months. The complaints sought a recommendation that the councilwoman recuse herself from voting on the application — which could have left the split board deadlocked.

“It has been seven months of ethics complaints by people who want to see a solar farm, a race track and a state park,” Giglio said.

“I believe it is in the best interests of the town,” Giglio said last night. In addition to the $40 million in sale proceeds, “the day we close on the property we will be collecting $4 million in property taxes,” Giglio said. She said that is the amount of tax on the vacant land being sold.

The proposal will also bring high-tech jobs to town, she said.

“This is the biggest decision of my tenure. I find CAT qualified and eligible and I vote yes.”

Wooten said he believes the CAT proposal is “a good fit” and questioned how “anybody in their right mind could really think they don’t have the money to buy and develop this site.

“Really?” he asked. “With all their assets, all their businesses? This is the best thing for Riverhead.”

Jens-Smith and Kent took the opposite view.

‘We can hope. We can trust. But we cannot verify.’

Prior to the vote, the supervisor read a long statement into the record. She cited the philosophy of President Ronald Reagan while negotiating an end to the Cold War, which she said was summarized in three words: “Trust but verify.”

Jens-Smith said she has spent most of her first year in office “repeatedly asking for more information” so she could verify the company’s plans and their ability to carry them out.

“My requests have been largely rebuffed,” Jens-Smith said.

“Simply put, I cannot verify exactly what Triple Five plans to do at EPCAL and neither can any member of this board,” Jens-Smith said.

“We can hope. We can trust. But we cannot verify.”

Kent said she has no confidence that the applicant is qualified and eligible to develop an aviation and technology park, since their primary experience is in developing shopping malls, she said.

She is also not satisfied that Triple Five has the wherewithal to finance the development. Too many questions still linger because of the company’s refusal to provide pertinent information, she said.

“Nader Ghermezian shouted at the conclusion of a town work session that we should kiss them for coming to Riverhead. I beg to differ,” Kent said.

“Riverhead deserves more… The time has come for us to realize our own value and negotiate deals that are in Riverhead’s best interest and not developers,” Kent said.

“We do not have to accept substandard deals such as this one,” she said. “I do not find CAT qualified and eligible based on a weak development plan that does not ensure jobs or great long-term economic benefits to Riverhead Town. Let’s put this flawed deal to rest and move forward with a new energy and a fresh perspective. I vote no.”

The Community Development Agency has rules for determining if an applicant is qualified and eligible. The rules require an examination of the applicant’s financial wherewithal to complete the proposed project and a public hearing at which the applicant is required to present its qualifications. The board held the public hearing in two sessions, in February and March. It also sought and received additional documents from Triple Five as CAT’s controlling member.

Last night’s decision represents the board’s determination that CAT met the requirements of the rules.

What happens next?

The purchase agreement approved by the town board last Dec. 19 requires the purchaser to make an initial deposit of $500,000 with a title company within five business days after the agreement is signed by both parties.

The agreement allows the CAT a 90-day due diligence period within which to conduct an environmental investigation of the property. The due diligence period may be extended for an additional 90 days at the purchaser’s request.

If CAT decides to proceed with the purchase, it must notify the town before the close of business on the last day of the due diligence period and make an additional $500,000 deposit.

The sale is contingent on CAT obtaining a subdivision approval within one year from the end of the due diligence period. If the approval is not obtained within one year from the end of the due diligence period, either party may cancel the contract and the purchaser’s deposits must be returned.

Last night, Triple Five representative Stuart Bienenstock said after the meeting ended that CAT would proceed with the subdivision and necessary due diligence simultaneously. The subdivision will be only a few lots, he said. 

Bienenstock said he was very happy that a majority of the board found in favor of the application and said Triple Five is “very committed” to undertaking the development plan it has put before the town. Its commitment is evidenced by its purchase of the former Dowling College campus in Brookhaven, which it says will serve to complement its plans in Calverton. Triple Five purchased the 108-acre site in a bankruptcy proceeding for $14 million in September.

In a press release issued Wednesday night, CAT said it intends to develop an aviation and technology “hub” at the EPCAL site, which it said is zoned to accommodate 9.8 million square feet of development.

“CAT will build a minimum of 1 million square feet within the first five years after the transfer of the property,” the company said in the release.

Citing the federal designation of the EPCAL site earlier this year as an Opportunity Zone, under a new federal program designed to boost private investment in underserved urban and rural communities with tax benefits — such as temporary tax deferrals on capital gains or investment profits — CAT said its Triple Five partner is “creating an Opportunity Zone Fund to invest into the site and other designated zones across the United States,” according to the release.

“Over the next decade, CAT intends to leverage several billions of dollars of private investment to transform this significant asset into a world-class aerospace technology, innovation and high-tech manufacturing hub,” the company said.

Editor’s note: This article was updated after its initial publication.

Triple Five Press Release Nov. 7, 2018 by RiverheadLOCAL on Scribd