“All politics is local,” said the late Tip O’Neill, former speaker of the House. So in what condition do we find local politics here, say on the town level? Let’s take measure of a recent episode in Riverhead Town Hall. With Republican majority control of the town board, as with Democrats in control of the county, to be covered in the next column, in each case, where does the public interest come in? You be the judge.
The Riverhead Town Board Republicans a few months ago approved the sale of what’s left of the town’s largest asset, 1,644 acres at the EPCAL site in Calverton, for the low price of $40 million — despite the problems two of them previously had with the buyers and with the poorly drafted contract of sale. Some serious problems with that contract were the subject of an earlier column here — problems that still exist. This contract of sale will haunt the town for years.
To their credit, those two GOP board members, in an 11th-hour vote in December 2017, rejected that flawed contract. They were out-voted 3-2 by an outgoing supervisor, defeated at election a month earlier, an outgoing, term-limited councilman and another term-limited councilman with two years left in office.
Until six days prior to that vote, the buyer was Luminati Aerospace, a company owned by the now infamous Daniel Preston, who said he was going to manufacture high-altitude, unmanned aircraft at EPCAL and bring the aerospace industry back to Long Island. The town had signed a letter of intent with Luminati in April 2017, committing to sell 1,600+ acres of vacant land at the enterprise park for $40 million — though it had been negotiating with two other prospective purchasers to sell just 600 acres for that same price a few months before. Though the town had the right to terminate the letter of intent after 30 days, the former board throughout 2017 kept agreeing to extend it — allowing Luminati to negotiate with a financial backer, identified as NYC billionaire businessman John Catsimatidis.
Then all of a sudden, Catsimatidis was out and the Ghermezians were in. And the contract of sale was on the outgoing town board’s agenda at the final meeting of 2017 — the final meeting for the outgoing supervisor (an unabashed Preston/Luminati cheerleader) and the outgoing, term-limited councilman. With two Democrats who opposed the Luminati deal about to take office, it was now or never for Luminati and the town board acted accordingly.
What adds to this concerning situation is that the Ghermezians, whose family-owned Triple Five Group is known for developing mega-malls — including the long-stalled, controversial “American Dream” in New Jersey — moved in on the gravy train, not by negotiating with the town as a buyer, but by making a deal with Preston.
Preston and Triple Five formed Calverton Aviation & Technology, a limited liability company on Dec. 13, 2017, less than a week before the Riverhead Town Board approved the contract of sale to CAT. The town board majority didn’t care about significant differences between the letter of intent and the contract they approved. The letter of intent, for example, states that the buyer would be a wholly owned subsidiary of Luminati Aerospace. Yet the contract is with a third party jointly owned by Luminati and Triple Five. The town thus gave Preston the ability to basically turn around and sell his interest in the deal to a third party. Indeed, we later learned that Preston/Luminati is a minority member of CAT — a 25 percent owner — with no management rights.
At this point, Luminati has literally skipped town, with lenders and other creditors in hot pursuit, suing Luminati for millions.
The Ghermezians pledged from the start that they will exploit things even further by grabbing every tax break they can get. We know what the Riverhead IDA will do with that, but let’s not digress. The point is that the contract once again was shown to be drafted against the town’s interest by allowing this who’s-the-buyer-now shell game to occur.
The new town board, saddled with the contract approved by the outgoing town board, held the required qualified and eligible hearings in February and March 2018 — state law allows a no-bid land deal like this in an urban renewal zone like EPCAL only if the the buyer is found “qualified and eligible” to buy and develop the property in accordance with the town’s urban renewal plan for the site. In November, the board’s Republican majority voted to find CAT qualified and eligible. The two Republicans who voted against the contract in December 2017 warmed up to the deal after all.
Then Luminati got into a whole lot of financial and legal trouble and Preston announced he was moving his operation upstate. So, Luminati Aerospace, at the center of this contract’s “intended development” plan as well as the “qualified and eligible” record, the company that was to bring the aerospace industry back to Long Island, will not even have a plant at EPCAL, much less be the lynchpin of CAT’s development as presented.
Where does that leave the town? Real worries emerged in town hall— better late than never. And in April, those same two Republican board members again expressed concern about this contract, and joined the two Democrats in reaching the logical conclusion: this contract should be more closely scrutinized to determine where the town stands. The four of them (we’ll get to the fifth one in a moment) agreed to seek advice from a specialist lawyer or firm to review the contract and advise the town where it stands with Luminati out of the picture. The town was on a path of common sense to review its (and our) position. Bipartisanship could really save the day.
The fifth town board member, also a Republican, would have none of this. He believes the town need not seek advice from any lawyer other than the one who represented it in the negotiation of the contract and indicated he believes there’s nothing to be concerned about, anyway.
The board seemed poised to hire a law firm — it was on the May 22 meeting agenda — but then things got weird. One of the two Republicans who was going to support the move was a no-show. The other was now quite uneasy. A few days prior he said he wanted to table the hiring in order to work out the “scope” of this contract review. Yet at the May 22 meeting, he came up a completely new cause for delay: the town’s N.Y. State downtown revitalization grant application might be jeopardized if this EPCAL contract were to be scrutinized. Another member of the Riverhead GOP in-crowd, holding a staff position in Town Hall, rose from her seat in the audience to back up this absurdity, stating she had warned board members “privately” about her concerns.
So the story goes that an application for $10 million downtown revitalization grant be denied by the state because — now get this— reviewing this EPCAL contract of sale, no matter how prudent such a review may seem to us local yokels, might suggest to the state in all its grant wisdom that we as a community are losing interest in creating jobs here.
Are they serious? The state would hold it against the town if it examined its legal position in an ever-changing land-sale deal with a questionable, controversial developer?
In fact, the town’s position, and commitment, to create jobs is unquestionable — witness all else that has occurred with new jobs at the EPCAL site, including the addiction research and rehabilitation facility now under construction, plus construction jobs associated with the downtown “workforce housing” projects, the expansion of Northwell Health facilities in Riverhead, etc. etc.
Adding to this charade, CAT, which has had as many lawyers as they choose, marched out their third or fourth one to assure the town board that everything is fine with the EPCAL contract anyway; further, take CAT’s word for it, any problems with the Luminati debacle have all gone away owing to CAT’s shrewd legal maneuvers. What’s more, he warned, when the town board raises questions about any of this, or even dares to talk publicly of hiring a lawyer to look into it and report back to the board, it has a “chilling effect” on prospective investors in their project.
Is there fear in some quarters of how “knowledge maketh a bloody entrance?” Is the less the town knows the better? For whom?
To their credit, the supervisor and the Democratic councilwoman voted to bring in the expertise this town desperately needs when it comes to a legal document that has darkened our future as a community. But the Republican majority, at least the ones who showed up, gave the idea a thumbs-down.
The town board may yet again take up a resolution to hiring outside counsel to advise the town where it stands as early (or shall we say as late) as this week. May wisdom prevail.
Let’s reflect on this final irony: we are to buy into the idea that the state would balk at a municipality’s exercising fiscal responsibility. The state would even go so far as to withhold unrelated millions in grant money for our downtown if we reviewed a controversial document tied to the EPCAL giveaway. And this would all result from our examining contract obligations by Luminati, which itself won $2 million in state grants.
Yes, in posted reports on the town’s website from its own bond counsel, these state grants to Luminati are mentioned almost in a boastful manner. So what became of all of that Luminati grant money? The state wasn’t so sensitive about grants that time, but of course, they will be with us. Was it disbursed? If not, will it go to CAT? And just what was that grant’s connection to Luminati’s role in the contract?
But these questions we mustn’t ask, as this would upset our own prospects for other state grant money. Please!!!
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