Let’s talk giveaways.
I’m inspired to discuss the subject of giveaways because yesterday, during a town board work session, Councilwoman Jodi Giglio acknowledged that vacant industrially zoned land sells for hundreds of thousands of dollars per acre.
Yet the Town of Riverhead is in contract to sell 1,644 acres of industrially zoned land, including two runways, for $24,330.90 per acre. That’s the per-acre price of the land being sold to Calverton Aviation and Technology for $40 million.
Giglio made that statement about the value of industrial land during a debate on another subject. No matter. It’s accurate and it underscores the value of the giveaway that is the sale to CAT.
Check out the Loopnet website. Search industrial vacant land for sale in Suffolk County. A search this morning turned up: a 26.6 acre lot within the Calverton Enterprise Park (Scott and Burman avenues) being offered for $8,246,000, or $310,000 per acre; a 37.1-acre parcel at 1743 Middle Road in Calverton being offered for $6,492,500, or $175,000 per acre; a 1.88-acre plot at 1313 Speonk-Riverhead Road, Speonk offered for $699,000; or 25.699 acres at $400,000 per acre on Grucci Lane in the hamlet of Brookhaven. I could go on, but you get the idea.
This year marks the 20th anniversary of the “Great Grumman Giveaway” election campaign of Republicans running for town board in 1999 on the platform that the Democratic majority in office had sold off the town’s most valuable asset for a song.
The incumbent Democratic majority — Supervisor Vinny Villella, and councilmen Phil Cardinale and Christopher Kent — had agreed to sell the 491-acre “industrial core” at the former Grumman site for $17 million to developer Jan Burman. In case you don’t have a calculator handy, that’s $34,623.22 per acre.
The property to be sold included the existing Grumman industrial buildings, but not the runways. The Town of Riverhead Community Development Agency was to retain the remaining 2,400 acres, with the exception of some areas that had been contaminated by Grumman’s operations and would be cleaned up by the U.S. Navy, which owned the property. Grumman had vacated the site in 1996 and the U.S. Navy deeded the land, including the industrial core, to the town in 1998 — for a buck, thanks to legislation then-Rep. George Hochbrueckner got passed in Congress.
The “Great Grumman Giveaway” was the centerpiece of the Republican campaign in 1999, which culminated in the election of Robert Kozakiewicz — who was, at the time, a former town attorney — and local businessman Edward Densieski, marking the return of a Republican majority on the Riverhead Town Board, a majority the Riverhead GOP would hold until 2018.
Fast forward. In 2001, Riverhead closed on the deal with Burman. After taking office in 2000, Kozakiewicz acknowledged there was no way out of the deal signed by the previous administration and it would go forward. Besides, upkeep on the buildings — including utility costs — had cost the town north of $1 million in 2000 alone.
In the ensuing years, Riverhead entertained one scheme — er, I mean proposal — after another for the former Grumman site. There were more than a few blatant land grab attempts by wannabe sand-miners and others. The town even entered into a contract to sell 755 acres to Riverhead Resorts — a joint venture of Bayrock Group and a Scottish developer — for $155 million ($205,298 per acre). But that deal, entered on the eve of the 2008 economic meltdown and real estate market collapse, fell apart.
In 2011, under the administration of Sean Walter, Riverhead embarked upon changing the zoning and creating an industrial subdivision at the site — something Densieski had advocated way-back-when.
The town went on to spend something on the order of $750,000 on the process, in consulting fees, plans, maps and revisions to existing planning documents.
But Riverhead never completed the process. In late 2015, Daniel Preston came to town.
Preston bought the Skydive Long Island building (located in the “industrial core”) and the town board, after what in retrospect can only be considered a perfunctory “qualified and eligible” process, gave him exclusive use of the site’s active runway.
Preston made a lot of claims and promises — a Fortune 250 backer, DOD contracts, etc. I’ve written a lot about him and won’t rehash it now. The important thing, since we’re talking giveaways here, is that the town’s pursuit of the subdivision — and its marketing efforts — for all intents and purposes came to a dead stop.
Preston revealed in an interview I had with him on March 28, 2017 that he wanted to buy “the whole airport.” That was how he put it.
What I didn’t know at the time was that a deal with the town had already been essentially negotiated. Luminati had already sent the town a signed letter of intent dated March 27, 2017.
I also didn’t know that Walter had, on Jan. 26, 2017 signed a nondisclosure agreement with Preston’s Luminati Aerospace. I didn’t know this, because no public vote was taken authorizing Walter or anyone else to sign the agreement. I obtained a copy of the NDA through a FOIL request this spring.
The town board authorized the letter of intent on April 4, 2017, stating its intention to sell the remaining developable acreage at the former Grumman site to a newly formed entity to be a “wholly owned by Luminati.” The LOI gave the parties 30 days to negotiate the terms of a “definitive agreement,” after which either party could cancel the letter of intent.
Instead, the town board allowed the town to be tied up by the LOI for eight months. Then at the last meeting of the year in December, the lame duck town board approved a “definitive agreement” with Calverton Aviation and Technology, a joint venture of Luminati Aerospace and Triple Five — notably not the “wholly owned” subsidiary of Luminati called for in the LOI. The vote essentially tied the hands of the incoming board — which would consist of a new supervisor and councilwoman, both Democrats, who had campaigned against the deal, two Republican incumbents (Giglio and Councilman Tim Hubbard) who voted against the deal and Councilman James Wooten, who maintains to this day that the deal with CAT is the best the town can do.
That’s a common refrain around Riverhead nowadays. The town has owned this site for so long — 21 years — and hasn’t been able to do anything with it. And heck $40 million is nothing to sneeze at. It’ll put the town’s fiscal house in order — at least for a couple of years.
I will admit that “EPCAL fatigue” has occasionally prompted me to shrug my shoulders and say, “Why not?” as far as the latest version of the Great Grumman Giveaway is concerned. Could it be any worse than nothing?
The people hollering about the Great Grumman Giveaway in 1999 — former supervisor Kozakiewicz, who is again the town attorney, former councilman Densieski, who is now a member of the planning board, the local Republican Party… They’re all content with this deal.
The Democrats aren’t making much noise about it either.
But then I think about how we got to where we are at this moment. The fatigue gives way to indignation.
What happens going forward will depend on the Ghermezian family, which owns the Triple Five conglomerate. Now represented by Christopher Kent — attorney and a former councilman involved in negotiating the 1999 Great Grumman Giveaway — will the Ghermezians develop the site as stated in the contract of sale and the town’s urban renewal plan for the site? If they don’t, or if they take another path, what recourse does the town have anyway?
If nothing else, this $24,330.90 per acre deal is a very good investment for the Ghermezians, who are best known for developing and operating mega-malls. It’s less than 10% of the per-acre offering price of vacant land in the Calverton Enterprise Park right now.
To be clear, there’s nothing illegal about the below-market, no-bid sale by the town. The site is in a designated urban renewal area and the State Urban Renewal Law specifically allows it. The town has to make a determination that the buyer is “qualified and eligible” to purchase and develop the site in accordance with the town’s adopted urban renewal plan.
And the Town of Riverhead made that determination last year, with the two council members who voted against the deal in 2017 (Giglio and Hubbard) joining Wooten to approve CAT as “qualified and eligible” in a 3-2 vote.
And with that vote, the Great Grumman Giveaway II was finalized.
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