A coalition of citizens, civic groups and environmental organizations is calling on town officials to pull the plug on a $40 million land deal with Calverton Aviation & Technology, the company in contract to buy 1,644 acres of vacant industrial land inside the Calverton Enterprise Park.
Today marks a crucial deadline in the contract and either party can terminate the agreement because the town hasn’t met its obligation to subdivide the land to be sold to the buyer from the land being retained by the town.
Rex Farr, coordinator of the EPCAL Watch Coalition, is urging the town to “seize the opportunity to free the town from a very bad deal.”
The coalition has objected to the sale because it includes more than 1,000 acres of environmentally sensitive land that coalition members say the town should retain and protect.
EPCAL Watch has also objected to the town’s vetting of the purchaser before finding the company to be a “qualified and eligible sponsor” under the State Urban Renewal Law. The law allows a municipality to sell an asset without a competitive bid or for less than market value, if the buyer is determined to be “qualified and eligible” to buy and develop the land in keeping with the municipality’s adopted urban renewal plan.
The owners of CAT — a limited liability company owned by Triple Five Group company and Luminati Aerospace — “failed to provide real financial data and a serious development plan during the 2018 ‘qualified and eligible’ hearings,” Farr said.
A split town board in November 2018 designated CAT a “qualified and eligible” sponsor and former town supervisor Laura Jens-Smith, who opposed the deal, thereafter signed the contract of sale.
EPCAL Watch has urged the town to reopen the vetting process to determine if Triple Five — majority and managing member of CAT — remains “qualified and eligible” in light of the economic impacts of the COVID-19 crisis.
Triple Five pledged a 49% interest in its Mall of America in Bloomington, Minnesota and its West Edmonton mall in Alberta, Canada, as collateral for a $1.67 billion construction loan for its American Dream project in East Rutherford, New Jersey, according to the American Dream bond documents.
“Their flagship Mall of America is pressuring the State of Minnesota for access to public funds to offset a huge financial problem due to unpaid rent, against the wishes of previously compliant local officials,” Farr said, citing a May 15 report in the Minneapolis Star-Tribune.
The group is calling for “a professionally credible independent audit” of the Triple Five and Luminati principals, the Ghermezian family and Daniel Preston. The deal “cannot go forward with the sale of [the town’s] greatest asset on speculation,” Farr said.
“The last-minute introduction of Arieli Capital and Midnight Capital, unvetted partners with an unclear relationship to the purchasers, requires serious attention that goes beyond the spin,” he said.
When asked by town officials last month to voluntarily submit updated financial documents — which the contract of sale does not require them to provide, according to officials — CAT submitted letters from two investment companies with Manhattan offices. One of them, Arieli Capital, said its role would be creating and developing a tech hub at the EPCAL site for Triple Five. See prior story.
The contract with CAT gave the town one year from the end of the buyer’s due diligence period (a period granted to the buyer to allow it to conduct site investigations and environmental studies) to complete the required land subdivision.
The subdivision is in progress — the Riverhead Planning Board granted preliminary approval last June 20— but the town still needs to gain a key permit approval from the State Department of Environmental Conservation and a subdivision approval from the Suffolk County Department of Health Services before the planning board can grant final approval. It is unclear how much longer it will take to obtain the approvals from both outside agencies.
But neither party is looking to cancel the contract.
“We’re ready to close. We’d like to see the town move forward,” CAT attorney Christopher Kent said in an interview last night.
A majority of the members of the Riverhead Town Board wants to move forward with the deal and it is unlikely that protests from the EPCAL Watch group or a petition in opposition to the sale, signed by more than 4,900 people, will change their minds.
Councilwoman Catherine Kent, who voted against the “qualified and eligible” determination in 2018, said today she wasn’t satisfied with the disclosure the principals made then and she isn’t satisfied now.
“I was hoping to see something from the original companies saying they were sticking with CAT,” Kent said.
“I would like to see more concrete information that they still have the ability to build out the project,” she added.
Council members Jodi Giglio, Tim Hubbard and Frank Beyrodt support going forward.
Today, Hubbard said he is, in fact, “getting more and more excited as time moves on because it’s getting closer to be a completed deal.” The town seriously needs the revenue and the tax base this project will bring, he said.
Supervisor Yvette Aguiar says she remains focused on making sure the 1,050 acres of environmentally sensitive land on the site is protected from development.
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