Riverhead officials today announced a new approach to closing the town’s $40 million land deal with Triple Five-affiliate Calverton Aviation & Technology.
The approach would allow the deal to close without the town having to first subdivide the land being sold to CAT, as its current contract of sale requires.
Instead, the Riverhead Community Development Agency, which owns the land, would transfer title to its all of its remaining land at the Calverton Enterprise Park — a total of 2,100 acres — to the Riverhead Industrial Development Agency. The IDA would enter into a “lease and project agreement” with the Community Development Agency and CAT that would require CAT to fulfill the intended development plan required by its current purchase agreement with the town.
The “lease and project agreement” would additionally shift the burden of obtaining subdivision and other approvals to CAT, CAT’s expense, said the town’s legal counsel, Frank Isler.
Once the “lease and project agreement” is signed, CAT will pay the town the balance of the $40 million purchase price. The process would take about six months, Isler said.
Prior to entering the “lease and project agreement,” the IDA would first determine that CAT has the financial wherewithal to not only pay the purchase price but also to develop the property in accordance with the development plan spelled out in the current purchase agreement, Isler said. Without a determination of CAT’s ability to fulfill its obligations, the IDA would not enter into the “lease and project agreement.”
After the IDA approves, CAT would proceed with the subdivision application. Once the subdivision approval is complete, the IDA would transfer title to the town to the roughly 500 acres dedicated to municipal uses — the ballfields, land for the Calverton Sewer District wastewater treatment facility, the Henry Pfieffer Community Center.
The new approach would remove Riverhead from the subdivision process — which has been stalled at the State Department of Environmental Conservation over the Riverhead Water District’s regulatory issues at the DEC and the state agency’s questions about public water supply infrastructure.
The town has negotiated an agreement with CAT to proceed as Isler outlined during today’s town board work session, said CAT’s attorney, Christopher Kent.
“We want to assume that obligation. We’re ready to do it,” Kent said in a phone interview after the town board discussion this morning.
Kent said the purchaser’s preference is to utilize the Riverhead Water District’s water supply. “All the applications to the county health department that have already been processed include the Riverhead Water District as the water purveyor for the development,” Kent noted.
The town has CAT’s “commitment to develop this property as the largest innovation and technology park in the eastern United States,” Kent said. “We’re ready to move forward with an IDA application where we’ll demonstrate our financial capability to move forward with the development of the project. And we look forward to moving forward and to to closing the deal,” Kent said.
CAT’s obligations under its purchase agreement with the town include investing $1 million in runway improvements within two years; developing at least 1 million square feet of industrial, beginning within 18-24 months of obtaining required approvals.
“CAT will pay taxes on the land and have a PILOT agreement with the IDA like any other developer,” Isler said.
CAT will also preserve the 1,000 environmentally sensitive acres deemed “undevelopable,” Isler said.
It will also pay $800,000 to light the Calverton ballfields, he said. There will also be a requirement that they can’t “interfere with” the recreation trail that encircles the enterprise park, he said.
The purchaser will also have to post the performance bond required by the current purchase agreement, he said.
Town board members have been discussing the proposal extensively in executive session meetings and today publicly embraced the new strategy.
“Today, we are taking the next step in the process of realizing the full economic potential of this valuable town asset, while providing very clear direction to Triple Five, ensuring they must take every step required to fulfill their obligations to unlock this great potential,” Supervisor Yvette Aguiar said, reading from a prepared statement before Isler’s presentation. “By doing so this property will be restored to the tax assessment roll and begin to generate revenue for the entire community,” she said.
“Triple Five has many companies which stand independently of the Ghermezian family’s holdings. Each entity as its own P&L, an independent business model and its own revenue streams,” Aguiar said, in an apparent reference to recent reports of the financial struggles of another Triple Five affiliate currently struggling to complete and open a megamall in New Jersey.
Councilman Frank Beyrodt said the “failsafe” in the new arrangement is if the IDA determines that CAT cannot fulfill its financial obligations in the buildout phase, the contract will be canceled.
Aguiar said the existing contract cannot be canceled “without an empirically documented default.”
Councilman Ken Rothwell said the new arrangement puts an end to ongoing financial concerns about the purchaser. “They will prove that they have the finances. If not, it gives us an opportunity,” Rothwell said.
Councilman Tim Hubbard, who voted against approving the contract in 2017, but was the deciding vote of approval of CAT as a qualified and eligible sponsor in 2018, said he was happy the 1,000 acres will be preserved as it was a concern of many residents. “To get the benefit of lighting on the ballfields is certainly a nice find for us,” Hubbard said.
“I think we’re making the best out of a murky situation that we absolutely can,” Hubbard said.
The board will take up a resolution Tuesday to approve making a joint IDA application with CAT to begin the process outlined in today’s meeting.
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