Riverhead Industrial Development Agency hires new law firm to assist with Calverton Aviation & Technology application for benefits

The Riverhead Industrial Development Agency last week hired a new transaction counsel to assist in the review of the Calverton Aviation & Technology application.

The IDA board at a special meeting Dec. 21 appointed the law firm of Phillips Lytle as transaction counsel for the CAT application. The action was taken at the recommendation of the board’s governance committee in response to a “perception of a conflict of interest in the community” on the part of the IDA’s counsel, Nixon Peabody.

Nixon Peabody, which has served as counsel to the IDA following the retirement of its longtime counsel Richard Ehlers, was separately appointed transaction counsel for the CAT application on Sept. 21. The transaction counsel is charged with undertaking due diligence review of CAT’s application for IDA financial benefits to support the company’s development of approximately 600 acres of vacant industrial land inside the Enterprise Park at Calverton.

As reported by RiverheadLOCAL on Oct. 3, two attorneys at Nixon Peabody previously worked for Triple Five affiliates developing the American Dream project in New Jersey. CAT is also an affiliate of Triple Five, a conglomerate owned by the Ghermezian family. One of the attorneys is a partner in Nixon Peabody’s real estate group and and head of its national leasing team; the other is special counsel in the firm’s real estate group.

In a statement provided to RiverheadLOCAL by the firm’s communications director said Nixon Peabody does not represent “Triple 5 or any of its affiliates involved in the Calverton Aviation & Technology (CAT) transaction.”

The firm represented a Triple Five subsidiary involved in leasing retail space at the American Dream mall, the statement said. That work was concluded prior to the submission of the CAT application, it said. Work done by a second attorney in connection with the American Dream mall was concluded before he joined Nixon Peabody and was unrelated to the CAT project, the statement said.

The IDA obtained “several opinions” that “there is no legal conflict of interest with Nixon Peabody as transaction counsel,” IDA board member and governance committee member Lori Ann Pipczynski said, reading from a prepared statement. However, “due to the perception of a conflict of interest in the community and out of an abundance of sensitivity to those concerns, the committee felt that engaging with a separate firm was warranted to advance the review process without any perceived prejudice,” Pipczynski said.

“Therefore, several firms were researched, references were sought among IDA colleagues and Phillips Lytle was the recommended choice to interview,” Pipczynski said. Following the interview, the committee voted to recommend the firm to the full board, she said.

Pipczynski said Phillips Lytle has “extensive IDA experience with similarly large and complex development projects.” The firm also has a “cross-disciplinary approach across nationwide offices, particularly as it relates to the SEQRA process,” Pipczynski said, and “experience in configuring innovative finance arrangements for public infrastructure.” The firm also understands and is willing to “satisfy the committee’s desire for public information sessions about the project,” she said.

The board voted unanimously to appoint the new firm.

CAT, jointly owned by a Triple Five-affiliate limited liability company and Luminati Aerospace, is in a $40 million land deal with the Town of Riverhead. It is proposing to develop 10 million square feet of industrial space at the site. CAT presented details of its proposed development plan at the IDA’s Sept. 21 meeting at which the agency accepted the company’s application for benefits, filed jointly with the Town of Riverhead Community Development Agency. Under an agreement between the town and CAT, if the IDA approves the application for benefits, the town will transfer its land holdings at the site, totaling 2,100 acres to the IDA, which would then enter into a “lease and project agreement” with both the town and CAT. The company pay the town the balance of the purchase price and pursue the subdivision approvals needed to transfer title from the town to CAT, as per the 2018 contract of sale. The lease and project agreement would allow CAT to simultaneously begin developing the site.

CAT’s engineer and architect told the IDA during the Sept. 21 presentation that the company’s plans would transform the Calverton Enterprise Park into a regional air cargo logistics hub for package delivery services to consumers on Long Island. The development would be undertaken in three phases, the company representatives told the IDA, and would ultimately consist of 9.24 million square feet for logistics centers in eight buildings along the two runways, a 400,000-square-foot distribution center at the rail spur within the park and 400,000 square feet of flex space in three buildings — plus 8,640 parking spaces in two parking garages and another 3,500 spaces in surface parking lots. The plans also call for the relocation of the taxiways along both runways and the construction of aprons along the taxiways for aircraft parking.

The Sept. 21 presentation to the IDA was the first time CAT representatives discussed developing logistics and air cargo uses at the site. Previous presentations to the Town Board focused on CAT’s intention to bring high-tech aeronautics manufacturing uses to the site.

Its Sept. 21 presentation to the IDA notwithstanding, two days later, CAT issued a statement saying it “has absolutely no plans to create an air freight cargo terminal” at the enterprise park.

“CAT’s intent is to utilize the runways for the purpose of encouraging aeronautical startups to design and test their designs on site, to allow corporate jets to bring in executives to connect with their investments, and to provide a means for urgent or time-sensitive supply chain components to be flown in…” the statement said.

At an Oct. 6 “supervisors roundtable” in Southampton, CAT attorney Chris Kent said his client is “proposing a mixed-use industrial high technology park” in Calverton. “There will be aviation-related uses, as there always have been in Calverton,” he said, referring to the site’s use by Grumman Aerospace for manufacturing and testing military aircraft.

“We’re looking to utilize the infrastructure at Calverton as accessory to principal uses that will be developed at the property. The principal uses will be related to aviation, aeronautics, academics, energy, environmental uses. We’re looking to do research and development, and the runways will be used accessory to those principal uses,” Kent said.

“We are not planning and have no intent to develop an air cargo jetport,” Kent said.