Pictured Above: At EPCAL

Calverton Aviation & Technology, LLC (CAT), filed a notice of claim and complaint against the Town of Riverhead and its Industrial and Community Development Agencies in Suffolk County Supreme Court Jan. 8, arguing that the town “engaged in a scheme to evade Riverhead’s binding contractual obligation to sell 1,643 acres at the EPCAL property in Calverton CAT” and demanding that the town honor the contract.

The Riverhead Town Board voted in late October to cancel the contract, after the town’s Industrial Development Agency (IDA) found the company was not “qualified and eligible” to complete the $40 million purchase and construct up to 10 million square feet of industrial and research buildings there.

The town’s move came after more than a year of public pressure to cancel the contract, after a consultant for CAT presented a plan for a cargo airport at the site to the IDA in September of 2022. Riverhead residents have made clear for years that they do not want an airport there, and the new town board adopted a code amendment at its first meeting this January to prohibit the property from being used as an airport in the future.

CAT alleged in its complaint that the town, after “fraudulently inducing CAT” to allow the IDA to determine its financial qualifications, improperly influenced the IDA to “falsely find that CAT lacked such qualifications.”

CAT said in a press release announcing the lawsuit that it is represented by a team of litigators from the national firm of Kasowitz Benson Torres LLP led by partners Marc Kasowitz, Ron Rossi and Thomas Kelly.

The IDA’s scathing Oct. 23 resolution determining CAT was not qualified and eligible said “the company has not provided any evidence of eligible equity to fund the project,” and then detailed CAT’s proposal to rely on a “mezzanine loan” from a third party lender, whose most significant asset is “the ownership of certain NASDAQ-traded securities, a portion of which are pledged to third party lenders”… and that those securities “are of a technology company and have been trading only since November of 2021.” It goes on to state that CAT has told the IDA the mezzanine lender has “opted to not transfer any of such securities to the company, pledge securities to the company or liquidate”them, and “has opted not to provide a letter of credit or other eligible collateral to secure its funding obligation.”

CAT was obligated by the terms of the contract with the town to build one million square feet of mixed use buildings within five years, and has said they hope to build up to 10 million square feet of buildings there. Its representatives told the IDA last summer that they expect the initial one million-square-foot phase to cost $247 million.

The IDA’s resolution added that the agency had not received enough information from CAT to even hold a public hearing on the application, and that CAT “failed to provide specific project definition, especially with regard to the uses of the facility, including the allowed and prohibited runway uses. Project income and expenses would vary significantly depending on such uses, and therefore the financability of the project cannot be adequately addressed…. we must be able to analyze the costs and benefits – employment effects, environmental impacts and a host of other economic factors… Unless the agency (the IDA) is advised as to what specifically is proposed, the agency is unable to process, much less approve the application.”

In the complaint, CAT stated the Industrial Development Agency was “fundamentally confused about the financial information that CAT had provided, or otherwise misunderstood basic commercial custom and practice for project-financed development projects,” describing their decision as a “series of slapdash adverse findings cloaked under the guise of careful consideration.”

On Oct. 24, 2023, as the Town Board unanimously declared the contract null and void, former Town Supervisor Yvette Aguiar said she “personally negotiated an amendment to the contract in March of 2022 that allowed the town board to declare the contract null and void” as she cast a “resounding yes” vote.

CAT’s complaint alleges that Riverhead officials’ “words and actions celebrated the scheme to evade the Riverhead’s contractual obligations to CAT, including when, moments after voting to nullify its contract with CAT, (then) Riverhead Town Supervisor Yvette Aguilar gleefully took credit for the scheme.”

CAT had agreed to the March 2022 contract amendments at the time, but called the deal “a ruse” in their complaint, stating that the town had assured them that they “could proceed more quickly to closing if the transaction was restructured,” and that the town “fully intended to close” the deal even if the IDA did not approve the project.

New Riverhead Town Supervisor Tim Hubbard’s office referred comment to the Town Attorney.

“The Town intends to mount a vigorous defense to CAT’s baseless and misguided claims and mischaracterization of the facts underlying the Town’s cancellation of the contract,” said Riverhead Town Attorney Erik Howard.

A former Town Board in 2018 had deemed CAT qualified and eligible to develop the property, but there have been numerous setbacks to the sale in the ensuing years, including the lack of DEC approval of a subdivision map of the property and public concerns over the business dealings of CAT’s parent company, Triple Five Worldwide, which is best known for its development of large shopping malls.

An overflow crowd filled the Hotel Indigo ballroom demanding the town not consider an airport at EPCAL at a May 2023 public information session on the project organized by Riverhead’s Industrial Development Agency.

The proposal for a cargo airport let to a huge public backlash, with hundreds of people packing into meetings in 2023 demanding the deal be canceled. It became the driving issue behind the 2023 election season, leading to the Town Board’s cancellation of the deal just two weeks before Election Day.

“CAT’s plan contemplates developing up to 10 million square feet of space to host tenants from the environmental, energy, academic, and other sectors,” said CAT representatives in their press release. “This development will create thousands of high paying jobs, significant economic benefits for Riverhead and its taxpayers. Phase 1 of the Project anticipates CAT investing approximately $250 million into EPCAL, to develop the first phase of the Project, as stipulated in the Purchase Agreement.”

“For over five years, CAT has worked in good faith and spent millions of dollars to develop a property that has been dormant for some 25 years in a manner consistent with the needs expressed to it by the Town of Riverhead and its citizens,” said CAT attorney Marc Kasowitz. “With this lawsuit, CAT intends to vindicate its contractual right to do so, to correct the false record espoused by the Town Council and RIDA concerning CAT, and, ultimately, to create a world class center for industry and innovation for the benefit of the people of Riverhead.”

Beth Young
Beth Young is an award-winning local journalist who has been covering the East End since the 1990s. She began her career at the Sag Harbor Express and, after receiving her Masters from the Columbia University Graduate School of Journalism, has reported for the Southampton Press, the East Hampton Press and the Times/Review Media Group. She founded the East End Beacon website in 2013, and a print edition in 2017. Beth was born and raised on the North Fork. In her spare time, she tinkers with bicycles, tries not to drown in the Peconic Bay and hopes to grow the perfect tomato. You can send her a message at editor@eastendbeacon.com

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