Riverhead Takes A New Tack on EPCAL Sale
After nearly five years of negotiations with potential buyers of 1,600 acres of the former Grumman manufacturing site in Calverton now known as EPCAL, Riverhead Town is taking a new tack this year.
The town is in contract to sell the acreage for $40 million to a company known as Calverton Aviation & Technology, backed by Triple Five Real Estate One, a project of the Ghermezian family, which is known internationally as the developers of the Mall of America in Minnesota and the American Dream mall in New Jersey.
But that contract has been stalled for several years, in part due to concerns by New York State’s Department of Environmental Conservation over how public water and sewage will be handled in the town’s subdivision plan for the site.
CAT and the town have been in negotiations since last June to “take advantage of the hot market that exists currently,” said the town’s outside attorney on the project, Frank Isler, who laid out the components of the agreement at a work session after the board discussed the project in executive session on Feb. 10.
“The option presented to the board today has a process that will bring to a fairly rapid conclusion the goals of this town — sell the EPCAL property now and receive the $40 million purchase price, while at the same time redeveloping and reusing the property for industrial and commercial development,” he said.
Mr. Isler said the town’s Community Development Agency (CDA), which currently owns the entire property, would transfer the title to the property to the town’s Industrial Development Agency (IDA), which would then lease the land being used by the town back to the CDA, while entering a “lease and project agreement” with CAT for the 1,600 acres that CAT is in contract to buy.
“The terms of the lease would require CAT to perform the terms of the contract we have with them presently — to build their intended development plan, spending $1 million to renovate the runways and build out one million square feed of industrial and commercial facilities,” he added. “One of the key components of this arrangement is that CAT would be obligated to secure the subdivision approvals that we have been attempting to get on behalf of the CDA.”
Once those approvals are granted, the IDA would convey the parcels being used by the town back to the town’s CDA, and would convey 1,600 acres to CAT. Of those 1,600 acres, there would be covenants and restrictions on 1,000 acres, which would be preserved as grasslands, as per the original agreeemnt.
Mr. Isler said under this agreement, he expects the town would “receive $40 million, optimistically, in about six months time.”
Mr. Isler said CAT would need to post performance bonds when they receive title to the property, and that “should the IDA determine that CAT is not financially capable of doing the development, that will enable the town CDA to terminate the contract of sale.”
“On close examination of Triple Five, it has revealed that it has many companies which stand independent of the Ghermasizan family holdings — each entity has its own P& L, independent business model and seperate revenue streams,” said Riverhead Town Supervisor Yvette Aguiar. “This is exactly why now is the time to move this process forward. Standing still means this property will continue to be a stranded asset, a burden on the taxpayers and a stalemate is not going to happen on my watch.”
The project has been mired since it was first proposed by another company, Luminati Aerospace, which originally signed the contract with the town and then brought on Triple Five as a partner. Luminati had initially planned to build unmanned aircraft, but was awash in financial difficulties.
Triple Five has also come under scrutiny for its inability to live up to the terms of its contract with Brookhaven Town’s Industrial Development Agency after Triple Five bought the Dowling College site adjacent to Brookhaven Calabro Airport out of bankruptcy in 2018. The Ghermasizan family’s mall ventures have also struggled during the pandemic, particularly the American Dream mall, which had been slated for a grand opening just after the start of the pandemic in March of 2020.
Ms. Aguiar said the town is currently in a binding agreement with Triple Five, and can’t cancel it unless Triple Five defaults.
“We intend to move forward, and in doing so it will quickly become apparent whether Triple Five is qualified and eligible or if Covid has damaged its ability to make this commitment,” she said.
“If they don’t meet the qualifications, that contract will be voided,” said Town Councilman Tim Hubbard. “I think we’re moving in the right direction on this.”
“This brings a conclusion to concerns, so potentially we could have payment within six months and, if not, have the opportunity to move on,” said Councilman Ken Rothwell
Councilman Bob Kern thanked representatives of the IDA for coming up with a creative solution.
“Can it be purchased by CAT? If not, it goes back up for sale,” he said.
“This is a failsafe — if the IDA does not feel they can fulfill their financial obligations in the buildout phase, the contract will be terminated,” said Councilman Frank Beyrodt. “I think that’s a wise decision.”