EPCAL Watch Coalition
156 Young's Avenue, Calverton, NY 11933
631.369.8237
156 Young's Avenue, Calverton, NY 11933
631.369.8237
June 2, 2020
The Honorable Yvette Aguiar
Supervisor
Town of Riverhead
200 Howell Avenue
Riverhead, New York 11901
Re: EPCAL: Comments For Addition to Record For
June 2, 2020 Meeting of
Riverhead Town Board
Dear Supervisor Aguiar:
First, thanks for speaking with representatives of the
EPCAL Watch Coalition [EWC] about our concerns.
I write on behalf of EWC to continue our discussion and to comment on
the recent letters filed with the town on behalf of Calverton Aviation and
Technology LLC (“CAT”). This letter has also been sent to the Town Clerk, Diane
Wilhelm, as well as to all members of the Town Board. We ask that our letter be posted on the town’s
EPCAL web page and be entered into the official record of the June 2, 2020 Town
Board meeting.
EWC requests that before your office responds to recent
CAT written communications, the Town Board hold an open public discussion of
their content at a work session or Board Meeting in which public comment is included. Uncritical acknowledgement of the letters
from Christopher Kent and Justin Ghermezian may be interpreted legally as a
waiver of the Town’s right to cancel the contract at any time before closing.
Our initial reading is that these two letters add
nothing of substance to the town’s requirement for updated financial
information and a detailed development plan.
Moreover, the tone of the letters is both threatening and patronizing,
reminding us of the infamous intervention by the head of the Ghermezian family
that, "You have to hug us. You have to kiss us" because other regions
were "begging" for their investment. Evidently Riverhead’s cost to the Ghermezians
has declined from a $2.5 million inducement for unanimous approval in the Q
& E process to advance payment of $500,000 for which the Town is already
entitled.
We believe the Town must make use of its legal
opportunity to immediately terminate its contract with CAT because CAT has failed
to define its proposed development as required under the Urban Renewal Law. Moreover, although you have repeatedly requested
updated financial information from CAT, appropriate documentation of its
ability to finance the project has yet to be submitted. Finally, contract termination is the only reliable
way to restore to town control the 1,050 environmentally sensitive acres inappropriately
added to the sales contract at no additional cost and without adequate public
hearing and debate.
CAT Has Failed To
Define the Project
As you are aware, the town
is entitled to terminate its contract with CAT because a subdivision map of the
property was not filed with the County of Suffolk by the May 20, 2020 deadline.
Last September 17, 2019, the DEC issued a “Letter of Incomplete
Application” which rejected the Town’s submission because, among other defects, information necessary to
make findings pursuant to SEQR as previously detailed was not provided, the
Town’s position was “contrary to the letter and spirit of SEQR”, and the Town’s
submission lacked “sufficient detail.” The Suffolk County Department of Health has
also rejected the Town’s submission for similar deficiencies. The Town’s
submissions remain legally deficient and insufficient because no real details
as to the planned development have been provided by CAT.
Mr. Kent’s letter announcing that Arieli Capital, a new unvetted
partner, is “currently working” on a plan of development—two years after the
eligible and qualified hearing-- underscores why the Town lacks authority to
convey the property for a wholly unknown project. The Town and CDA do not have
authority to dispose of a taxpayer asset when it must speculate on the intended
development or public benefit. It is
clear this deficiency is attributable to CAT’s own failure to define its
intentions. CAT itself has said they, “recognize and appreciate the efforts the CDA and the Town
have made to secure the required subdivision approvals.”
CAT Has Failed to Provide Evidence of Its Financial Capability
Multiple press reports
state that Triple Five is delinquent under a $1.4 billion mortgage for its Mall
of America property in Minnesota and has sought state and federal financial
assistance. Riverhead Local has reported
Triple Five has also failed to provide audited financial statements in
connection with its American Dream Mall in New Jersey which is in crisis. Triple Five CEO Don Ghermezian has publicly
acknowledged the potential that the COVID pandemic may cause many malls to
default from their mortgage and financial obligations.
Article XIII of the
Contract provides that purchaser represents it has the financial ability to
complete development of the project. Article XXIII allows the Town to request ‘further
assurances” of CAT’s performance. Statements by CAT to the contrary, evidence of
its ability to perform is not voluntary or a matter of “courtesy”—but required
under the Urban Renewal Law and the Town’s own contract with CAT.
Although you have
requested updated financial statements from CAT, no such statements have been
provided. Press reports of Triple Five’s
financial difficulties and Mr. Ghermezian’s admissions of potential financial
troubles for his family’s existing projects demonstrate, in our opinion, that CAT
lacks ability to finance and develop an aviation or technological hub that will
cost hundreds of millions of dollars in the midst of a recession. The suggestion
in Mr. Kent’s latest letter that the Town must “believe in” CAT and now its new
associates so “investment will flow” is not a substitute for proper financial
documentation, which the Board has requested for months.
The Town must receive substantial
evidence, not wishful thinking. All claims by Triple Five should be subjected
to independent fiscal and legal assessment and cannot be cloaked by proprietary
family interests. The legal and financial
relationship of Arieli Capital to Triple Five must be explained and documented completely
and transparently.
The claim that the well reported
financial difficulties of Triple Five’s Mall of America and American Dream Mall,
and presumed problems of its gambling properties in Las Vegas, have no bearing
on CAT is unpersuasive. CAT consistently
emphasized during the eligible and qualified hearing that its ability to develop
EPCAL was supported by the strength of the Triple Five’s entire consortium of
entities.
CAT also owes to the
Town a complete explanation of its past and current relationship to its increasingly
invisible 25% partner and scientific inspiration Daniel Preston. When did Triple Five become aware of the collapse
of his business in Riverhead and why did it not inform the Town? Why did it pay his debt to Riverhead and was anything
received from him in return? When did it
become aware of the collapse of his business in Little Falls, New York, and the
related suspicious fire? What financial
and legal liability could fall on CAT because of his 25% ownership? What scientific and aerospace advisory or
guidance role does Preston currently play with CAT? If Triple Five has in effect severed its
relationship to Daniel Preston, in order to proceed with the contract is it
prepared to return to the Town the 1050 acres that were gifted to him without
payment?
Absent a well-defined
development plan and specific evidence that CAT can deliver on its promise, the
Town does not have authority to convey the property based on mere speculation. The Town’s actions
are contrary to the General Municipal Law, its own requirements under the Urban
Renewal Law, and the Riverhead Town Code. It is unconscionable, irresponsible
and illegal for the Town to continue to ignore these unequivocal lawful requirements.
Should the Town and CDA continue to ignore these mandates, EPCAL Watch is concerned
that the Town will be legally and financially in jeopardy.
Sincerely,
EPCAL WATCH
Reginald Farr III
Coordinator
