Wednesday, June 3, 2020

EPCAL Watch June 2 Letter to Board


EPCAL Watch Coalition
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

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