Riverhead Resorts misses deadline to pay town $3.8 million

06/15/2010 12:00 AM |

Riverhead Resorts did not pay Riverhead Town the $3.8 million it owed Tuesday in accordance with its contract, but town officials say they still hold out hope that a sale will be completed this year.
And an attorney for Riverhead Resorts said in an interview Tuesday night that the group hopes to pay the $3.8 million by the end of this week or the beginning of next week.
“We hope, within a short period of time, to first make the payments for the two extensions that the town was gracious enough to give us, and then to move forward sometime between now and the end of the year with the actual closing on the property,” attorney Mitch Pally said. “That is still our goal.”
Riverhead Resorts is under contract to buy 755 acres of land from the town at the Calverton Enterprise Park for $155 million, although both the company and the town have said they have discussed lowering that price to $108 million. The drop in price, however, has not yet happened.
The contract, signed Jan. 15, 2008, set a Dec. 15, 2009 deadline by which to finalize the sale, but it also gave Riverhead Resorts the option to buy up to five three-month extensions at $1.9 million each.
In December, the Town Board amended the contract, and moved the deadline to close the deal to May 15. And in May, the board extended the deadline for the two extension payments to June 15.
The ultimate drop-dead date remains Dec. 15, 2010.
Residents Matt Hattorff and Charles Sclafani both asked about the June 15 deadline at Tuesday’s Town Board meeting.
“It seems like they’re just stringing us along and we’re going to end up with the property and we’re not going to have the money they were going to pay us,” Mr. Hattorff said.
Supervisor Sean Walter confirmed that the money had not come in by the June 15 deadline, but he said the town will continue working to subdivide the property because it can’t be sold until it is subdivided from the rest of the town property at EPCAL anyway.
“That property doesn’t sit in any position that we can sell it now, so at the end of the day, if they don’t close, we will at least have a 755 acre piece of property that we can sell,” Mr. Walter said.
He still feels the price they are willing to pay is a good deal for the town, and said that if the town put the property back on the market, it would take two to three years before it would be sold. The supervisor said the town’s attorneys have spoken with the attorneys for Riverhead Resorts’ financing company and received “positive information.”
Mr. Walter also is hoping the deal can be finalized this year, because that would alleviate the town’s budget problems. Officials say the town has a budget deficit of at least $7 million.
Mr. Pally said one of the group’s financing entities is a European company and there have been difficulties related to the U.S. Patriot Act, but he said all of the financing entities are being extra cautious given the size of the transaction, which is one of the reasons the deal is taking so long.
“Everybody is trying to accommodate everyone because this deal is so important to the town and to all of Long Island, that we’re all trying to make it happen,” Mr. Pally said.
tgannon@timesreview.com