Riverhead Supervisor Sean Walter announced last week that Rechler Equity Partners, the development group that walked away from purchasing 255 acres of town-owned land in Calverton last year, probably owes the town $250,000 for terminating the deal.
And during a brief meeting in Hauppauge Tuesday between the supervisor and the group’s head, Gregg Rechler, the well-known developer said he would pay the town the money — if indeed it’s owed.
“[Mr. Rechler] said his attorneys and his comptroller are going to go through the contract, and if he owes the money, he says, not a problem,” Mr. Walter said after the meeting Tuesday. Mr. Rechler later confirmed the same to the News-Review.
“And he said he wished I would have picked up the phone and called him,” Mr. Walter added.
The supervisor’s office issued a press release Friday stating the supervisor had “uncovered a potential windfall for taxpayers” — a reference to a $250,000 letter of credit Rechler Equities had posted as part of the sales contract that would be paid to the town if the group backed out of the deal.
That letter of credit expired in May.
In the press release, Mr. Walter insisted town attorneys would “vigorously pursue the deposit in question and take any measure necessary to recoup this money.”
Mr. Walter’s announcement also drew the ire of Phil Cardinale, his Democratic challenger for supervisor in this year’s local elections. In an interview this week, Mr. Cardinale charged Mr. Walter’s administration with dropping the ball on the matter by not pulling the line of credit before it expired — and possibly costing the town big bucks.
Mr. Cardinale, who was supervisor when the town entered into the contract with Rechler, said he told Mr. Walter in April that Rechler might owe the town more cash.
“The story actually begins with a 2011 [News-Review] article by Tim Gannon, which stated Rechler owed the town $125,000 for a contract extension,” Mr. Cardinale explained. “About the same time I was in Town Hall for some other purpose … I spoke to Sean and I said, ‘Look, I saw that note in the paper. You sure there isn’t more money for the town to pick up?’ And he said, ‘I’ll check it out.’”
Mr. Cardinale said he never heard anything more on the matter, so in June, he had his daughter fill out a Freedom of Information Law, or FOIL, request to find out whether or not the town ever received $250,000 from Rechler, which had sought to build a massive, high-tech industrial park called Repcal at the Enterprise Park at Calverton.
When asked why his daughter filed the FOIL request, Mr. Cardinale said he “wanted a prompt response. And I wanted it to appear to be someone unrelated to politics.”
Still, he said, town officials dragged their feet and never gave an answer.
“We got [the town attorney’s] response on Friday saying they needed 15 days to process my request,” Mr. Cardinale explained. “Four and a half hours later, [the town] issued this press release.”
He said the town is now in danger of not receiving any money — no matter Mr. Rechler said this week.
“It’s really possible that we’re never going to see this $250,000, because Repcal is a Delaware-based shell corporation set up just for the purposes of this [high-tech park] project. It has no assets,” Mr. Cardinale said.
Mr. Rechler said Tuesday he had thought his group was all settled up with the town, but added, “We’re looking into it, and if this claim is accurate then we’ll make good on it.”
Repcal was indeed a single-purpose LLC, as the former supervisor had asserted, Mr. Rechler said.
“Phil really understood and was really hands-on in negotiating the deal and the [contract] amendments, and really understood it,” Mr. Rechler added. “The problem was, Sean didn’t really understand the deal and the benefits to the town.”
Mr. Walter said in an interview Tuesday that he and Mr. Cardinale spoke only “in passing” in April, and that he did ask in-house attorneys to look into the matter, but they found nothing.
“It wasn’t until [Mr. Cardinale’s daughter] started FOIL-ing for stuff and this issue was in front of me that I thought, ‘Hey Phil must know something,’” the supervisor said. “But we’ll get the money and I take responsibility; it shouldn’t have gone that way.”
Mr. Walter then accused Mr. Cardinale of putting political interests before those of the town.
“I just wish he would have picked up the phone and said to me, ‘Hey, numbskull, look at this thing.’”