11/18/10 9:27am
11/18/2010 9:27 AM

Riverhead Resorts’ quest to build a massive resort in Calverton appears to have come to an end, as the Riverhead Town Board voted to formally terminate its contract with the company Friday.
Despite this, Riverhead Resorts president John Niven and attorney Mitch Pally say they still intend to pay the town the $3.9 million Resorts owes in late contract extension fees in the hope that town officials will change their minds.
“We’re going to tell the town we have it and offer to send it to them and whatever the town decides, the town decides,” Mr. Pally said Tuesday. The money, which Resorts had planned to send by wire by Friday, still had not arrived as of yesterday.
Critics of the Resorts’ plan were essentially saying, “I told you so,” after the board voted to cancel the contract, under which Resorts would paid the town $108 million for 755 acres at the Enterprise Park at Calverton, or EPCAL.
“Nobody likes to say, ‘I told you so,’ but we never believed in this project in the first place,” said Richard Amper, executive director of the Long Island Pine Barrens Society environmental group. “It now joins the motion picture studio, the NASCAR track, the Wilpon deal, the Densieski airport, the Mario Cuomo international jetport, the Linda Alba theme park, the water-ski park and who knows how many other pie-in-the-sky ventures that have been proposed at EPCAL and were defeated because they are not real.”
As originally proposed, the Riverhead Resorts project called for construction of eight theme resorts, including one with an indoor ski mountain and another with a man-made lake constructed over the unused 7,000-foot runway at EPCAL, which would be torn up. The $2.2 billion project was being led by Baldragon Homes, a small Scottish company led by Mr. Niven, whose background was mostly in residential construction in Scotland. A larger New York City company called Bayrock Group, which has worked on projects with Donald Trump, was heavily involved in the project initially but later pulled back.
“There have been a lot of failed development projects in the last 20 years, but Riverhead seems to have cornered the market on them,” Mr. Amper continued. “It’s the bad idea capital of the world. If you have a bad idea, take it to Riverhead.”
Mr. Amper said his organization never launched a major campaign against the Resorts project because they didn’t think it was necessary, since it was unlikely to ever be built.
Mr. Amper feels the town should be seeking to develop EPCAL with high-tech companies, as is being done elsewhere on Long Island, at places like Stony Brook University, Brookhaven National Lab and Cold Spring Harbor labs.
Resorts had been late in paying several $1.9 million contract extension fees dating back to May 15. The contract with Resorts permitted them to purchase up to five three-month extensions for $1.9 million each. They had missed three of those payments, and promised to pay off two of them, totaling just under $4 million, this month.
The company delivered a check equivalent to that amount on Nov. 3, but it was written in English pounds instead of American dollars, was not a bank check and was directed to be kept in escrow until the Town Board agreed in principal to lower the sales price to $108 million from the original $155 million and to schedule a public hearing on the new price.
But after Resorts’ attorneys posed with the town officials while displaying the check during the Nov. 3 Town Board meeting, the bank that issued the check canceled it for security reasons because a close-up photo of it appeared on the News-Review website.
Shortly after that, Supervisor Sean Walter announced he would vote to terminate the Resorts contract regardless of whether the fees were paid.
Mr. Walter said that instead of immediately seeking to sell the land to new developers, he wants to hire a land-use consulting firm to reevaluate the zoning at EPCAL and to finish up the ongoing subdivision there, since the land can’t be sold without legally subdividing the sold portions from the rest of the town property.
Former councilman Ed Densieski, the only board member who voted against opening negotiations with the Resorts group in 2007, also had an “I told you so” moment when asked about Friday’s vote.
He had supported an alternate proposal for EPCAL that was led by more established developers Scott Rechler and Jim Petrocelli.
“We had two of the best developers on Long Island, who really wanted to build here and who had the money, and instead we went with a no-name company that has no money,” he said. “It’s mind-boggling to me.”
But Mr. Densieski said he opposes the current board’s plan to re-study the zoning at EPCAL.
“That’s a waste of time, in my opinion,” he said. “We should keep the zoning we have and just make changes to it.”
Mr. Densieski feels the town should lease the property to developers so they can get projects started while they wait for subdivision approvals and contracts.
Mr. Niven told the News-Review last week that he has spent $18 million on the project, including paying the town $7.5 million in non-refundable payments. He told the board recently that although he has financially drained both of his companies in trying to build Riverhead Resorts, he’s determined to complete the project.
Former supervisor Phil Cardinale, who was on the board that selected Resorts over Mr. Rechler’s company, said this week, “I’m pleased the town collected nearly $8 million but disappointed that the transaction didn’t close.”
Mr. Cardinale said the contract was written in such a way that the town could have collected as much as $14 million in extension fees and other payments without ever selling the land.
He noted the net amount the town received from selling nearly 500 acres of industrial land at EPCAL to developer Jan Burman in 2001 was about $12 million, only slightly higher than the $7.5 million they got from Resorts for not selling anything. The Burman deal redirected a chunk of the $17 million sales price to real estate commissions and property management fees, he said.
While the town has received $7.5 million from Resorts, Mr. Cardinale continued, “There has not been one dollar collected since I left office.”
In addition to the Riverhead Resorts deal being terminated, the town’s other deal at EPCAL — to sell 300 acres of industrial land to Rechler Equity Partners — also fell apart because the group’s head, Gregg Rechler, sought to add housing and retail to the project.
“I’m disappointed the board was unable to support either deal and we’re now in the same position we were in 10 years ago,” Mr. Cardinale said. “Since we were given this property in 1998, only about 500 acres has been returned to the tax rolls.”
On Friday, when the board voted 4-1 to terminate the contract with Resorts, Mr. Walter had issued a written statement that began: “Ding-dong, the witch is dead.”
“Riverhead Resorts was a sort of pay-per-view movie purchased by my predecessor,” he wrote. “I always felt I knew how this movie would turn out, but I was willing to give it some time, just to be sure. Riverhead Resorts came into the process making grand claims and looking to take on a rather large project. Some felt they lacked a track record and most felt they would have trouble gaining financing.”
The supervisor said Resorts had been in arrears under the terms of its contract for some time and “has offered excuses and rationalizations but what hasn’t happened is that the money hasn’t crossed the finish line.”
The supervisor said the contract technically expired May 15, when Resorts failed to make an extension payment. He said he had previously voted to give them more time because he thought the money might help him avoid eliminating some town jobs in the 2011 budget. But he said he changed his mind last week because “it is clear to this member of the Town Board that Riverhead Resorts cannot close their transaction.”
Councilman John Dunleavy, who opposed terminating the contract Friday, insisted the money the town had already received from Resorts has helped keep taxes low for the last few years.
Mr. Niven, the Riverhead Resorts principal, said he has deals in place that would provide the project’s full $2.2 billion price tag in January, even though Resorts had difficulty getting the $3.9 million this week.
He is still vowing to see the project to fruition.
“Probably one of the worst things we have done is try to give exact dates,” Mr. Niven said. “The way the economy is right now, trying to raise money is not what it was three years ago. You could go to the bank three years ago and they would throw money at you.
“My commitment to Riverhead Resorts is stronger today than it was last year or the year before. We are determined to do this project on Long Island. And I don’t think there are many projects going on in Long Island just now because people cannot raise the cash, and I think the position we are in just now is an achievement in itself.”
tgannon@timesreview.com

11/13/10 3:21am
11/13/2010 3:21 AM

Just hours after Riverhead Town canceled its contract with Riverhead Resorts ­— the group that planned to build a $2 billion resorts complex on town-owned land in Calverton — another potential developer stepped forward.

BARBARAELLEN KOCH PHOTO Neil Rosenberg of Ronkonkoma wants to build a dragstip at EPCAL.

Neil Rosenberg of Ronkonkoma, who was at Town Hall Friday as the Town Board voted to terminate its land sale contract with Riverhead Resorts, hopes the board will sell part of the land to his group, which wants to build a quarter-mile drag racing strip at the former Grumman naval plant property, known as the Enterprise Park at Calverton, or EPCAL.
“We were waiting for this to happen,” Mr. Rosenberg told the News-Review, referencing the failed resorts project.
Mr. Rosenberg said he was part of the Rexcorp group, to which the Town Board had considered selling 755 acres to three years ago. The board ultimately decided to sell the land to Riverhead Resorts instead.
Rexcorp, led by developer Scott Rechler, sought to build a large resort featuring an oval race track, equestrian facilities, hotels and conference centers and other recreational facilities.
“This is the older proposal on a smaller scale,” Mr. Rosenberg said. “Some of the players from that group are ready to immediately propose a smaller project.”
Scott Rechler is not involved in the current proposal, he noted
The proposal will not include residences, resorts or other attractions along with the drag strip, Mr. Rosenberg said.
“It’s strictly a drag strip at this time and we’d want a right of first refusal on the remainder of the 755 acres. It would be dug down into the ground, and have noise attenuation, all the things a modern drag strip would have,” he said.
There would be stands for between 5,000 and 10,000 spectators, he said.
Mr. Rosenberg said his group seeks to purchase about 250 acres at about the same price per acre Riverhead Resorts offered in its most recent proposal. That would come to about $35.7 million.
Riverhead Supervisor Sean Walter, who spoke briefly with Mr. Rosenberg after Friday’s meeting, said he’s hoping to hire a planning consultant to study subdividing the land before considering new proposals.
Those processes, along with a town site plan for EPCAL, could take at least a year, he said.
Recreational zoning has to be investigated further, he said.
“We’ve spent 11 years trying to do something on the recreational zoning and we’ve had one song and dance after another; it doesn’t really work there,” Mr. Walter said. ”I’m not promoting any use at this point. Let’s study it and find out what works for the property.”
tgannon@timesreview.com

11/12/10 3:59pm
11/12/2010 3:59 PM

Riverhead Town’s contract with Riverhead Resorts, the company that sought to build a complex bigger than Disneyland on town-owned property in Calverton, is off.
The Riverhead Town Board voted 4-1 to terminate the $155 million agreement Friday morning with Councilman John Dunleavy casting the sole dissenting vote.
Mr. Dunleavy said the $7.5 million Riverhead Resorts has already made in non-refundable payments to the town have helped keep the tax rate down. He also said it was wrong to terminate the contract before Tuesday, the date the board gave Resorts to make a $3.9 million payment for two contract extension payments it owed dating back to May 15.
The project, which was expected to cost $1 billion to build, called for eight themed resorts including an indoor ski mountain.
“Finally, we have got the 800 pound gorilla off our back,” said Councilman George Garbrielsen. He said the town can now subdivide the property and market it properly.
Mr. Walter said he opposed terminating the contract earlier because he felt the payments might help the town avoid layoffs.
“That brings us to today,” he said in a written statement. “It is clear to this member of the Town Board that Riverhead Resorts cannot close their transaction with Riverhead. Months of excuses, platitudes, apologies, justifications, and explanations have only left Riverhead holding the bag at EPCAL and this cannot continue.”
Councilman Jim Wooten, who has opposed terminating the contract in prior votes, said he voted for it today because he feels Resorts and other developers still will be able to make a proposal for the property in the future, although he said he thinks it will probably be for less money.
tgannon@timesreview.com

11/09/10 6:03pm
11/09/2010 6:03 PM

TIM GANNON PHOTO Representatives from Riverhead Resorts and Riverhead Town posed with the check delivered by the company Wednesday for the $3.9 million it owes the town in extension fees. From left are Resorts' attorney Mort Weber, town special counsel Frank Isler, Councilman Jim Wooten, Supervisor Sean Walter and Councilman John Dunleavy.

The handwritten check that Riverhead Resorts attorneys presented to Riverhead Town Board members during an impromptu press event in Town Hall last week has been canceled by the London-based bank that issued the check after a closeup photo of it appeared on the News-Review website.
Citing security concerns, Barclays bank officials will instead seek to wire the money to Riverhead Resorts’ attorney Mitch Pally and said the money should clear by the end of the week.
But Riverhead Supervisor Sean Walter said they better move quickly. He’s calling a special Town Board meeting for 10 a.m. Friday to vote on a resolution to cancel the contract with Riverhead Resorts.
Mr. Walter, who figures to be the swing vote on whether the deal lives or dies, is not even certain if he will vote to continue the contract even if Resorts does get the money in on time.
“I couldn’t even tell you if I’d vote for it at this point,” he said. “I have no doubt in my mind that they will try every trick in the book to show that they have money.”
The Resorts group was faced with a Nov. 3 deadline by which to pay the town $3.9 million in extension fees on its contract to buy 755 acres of town-owned land in Calverton for $155 million. The company, headed by a Scottish residential developer, John Niven, hopes to build eight theme resorts at the Enterprise Park at Calverton including one with an indoor ski mountain.
The Resorts group actually owes close to $6 million, as it has missed three extension payments of about $1.9 million each, but the two sides worked out an agreement by which Riverhead Resorts would pay two of the payments by Nov. 3, and two more in January, in return for the Town Board adopting a resolution agreeing to lower the land’s sale price to $108 million from $155 million.
Having repeatedly promised to come up with the money it owes — only to miss deadline after deadline — Riverhead Resorts attorneys Mort Weber and Mr. Pally arrived with the check in hand at last Wednesday’s Town Board meeting and even posed for pictures with the check in the Town Hall meeting room. RiverheadNewsReview.com ran a picture of the check presentation with the involved parties and also shot a closeup of the check. That second picture revealed the check was made out for 2.4 million English pounds, rather than $3.875 million in U.S. dollars. It also showed it was a handwritten check, and not an official bank check. But it also showed routing and account numbers, which worried the bankers.
Mr. Pally said Monday that Barclay’s had placed a stop order on the check and will set up a new account for Solutio Finance Limited, which is financing this portion of the project, through which the money will instead be wired to the town.
Mr. Walter said this week that he didn’t think the photo incident should hold up the payment.
“If an account is locked up, you can get it unlocked pretty quickly and wire the money if you really had it,” he said in an interview. “It shouldn’t take a long time. They really have until Wednesday, because Thursday is not a banking day. If it’s not there, in [an escrow] account, they are done.”
Mr. Walter figures to be the swing vote, as Councilmembers John Dunleavy and Jim Wooten have supported giving Resorts further extensions, while Jodi Giglio and George Gabrielsen say they will not support such a move.
tgannon@timesreview.com

11/03/10 2:41pm
11/03/2010 2:41 PM

TIM GANNON PHOTO The check presented Tuesday to the Town of Riverhead to extend Riverhead Resorts' agreement at EPCAL.

Riverhead Resorts representatives presented a $3.8 million check to the Riverhead Town Board at its meeting yesterday, but it wasn’t made out to the town. And it wasn’t a bank check.
It was handwritten and made out to the law firm of Frank Isler, the town’s attorney in the contracted sale of 755 acres of town-owned land in Calverton, where the Resorts group hopes to build a $1 billion resorts complex that could include an indoor ski mountain. The money is going to be held in escrow until the Town Board formally approves reducing the selling price from $155 million to $108 million.
That all seemed to be good enough to keep the deal alive.
The $3.8 million is just part of the nearly $6 million Riverhead Resorts owes the town in unpaid extension fees on the real estate contract. Supervisor Sean Walter had given Riverhead Resorts until yesterday, Wednesday, to pay that amount, or else the town would terminate its contract with the company.
The check represents two payments of $1.9 million, for two prior contract extensions. Resorts actually owes three payments and will owe another in December. It has been given several extensions already this year.
The town and the Resorts group have a draft resolution prepared that will allow the developers to make the other two payments in January. That resolution also calls for setting a public hearing as part of a process that would reduce the overall sales price from $155 million to $108 million.
Of the four Town Board members, Jodi Giglio and George Gabrielsen have opposed further extensions, while Jim Wooten and John Dunleavy have voted to grant extensions.
“It’s a carrot in front of our nose,” Ms. Giglio said as Town Board members posed for photos with the check many thought would never come.
“Where else would you get $10 million for this property that is ours to keep if this doesn’t go through?” Councilman John Dunleavy asked Ms. Giglio, referring to previous down payments the Resorts group has made to the town.
Mr. Walter interrupted.
“This is not something we’re discussing at the Town Board meeting,” he said.
He said the board will discuss the matter at a work session or at executive session. No public hearing has been set.
“We didn’t get a bank check,” Mr. Walter said, “so I and this board is not taking any action on this until that money is in the bank.”
If built, the developers’ multi-themed resorts complex would be bigger than Disneyland. It would be located on land now known as the Enterprise Park at Calverton, or EPCAL, which was owned for decades by the U.S. Navy before it was deeded to Riverhead Town in the mid-1990s.
tgannon@timesreview.com

10/25/10 4:14pm
10/25/2010 4:14 PM

Supervisor Sean Walter cast the deciding vote Tuesday, tabling a resolution to terminate the town’s contract with Riverhead Resorts. The development group is looking to buy 755 acres of town land in Calverton for $155 million to build a themed resorts complex bigger than Disneyland.

“In my heart of hearts, I don’t believe they have the financial wherewithal, but I don’t want to be the guy that closes the door,” Mr. Walter said.

The supervisor said he changed his mind after receiving a call from Kenneth Auerbach, a friend who is also co-chairman of the Brookhaven Town Conservative Party, asking him not to vote to terminate the agreement.

Council members George Gabrielsen and Jodi Giglio favored terminating the contract, while Jim Wooten and John Dunleavy did not, saying no one else is ready to step in and buy the land.

Mr. Walter said the purpose of the resolution was to show the state Department of Environmental Conservation that the deal doesn’t exist anymore, so that the DEC would not require the town to examine the impacts of Riverhead Resorts’ massive proposal as the town proceeds in subdividing the land.

Mr. Walter said that, technically, the agreement had ended June 15, when Riverhead Resorts failed to make a $1.98 million payment for a three-month extension of the contract. Two more deadlines have been missed since then, and Riverhead Resorts now owes the town almost $6 million.

This is the second time the Town Board has postponed a resolution terminating the agreement with Riverhead Resorts.

“There comes a time when enough is enough,” Councilman George Gabrielsen said at the meeting.

Mr. Walter said the Town Board has asked Riverhead Resorts to discuss its plans in public at a Town Board work session next Wednesday morning.

Mitch Pally, an attorney for Riverhead Resorts, discussed extending the agreement with Town Board members individually Friday and said Resorts now has a signed contract from a financing entity, but just needs more time to work out details like the timing of the closing.

The signed contract is with a London-based company called Solutio Finance, which will provide an initial funding package of $25 million, Mr. Pally said. The $5.9 million owed the town will come from this package, he said.

A second funding package of $222 million will come at a later date from another financing entity, which Mr. Pally said he cannot name because the details of that agreement are still being worked out.

Under the terms of the Resorts contract with the town, the full payment will not be made until after the project receives approvals, and that can’t happen until the land is subdivided, a process that might not be completed until next year.

But under the terms of the contract, the $5.9 million in extension payments would go to the town immediately and would be non-refundable, regardless of whether the sale ever occurs. If, however, the town terminates the contract before the payment is made, the $5.9 million would not still be owed to the town, Mr. Walter noted.

The Town Board on Sept. 7 also had planned to vote on a resolution to terminate Riverhead Resorts’ contract, but backed off. At that time, Mr. Pally had presented the town with a letter from a funding entity called Global Capital Markets Advisors LLC, indicating that it was “preparing to lend Riverhead Resorts the sum of $25 million for an initial round of project financing.”

Mr. Pally said Friday that the deal with GCMA fell through, but that they had an alternate backing from Solutio Finance.

While the contract calls for the land to be sold for $155 million, both sides have since said they agreed informally to make the deal for $108 million.

“Your commitment to the project is contingent upon my fulfilling my financial obligations to you and your constituents and my inability to do so over the past year has been greatly upsetting to me and all involved,” Riverhead Resorts president John Niven wrote in a letter to Town Board members Monday.

“However, I now fully believe that the financial arrangement I have entered into with Solutio Finance will allow for the Town of Riverhead to receive all of the funds owed to them and allow for the project to move forward without any additional financial barriers.”

Mr. Walter said Mr. Niven has a month to prove it.

tgannon@timesreview.com

10/25/10 3:44pm

One of the businessmen behind Riverhead Resorts, the group planning to build a $1 billion resorts complex in Calverton, reportedly was detained by Turkish police in connection with a prostitution ring .

The Daily News reported Friday that “Tevfik Arif, 57, had been detained in Turkey on suspicion of setting up trysts between wealthy businessmen and Eastern European models ­— some underage — aboard a $60 million yacht once used by the nation’s founder, Mustafa Ataturk.”

Mr. Arif, who reportedly has denied the charges, is the sole owner of the Bayrock Group, which owns 50 percent of Riverhead Resorts, according to papers that Riverhead Resorts filed with Riverhead Town as part of its proposal to build land at the Enterprise Park at Calverton two years ago.

When asked about the charges, Mitch Pally, an attorney for Riverhead Resorts, said that Bayrock Group never actually owned more than 5 percent of the project and that efforts are already under way to remove Bayrock’s ownership interest entirely.

He insisted that Baldragon Homes, a Scottish company headed by John Niven, has been the principal owner of the Riverhead Resorts group.

Riverhead Resorts, which is seeking to build eight themed resorts at EPCAL, including one with an indoor ski mountain, was given more time to come up with the money for the project Tuesday, even though they owe the town about $6 million in fees to extend the life of the contract.

Town Board members, for the most part, had a good laugh at news of Mr. Arif’s detainment, but didn’t seem surprised or concerned, and indicated that it wouldn’t affect their vote on Riverhead Resorts.

“It was my understanding that Bayrock isn’t involved anymore,” Riverhead Supervisor Sean Walter said. He said he has never met with anyone from Bayrock since he’s been supervisor. He has met once with Mr. Niven.

Last week didn’t mark the first time the Bayrock Group saw negative press.

In August, the developers were named in a lawsuit filed by 15 people who bought condos in the Trump SoHo Condominium project in Manhattan, alleging that Bayrock and the other developers of the condos lied about the number of units sold.

In January 2008, shortly after the town entered into contract with Riverhead Resorts, a construction worker was killed in an accident while working on Trump SoHo, and violations were issued to the contractor Bayrock hired for the job for using materials that were not up to industry standards.

That same month The New York Times ran an article about Felix Satter, a Bayrock executive who the article said had been arrested nine years earlier when “accused of conspiring with the Mafia to launder money and defraud investors.”

And Jody Kriss, a former senior vice president at Bayrock who signed the agreement in September 2007 to authorize Bayrock to begin exclusive negotiations with the town for the EPCAL land, has since filed two lawsuits against Bayrock Group, calling it a “racketeer influenced and corrupt organization” in one of them. The lawsuits, filed in 2009 and 2010, mention by name Mr. Arif, Mr. Satter and Julius Schwarz, who had represented Bayrock in the “qualified and eligible sponsor” hearing before the town in December 2007. That hearing is designed to determine if the company has the experience and financial resources to complete the project they propose,

Should they get that far, Mr. Pally acknowledged that Riverhead Resorts also will need to undergo a new  “qualified and eligible sponsor” hearing, because they now plan to eliminate Bayrock Group from the ownership of Riverhead Resorts.

In the original hearing, papers submitted to the town indicated that Riverhead Resorts was half-owned by Baldragon Homes, a Scottish company owned by John Niven, and half-owned by Bayrock Group, a New York company that has worked with Donald Trump on a number of other high-profile projects. Much of the documentation presented to the town at the time dealt with Bayrock’s financial ability, as Baldragon Homes was described as a residential home builder whose work was limited to Scotland.

Mr. Pally said that while Bayrock Group initially intended to be part of the project, they soon “lost their ability to finance it,” and have not been active in the financing or management of Riverhead Resorts for about two years.

The town chose Riverhead Resorts over another project called EPCAL Centre, which was led by developer Scott Rechler and featured motorsports components. Racing fans continue to press the town to use the EPCAL property for motorsports uses.

tgannon@timesreview.com

10/24/10 2:37pm
10/24/2010 2:37 PM

Riverhead Resorts is requesting more time from the Riverhead Town Board, which is planning to vote on a resolution to terminate its contract with the company Tuesday.

Riverhead Resorts owes the town nearly $6 million in payments for three extensions it has already received. Under the terms of their contract to purchase 755 acres of land at the Calverton Enterprise Park from the town for $155 million, the deal was to have closed by May 15, but Riverhead Resorts could buy up to five three-month extensions for $1.98 million each.

Mitch Pally, an attorney for Riverhead Resorts, said he met with three Town Board members individually Friday and spoke with another by phone in regard to the request for more time.

Mr. Pally said Resorts now has a signed contract from a financing entity, but just needs more time to work out details like the timing of the closing.

The signed contract is with a London-based company called Solutio Financing, which will provide an initial funding package of $25 million, Mr. Pally said. From this amount, the $5.9 million owed the town will come, he said.

A second funding package of $222 million will come at a later date, from another financing entity that Mr. Pally said he cannot disclose, because the details of that agreement are still being worked out.

Under the terms of the contract with the town, the full payment will not be made until after the project receives approvals, and that can’t happen until the property is subdivided, a process which might not be completed until next year.

But the $5.9 million in extension payments would go to the town immediately, and would be non-refundable, regardless of whether the sale take place, under the terms of the contract.

The Town Board on Sept. 7 also had planned to vote on a resolution to terminate Riverhead Resorts contract, but backed off.

At that time, Mr. Pally had presented the town with a letter from a funding entity called Global Capital Markets Advisors LLC, indicating that that the GCMA was “preparing to lend Riverhead Resorts the sum of $25 million for an initial round of project financing.”

Mr. Pally said Friday that the deal with GCMA fell through, but that they had an alternate funding entity in Solutio Financing.

While the contract calls for the land to be sold for $155 million, both sides have since said they agreed informally to make the deal for $108  million.

Mr. Pally acknowledged that Riverhead Resorts also will need to undergo a new public hearing to determine if they are a “qualified and eligible” sponsor under Urban Renewal law, because they now plan to eliminate Bayrock Group from the ownership of Riverhead Resorts.

In the original hearing, which is designed to determine if the company has the experience and financial wherewithal to complete the project they propose, papers submitted to the town indicated that Riverhead Resorts was half-owned by Baldragon Homes, a Scottish company owned by John Niven, and half-owned by Bayrock Group, a New York company that has worked with Donald Trump on a number of high-profile projects.

Mr. Pally said that while Bayrock Group initially intended to be part of the project, they soon “lost their ability to finance it,” and have not been active in the financing or management of Riverhead Resorts for about two years.

The owner of Bayrock Group, Tevfik Arif, 57, reportedly was detained in Turkey this week on suspicion of setting up a high-priced prostitution ring on a yacht in Turkey.