Riverhead Resorts asks for more time to pay $1.9 million owed to town

05/14/2010 12:00 AM |

The Riverhead Resorts development group will be asking for 30 more days to pay the $1.9 million it would otherwise owe Riverhead Town on Saturday, May 15, the News-Review has learned.
The payment comes due as part Riverhead Resorts’ contract with the town, under which the group is required to pay up each time it needs an extension to the scheduled closing date on 755 acres of town-owned land in Calverton for $108 million.
Under the terms of the contract, Riverhead Resorts is required to close the deal by Saturday, May 15, but is allowed to buy five three-month extensions at $1.9 million each.
Mitch Pally, a Riverhead Resorts attorney, said Friday the Resorts group is asking the town to extend the deadline by 30 days more.
“Obviously, we can’t close by May 15,” he said, “so we want to work with the town to extend that period so that it more closely resembles what will actually happen.”
He’s hoping that at the end of the 30 days, which would be June 14, Riverhead Resorts will have its entire financing for the project in place.
The $1.9 million extension fees are counted toward the final sale price, unless Riverhead Resorts terminates the deal, in which case the town keeps the money.
Riverhead Resorts, led by a Scottish builder, hopes to build an entertainment mega-project that would feature eight themed resorts and a possible indoor ski mountain. As proposed, the final project would be bigger than Disneyland.
The company was credited with one extension on Dec. 15, when the Town Board allowed them to use $1.5 million it already had in escrow to qualify as an extension fee, with the remaining $400,000 being paid at closing.
The town in December also allowed Riverhead Resorts to delay the second extension deadline of March 15 to May 15.
“Obviously, we have no intention of terminating the agreement,” Mr. Pally said.
The company filed a subdivision application for the proposed deal on Thursday, showing two lots of 740 acres and 15 acres, the latter of which it intends to give back to the town.
Mr. Pally reiterated that Riverhead Resorts is committed to finalizing the deal before the end of this year, Mr. Pally said. He blamed a provision in the U.S. Patriot Act for stalling the company’s financing, some of which is coming from the United Kingdom. The financing would be at the ready without the holdup, he said.
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