Riverhead Resorts misses deadline to pay town $3.8M

06/17/2010 12:00 AM |

Under contract to buy 755 acres of land from the town at the Calverton Enterprise Park for $155 million, Riverhead Resorts did not pay Riverhead the $3.8 million it owed Tuesday in accordance with its purchase contract.

Town officials say they still hold out hope that a sale will be completed this year. The company hopes to pay by the end of this week or the beginning of next week, an attorney for Riverhead Resorts said in an interview Tuesday night.

The company has plans to build eight resorts with differing recreational themes on the property, including one with an indoor ski mountain.

“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,” attorney Mitch Pally said, “and then to move forward sometime between now and the end of the year with the actual closing on the property. That is still our goal.”

Riverhead Resorts and the town have said they’ve discussed lowering that contracted price to $108 million.

The contract, signed Jan. 15, 2008, set a Dec. 15, 2009 deadline for 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. In May, the board extended the deadline for two extension payments to June 15.

The ultimate drop-dead date is now Dec. 15, 2010.

At Tuesday’s Town Board meeting, residents Matt Hattorff and Charles Sclafani both asked about the June 15 deadline.

“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 the process of dividing the property from the rest of the town’s Calverton acreage at EPCAL so a sale can eventually proceed.

“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 said a sale to Riverhead Resorts still would be a good deal for the town, and if the town had to 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 had received “positive information.”

Mr. Walter said he was hoping the deal will 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. 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.

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