No. 2 Story of the Year: Resorts and Rechler deals go down

BARBARAELLEN KOCH FILE PHOTO | An artist's rendering of the proposed Riverhead Resorts, a 90-acre lake and mountain resort.

At the beginning of 2010, Riverhead Town had a new supervisor and an all-Republican Town Board. But the officials still had in their laps the same two massive and controversial land sale/development projects pitched for the former Grumman site in Calverton. Both projects were initiated some three years back, during the previous administration.

If deals with Riverhead Resorts-—which was seeking to buy 755 acres for a giant resort and entertainment complex, including an indoor ski mountain— and Rechler Equity Partners—which sought to purchase 300 acres to build a hi-tech industrial park— ever came to fruition, the town would be rolling in money. Resorts’ was offering $100 million and Rechler $18 million, and both of those prices had come down from previous agreements.

But in the end, neither deal happened.

Rechler, which had previously convinced the town to lower its sale price from $35 million, asked the town to allow residential and retail spaces mixed in with the industrial uses initially sought. Town officially were opposed to that idea, and when push came to shove, Rechler pulled out of the deal.

Resorts, which had already paid the town about $7.5 million, eventually starting missing payments needed to extend its contract with the town. The deal would allow the group to buy three-month extensions beyond the May 15 deadline to close the deal, at $1.9 million each. They missed deadline after deadline, but a split Town Board, with Supervisor Sean Walter as the swing vote, continued to give them time. In November, Resorts showed up with a check for nearly $4 million, representing two of the three extension payments they had missed, and even posed for pictures with the check at a Town Board meeting. But the check was in English pounds and was not a bank check. Town officials gave them a week to allow the check to clear.

Pointing to security concerns, Resorts representatives later said their bank had problems with the fact that a closeup photo of the check was posted at and they instead wanted to wire the money and cancel the check. After that, Mr. Walter changed his vote and called a special meeting to formally cancel the contract. Resorts had said it would still try to get the money to the town in hopes that officials would change their mind, but Mr. Walter said that never happened.

In the end, two massive projects, one that was supposed to deliver hundreds of high-paying jobs to the area, and another that could have changed the region completely, both completely dissolved within weeks of one another.

As for the Resorts project, many felt Riverhead Town was better off. It’s now back to square one at the Calverton land known as EPCAL. Officials are planning to hire a consulting firm to re-evaluate proposed uses for the huge property.

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