Featured Story

Tempers flare at board meeting on CAT finances

05/25/2018 9:00 AM |

Bedlam broke out at the end of Thursday’s Riverhead Town Board work session when Nader Ghermezian, the chairman of Triple Five Group, began shouting at Supervisor Laura Jens-Smith and others when he wasn’t permitted to speak as the board discussed Calverton Aviation and Technology’s finances.

Councilman Jim Wooten also threatened to walk out of the work session earlier when Ms. Jens-Smith suggested that the documents the town received from CAT be shared with him.

“I don’t want to know, I move to adjourn,” Mr. Wooten said. “I think it’s ridiculous.”

“I can’t imagine you’re actually getting up and walking out,” Ms. Jens-Smith replied. “This is one of the biggest deals ever, and you’re just going to walk away?”

“I can do what I want,” Mr. Wooten said. “My back hurts.”

He said he’s seen all of the information already, and has been dealing with EPCAL for 11 years and knows what’s at stake. He said town finance administrator Bill Rothaar should be asked to review all of the information in the hearing record.

The meeting began with Mr. Rothaar going over information submitted by CAT as part of the “qualified and eligible sponsor” hearing for their proposal to buy 1,640-acres of town land at the Enterprise Park at Calverton for $40 million. Mr. Rothaar also admitted he hadn’t read all of the comments the town received on CAT.

Several times during the presentation, Mr. Ghermezian and Stuart Bienenstock of Triple Five asked to speak to clarify some of what the board was discussing, and they were denied by Ms. Jens-Smith, who said the public is not allowed to speak at work sessions, and the Q&E hearing with CAT had concluded. They cannot submit new information, she said.

Mr. Ghermezian spoke anyway, while Ms. Jens-Smith repeatedly asked him not to.

“He said he’s not read all of the information,” he said of Mr. Rothaar. “What if the information he’s giving you is wrong?”

Mr. Ghermezian said he “just spent $14 million” on the former Dowling College school of aviation in Shirley to help the EPCAL project.

Other areas are “begging” them to come there, he said, and said Riverhead should appreciate that they are interested in EPCAL.

“You have to hug us. You have to kiss us,” he shouted. “This is dirty. This is politics.”

“It’s not politics,” Councilwoman Catherine Kent said. “We’re just vetting.”

“Talk to your lawyer,” Ms. Jens-Smith said and then walked away.

Mr. Rothaar said CAT did not submit any of the information the town asked for, such as audited personal or corporate financial statements for CAT and its principals.

Mr. Rothaar also said that the town has waived that requirement in Q&E hearings in the past. He said it’s up to the board to decide if an applicant meets the Q&E criteria.

“I don’t know if that’s true,” Ms. Jens-Smith said.

The Q&E hearing is designed so that someone buying town land can demonstrate they have the finances and ability to do whatever development plan is proposed.

She said that when the town amended its Q&E regulations last year, it retained language that said the town “shall ascertain whether the applicant is qualified and eligible.”

That resolution suggested the town review “pro forma financial statements for the proposed project,” including certified personal and corporate financial statements.”

Mr. Rothaar said the town will leave the decision as to whether that can be waived “to the attorney,” but he said the board has waived the financial requirement in the past.

Councilwoman Jodi Giglio said the town received a legal opinion from outside counsel on the CAT proposal saying the financial statements weren’t required.

Ms. Jens-Smith said that if the board wants to approval CAT’s proposal without the financial statements, it must do so by a resolution.

CAT, as well as Triple Five Group, its majority owner, is a privately-owned company and, as such, is not required to submit public Securities and Exchange financial statements like a publicly traded company would, according to Martin Walrath, Triple Five’s executive vice president of corporate finance, who spoke at the Feb. 27 Q&E hearing. He made it clear at that hearing that Triple Five would not make that information public.

Triple Five submitted a letter from accounting firm Grant Thornton saying Triple Five has “in excess of $40 million for use in connection with the purchase” of EPCAL.

Mr. Bienenstock said afterward that $40 million in cash “can finance a lot. We don’t put up 100 percent of the equity. We finance all of our development deals.”

He said the infrastructure costs at EPCAL will be at least $50 million.

Triple Five is best known for malls and entertainment centers like the Mall of American in Minnesota and the West Edmonton Mall, but says it is proposing an aviation and industrial development at EPCAL.

[email protected]

Comments

comments