When Riverhead Town’s outside counsel on the Calverton Aviation and Technology negotiations addressed the Town Board June 10, he said Triple Five Group had shown him a letter indicating that a bank will provide CAT with a construction loan of up to $120 million for development of the first phase of its plan for the 1,643-acre property it seeks to buy from the town for $40 million.
But attorney Frank Isler told the Town Board that he could not show board members the letter and could not identify the bank, citing confidentiality concerns.
CAT also provided the Town Board with a letter from accounting firm Grant Thornton LLP confirming that, as of May 31, “Triple Five and its affiliates have in excess” of $40 million for the acquisition of the property.
At the board’s June 17 work session, Councilwoman Catherine Kent questioned that.
“We are elected by the people of the town and we are the client to our outside counsel,” she said. “I was not privy to a discussion [on this] and I did not approve having the outside counsel accept a letter on our behalf. I’m wondering who did.”
Town attorney Bob Kozakiewicz said Mr. Isler is retained by the board to handle the transaction.
“I’m not sure why he would need specific authorization on that particular item,” he said.
“But wouldn’t it have been appropriate for us to have had a discussion about that prior?” Ms. Kent asked. “I learned about it at the work session.”
“I did also,” said Supervisor Yvette Aguiar.
“We have no idea what could be in this letter,” Ms. Kent said. “There could be special conditions in the letter. There could be things in there that we absolutely need to know about. We should’ve at least had a discussion.”
“We’re just validating their financial status,” Councilman Ken Rothwell said.
Mr. Kozakiewicz said that “because the letter required some confidentiality, maybe his concern is that once it’s divulged to the Town Board, that there’s a potential for it to become available through FOIL or otherwise.”
CAT’s majority owner is Triple Five Group, which is privately held and has refused to turn over financial statements to the town.
Mr. Kozakiewicz said the outside counsel is not required to contact the Town Board on every issue.
Ms. Kent said this is a major issue.
Ms. Aguiar said Ms. Kent should contact the attorney herself. Ms. Kent said she’s done that in the past and was told that the attorney doesn’t respond to questions for individual board members, just from the board as a whole.
“This isn’t the first letter of credit that has been submitted to our attorney,” Councilman Frank Beyrodt said. “I think this has happened several times through the years.”
“This is the first time that I recall where our outside attorney looking at a letter that we were not seeing or that we have no knowledge of what’s in the letter,” Ms. Kent said.
“Anything regarding the finances of Triple Five, in the past, has come to us as a board,” Councilman Tim Hubbard said.
He said his assumption is that the Town Board received more information from Triple Five than in the past.
“We don’t know that,” Ms. Kent said.
Triple Five’s attorney, Christopher Kent, told the board June 10 that the bank wishes the letter to remain confidential because a closing on the sale is not imminent, and it wants to prevent other lenders from potentially trying to offer better financial terms.
“We work for the people and the people need to know that we are doing our due diligence,” Ms. Kent said.
Ms. Aguiar, who is a licensed real estate agent, said this is a common action “where there is confidential material that you don’t want to reveal to avoid competition.”
She added, “We have to trust our attorney.”
She said the board would discuss Ms. Kent’s questions with its outside attorney in executive session, which is not open to the public.
Mr. Isler said he could not comment until after he meets with the Town Board in executive session.