Last week, during the most contentious meeting yet about the future of the Enterprise Park at Calverton, Riverhead Industrial Development Agency officials grilled the proposed developer about finances and liabilities, and heard from numerous residents who continue to oppose the deal.
Things grew so acrimonious during the meeting’s public comment period that Riverhead police officers stationed themselves just outside the side entrance to the Town Hall meeting room, within view of each speaker at the podium.
The Aug. 23 session was the third public information meeting this year about developer Calverton Aviation & Technology’s plans for the site — which became a lightning rod for public opposition last fall after a CAT engineer raised the possibility that a cargo jetport could be created there. The property includes two runways: one is 10,000 feet long and the other is 7,000 feet. CAT has been in contract with Riverhead Town since 2018 to purchase about 1,600 acres at the park.
In an interview this week, an attorney for CAT reiterated that the company is legally barred from operating a cargo jetport on the site
The lawyer also vowed to provide the Riverhead IDA with all the documents requested to demonstrate CAT’s financial ability to see the massive project through to completion.
Part of the anger in the audience stemmed from what one resident described as considerable confusion over the workings of the town’s IDA and the agency’s role in the ongoing review of CAT’s application.
Addressing the IDA board toward the end of the tense meeting, Calverton resident Claudette Bianco said she understood its board’s frustration with the evening’s many public outbursts, “but you have to understand the enormity of this project.
“Most of us have never been involved in public meetings and don’t know the process … [but] the public are very angry about this project, and they don’t understand any of it,” Ms. Bianco said. “It t has brought out the entire community that has never gone to a meeting before.”
The IDA’s role in the years-long process of reviewing CAT’s application to develop EPCAL is twofold. First, the agency must determine CAT’s financial capability to complete the full buildout of the project, which would be done in phases, would take years and could eventually generate 10 million square feet of new mixed-use industries on the roughly 600 acres of developable land at EPCAL.
If financial capability is confirmed, CAT must obtain site plan approval for the project from the Town Board. It’s only after that approval that the IDA would convene again to determine whether financial inducements to the project are warranted.
The unpaid IDA board is made up of local professionals with experience in complicated financial and development projects and employs a forensic accountant that examines complex financial deals for the agency. Chairman Jim Farley is a former federal prosecutor and a certified public accountant. Treasurer Lee Mendelson is a veteran business attorney with a background in corporate, contract and construction law.
At the meeting, IDA members probed attorneys for CAT about the company’s finances, capital and corporate structure, as well as about litigation facing other affiliates of CAT’s parent company, Triple Five Worldwide Group.
Meg Blakey, Triple Five executive vice president, told the board that the cost for the first phase of the project would consist of 25% developer equity and 75% construction loans.
Mr. Mendelson noted that corporate structure filings show that Justin Ghermezian, the son of Triple Five Worldwide Group chairman Nader Ghermezian, one of the conglomerate’s founders, indirectly owns 100% of Triple Five Real Estate, the LLC with a 75% controlling interest in CAT. Luminati Aerospace owns the other 25%.
“Can you touch upon Justin’s experience in projects of this size?” Mr. Mendelson asked CAT attorney Peter Curry.
Mr. Curry described the younger Ghermezian as “a family member of an organization that’s been developing for over 50 years … And no company like this has just one person who has experience — the entire company has the experience.”
Most of Triple Five’s development experience has involved creation of mega malls like the Mall of America in Bloomington, Minn..
“Just saying he is part of the family isn’t giving us a warm and fuzzy feeling,” Mr. Mendelson replied.
Citing a loan term sheet submitted to the board, Mr. Mendelson also wanted to know how one Triple Five affiliate could be the guarantor for another affiliate — in this case CAT. Mr. Curry replied that it’s common to structure a large development conglomerate that way.
Mr. Mendelson asked if one affiliate of Triple Five had ever acted as guarantor for another, and Mr. Curry said he didn’t know but would find out.
“Well, it’s important,” Mr. Mendelson responded, “because we’re aware of certain alleged defaults in other projects that have been discussed, and the IDA, I believe, has a right to know whether or not the guarantor for the acquisition of the loan in this project could be a potential defendant target, or guarantor in any other project.”
Mr. Curry said the CAT’s finances were vetted by the lender before committing to the loan.
“That’s insufficient for the IDA’s purposes,” Mr. Mendelson replied, “which is to vet it ourselves.”
Mr. Curry said that “none of the litigation that Triple Five faces, whether considered singly or in the aggregate, pose any material risk to CAT’s ability to meet its financial obligations and commitments on the EPCAL project.”
The attorney concluded that “in summation, over the course of time, we’ve provided financial information to the agency, we’ve met with the agency, we’ve actually responded to questions that were raised, and we think at this time that we have shown the agency the appropriate information to indicate CAT’s ability to acquire the property, to develop the property [and] to obtain construction financing when the time is right.”
In an interview after the meeting, another CAT attorney, Christopher Kent, said CAT had turned over financial information to the IDA in May and July of this year, adding “whatever additional information they require, we’re going to provide it to them.”
The second half of the meeting was devoted to public comments, and among the issues raised by the animated audience were the threat of a cargo jetport being built on the site — despite CAT officials’ pledge that they can’t and won’t; concern that the town could lose control over the site to the FAA if the developer takes any federal funding; whether the project is commercially viable; and whether Triple Five and its affiliates can or should be trusted.
Other audience members cited a variety of allegations and lawsuits against other Triple Five affiliates.
Jamesport resident Angela DeVito told the IDA board that “everything we’ve heard about what the Triple Five groups have done over the past 50 years — and it’s quite a stellar experience — but none of it seems to address all the skills they need in their toolbox for” the EPCAL project. “They are mall builders.”
Two residents, Andrew Leven and Evan Philcox, complained that the $40 million price tag for the 1,664 acres was far below what the property is worth.
“Of course they want it for $40 million … $40 million is free. That’s a song. It’s a giveaway,” Mr. Philcox said
Former town supervisor Laura Jens-Smith, who voted against the project in 2018, cited a federal lawsuit filed in June in which the construction company that built Triple Five’s $6 billion American Dream Mall in New Jersey sued the bank that put up the loan, alleging that the Triple Five affiliate Ameream failed to pay more than $30 million.
“Ameream is now in financial distress,” PCL Construction Services claims in the lawsuit, according to Bloomberg.
Ameream has cited defective construction work to justify the lack of payment.
The construction company has a relationship with Triple Five that stretches back four decades and was the company that built both Mall of America and the West Edmonton Mall in Canada, Bloomberg reported in June — citing bond documents underlying the deal.
Mattituck resident Teresa McCaskie, who sits on Southold Town’s Aircraft Noise Steering Committee, told the IDA that if the developer ever seeks financial support from the federal government, the town will lose control over the runways to the Federal Aviation Administration. She said that is how East Hampton lost control over its own airport.