CAT claims campaign politics motivated EPCAL

Calverton Aviation & Technology — the developer whose contract with Riverhead Town to purchase more than 1,600 acres at EPCAL for $40 million was canceled last fall following a rejection of its bid for town tax breaks — now claims in an amended lawsuit that town officials were motivated by campaign politics. 

“As election day 2023 approached, public opposition to the sale … emerged as a critical issue,” attorneys for CAT contend in the new filing. “To the Town Board, a denial of the [application for tax breaks], just in time for the upcoming election on Nov. 7, 2023, would be red meat for constituents who falsely believed that CAT intended to build a cargo jetport at the EPCAL site, despite CAT’s numerous public denials.”

Later in the filing, CAT attorneys claim that “[f]or Town politicians seeking office in 2023 — including [new Town Supervisor Tim] Hubbard — this stunt … worked. 

“Running against the fictitious cargo jetport plan, they swept the opposition in the election.”

Riverhead town attorney Erik Howard said in a statement that the new filing “seems to be a repackaging of the first complaint designed to correct procedural deficiencies and an attempt to supplement a weak legal theory with additional public statements.

“The filing of this Amended Complaint does not change the Town’s position and/or commitment to defending the Town Board’s decision to terminate the contract with CAT. “

 CAT has previously accused town officials, in a lawsuit filed in January, of engaging in a “scheme to evade Riverhead’s binding contractual obligation” to complete the EPCAL sale. 

In last week’s amended filing CAT’s attorneys claim it was lured into updating the original 2018 contract by town officials in 2022 to require an additional financial audit by the Riverhead Industrial Development Agency — which resulted in the tax break denial and paved the way for the town to cancel the contract. The developer, the filing noted, had initially been deemed financially “qualified and eligible” by the Riverhead Town Board.

“CAT initially refused to agree to the RIDA review, but the Town threatened … if it did not agree, CAT would have to sue in order to force the Town and the [town’s Community Development Agency] to close on the Purchase Agreement,” attorneys argue. 

“During negotiations to induce CAT to agree to a RIDA review and assuage CAT’s concerns, the Town and the CDA represented to CAT that the ability to terminate the contract was solely for ‘optics,’ but that the Town fully intended to close with CAT even if RIDA, ultimately, did not approve CAT.”

Elsewhere in the amended filing, attorneys for CAT describe the developer and its parent company, Triple Five Worldwide Group — known largely for building mega-malls — as “the most financially capable sponsor entity the Town or RIDA has ever dealt with.” 

The filing characterizes the IDA’s October decision to deny tax breaks for CAT’s EPCAL development as “a series of slapdash adverse findings cloaked under the guise of careful consideration.

“The result, however, was nakedly pretextual, replete with misrepresentation and obfuscations designed to evade an obvious and inescapable truth: Triple Five and CAT collectively have vastly more than enough cash resources available to develop EPCAL.”

The Riverhead IDA’s board is made up of unpaid local professionals with experience in complicated financial and development projects and employs a forensic accountant who examines financial proposals for the agency. The agency also hired an independent accounting firm to vet CAT’s finances, whose conclusions were consistent with the IDA’s analysis.

Last October, in a decision that took 10 minutes to read aloud, the agency determined that CAT failed to provide the IDA with enough information to properly evaluate the project — including failing to produce specifically requested documents — or adequately demonstrate its ability to finance it, adding that the overall development vision CAT presented was simply too “vague.” 

“The business plan submitted by the company was vague and not specific enough to provide a basis to determine the viability of a financially successful project,” IDA vice chairperson Lori Ann Pipczynski said. “Despite our having held a public information meeting devoted to the topic, the proposed project remains largely undefined. 

“The company has provided only general, broad categories of possible uses. The company has advised the agency that for its specific uses, ‘We’ll follow what the market bears.’ 

“As the [IDA’s] mission involves economic development, in order to approve a project for financial assistance, we must be able to analyze the costs and benefits. Doing so requires us to evaluate the employment effects, environmental impacts and a host of other economic factors.

“Unless the agency is advised as to what specifically is being proposed the agency is unable to further process, much less approve, the application,” the statement concluded.

The following day, members of the prior Riverhead Town Board moved swiftly to cancel the 2018 agreement. According to Riverhead officials, the agreement with CAT gave the Town Board the authority to declare the original contract null and void based on the IDA’s denial.

Fears of a cargo jetport being built at EPCAL were sparked during a town IDA meeting in the fall of 2022, when a CAT engineer expressed what residents interpreted as an admission that the site would ultimately operate as an air cargo hub.

At that hearing, CAT engineer Chris Robinson told the IDA, “I think the [vision] here is the aeronautic aspect — bringing packages which get brought into a logistics building, transferred onto tractor-trailer trucks … currently, that end of the logistics business is not handled on Long Island. This would be an incredible opportunity to bring that here.”

Local opposition to the plan grew steadily in the wake of that hearing. 

CAT officials have since insisted repeatedly and publicly that they never intended, nor have any future intention of building a cargo jetport. 

The IDA’s analysis also cut to the heart of the community’s opposition to the plan, specifically faulting CAT for providing the agency with conflicting visions of its development plans. 

“The company’s expert advised the agency and the public that ‘we’ll be using both runways eventually for cargo and also for testing at the site,’ ” Ms. Pipczynski said, reading from the decision. “However, after almost a year of contradictory statements, on August 7, 2023, Justin Ghermezian, the principal owner of the company, apologized for these statements and said, ‘What is not being designed, considered or proposed is a cargo jetport or a commercial aviation jetport.’ 

“Yet a few minutes later, the company’s counsel stated that the eastern runway has been and continues to be an active runway and would be available for such in the future,” she continued .“And the western runway would also be available for its historic aviation uses and/or other contemplated supportive uses … The agency is unable to properly evaluate the project on an economic, environmental or societal level with the information provided.”

One runway is 10,000 feet long and the other is 7,000 feet. The property also includes rail freight service and sewers. Title to the 2,900-acre property was transferred by the U.S. government to Riverhead Town in 1998.

Last summer, a federal lawsuit was filed 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 built both the Mall of America in Minnesota and the West Edmonton Mall in Canada, Bloomberg reported in June — citing bond documents underlying the deal. 

During a public hearing last September, CAT attorney Peter Curry told IDA board members 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.” 

CAT’s lawsuit seeks a court order to compel Riverhead Town to close on the deal, as well as pay “compensatory damages” and legal fees.