Changing its Stance, Riverhead Resorts Vows to Have $3.9 Million in by Next Meeting

Riverhead Resorts said Thursday it will now take its chances that the Town Board will ultimately approve its request to lower the purchase price for 755 acres at Enterprise Park at Calverton.

This represents a dramatic change of heart for the developer of a proposed resort complex at EPCAL because only last week, Mitch Pally of the Weber Law Group, attorneys for Riverhead Resorts, told Riverhead Patch that his client would refuse to transfer the nonrefundable $3.9 million in overdue payments to the town unless and until the Town Board passed a resolution legally changing the purchase price to $108 million from $155 million. That agreement remains verbal in nature, and at least two board members - Councilwoman Jodi Giglio and Councilman George Gabrielsen - have made it quite clear that they would not lower the price if asked.

"We have confidence that the board will pass all of the appropriate resolutions at the appropriate times," Pally said yesterday. "We've negotiated in good faith and we have as much confidence that we can have."

Pally said that his client now feels confident enough to take the risk even though a resolution on the agenda for the next Town Board meeting indicates only that an "agreement in principle" to amend the contract has been reached.

In other words, even though the resolution is expected to be approved by at least three members of Town Board, it would not legally change the purchase price, nor would it approve the new financing entity that Riverhead Resorts wants to substitute for the Bayrock Group, the financial firm it had listed in its original contract three years ago.

For the contract to be legally amended – both in respect to purchase price and financing entities – Riverhead Resorts would first have to go through another qualified and eligible sponsor hearing to determine, as required by state law, whether it has the financial wherewithal and the relevant experience to see a project through on land within an Urban Renewal Zone, which EPCAL is. If next Wednesday's resolution is approved, that hearing would be held on Nov. 23.

Pally said that negotiations had resumed after Riverhead Patch reported a difference in understanding over what was agreed to at a Town Board work session on Oct. 13, at which John Niven, Riverhead Resorts' chairman, discussed what his company was willing to do, and when.

After that meeting, Supervisor Sean Walter said he understood that the $3.9 million would be released from escrow as soon as the Town Board voted not to terminate its contract with Riverhead Resorts. Pally, however, said Walter's interpretation was incorrect and that his client had not agreed to release the money before a reduction in the purchase price was agreed to by a Town Board resolution.

In changing its mind, Pally admits Riverhead Resorts is taking a considerable risk, pointing to Giglio and Gabrielsen, who stand opposed to giving the developers more time.

For another, the suggested financing entity that Riverhead Resorts wants to use has been met with skepticism by some Town Board members, Giglio in particular.

She said last week that she had "Googled" the name of Michael Simmonds, the managing director of Solution Finance, who had made a presentation at the Oct. 13 work session about the financing his firm would arrange. "It shows that he has jumped around from job to job over the past two or three years, and that troubles me," Giglio said.

Another hurdle is the timely receipt of the $3.9 million in overdue payments Riverhead Resorts owes, a precondition for Wednesday's resolution to be voted on. But Pally insisted yesterday, "We expect to be able to have the money in Mr. Isler's possession by Nov. 3."

His reference was to Frank Isler of the law firm of  Smith, Finkelstein, Lundberg, Isler and Yakaboski, whose escrow account would be used for the transaction.