In Turn of Events, Board Votes Not to Cancel Riverhead Resorts Contract

Riverhead Resorts got yet another reprieve this afternoon when the Riverhead Town Board voted 3-2 against terminating its contract with the town to purchase 755 acres at Enterprise Park at Calverton (EPCAL) for a $108 million resort complex.

What the vote means, according to Supervisor Sean Walter, is that Riverhead Resorts has until the Nov. 3 Town Board meeting to come up with the approximately $6 million in payments that were due on Sep. 15, with approximately $3.850 million of that amount due as far back as June 15.

"I don't believe they have the wherewithal to finish this transaction," he said. "But what this comes down to for me as the deciding vote is a simple question: Am I going to cut off my nose off to spite my face?"

The vote to keep the contract alive came as a surprise because Walter had been expected to vote with Councilman George Gabrielsen and Councilwoman Jodi Giglio to cancel it. As recently as early last evening, Walter had said that he wanted to end the town's involvement with the developer.

At today's meeting, however, Walter said that later last evening he had had conversation with a lawyer and friend he respects, Ken Auerbach, who counseled him to reconsider his position. Despite voting against ending the contract, however, Walter expressed skepticism about the ability of Riverhead Resorts to complete the project.

Referring to Riverhead Resorts' principal partner, Walter said, "I have no doubt that if John Niven were to walk in with a check for $6 million dollars, the majority of this Town Board, myself included, would reinstate the contract and take the money.

"While in my heart of hearts I don't think they're going to close or give us the money this month, I don't want to be the guy who shuts that door," Walter said.

Gabrielsen, in voting to end the contract, explained, "We've been at this point for several months. I think there comes a time when enough is enough, and I think that time has come."

Giglio, who also voted to end the contract, said, "There have been people calling me, saying they're interested in the property. But I won't even talk to them because I don't want to violate any contract until we have a termination agreement."

Councilman Dunleavy, who voted with Walter and Councilman Jim Wooten to retain the contract for another month, said, "We have nobody waiting in the wings to buy this 755 acres. So if we do get a payment by the end of this month, today's action is not hurting us."

Leading up to today's vote, representatives of Riverhead Resorts had lobbied hard to hold off the resolution.

On Friday, Mitch Pally of the Weber Law Group, which represents the developer, met with Gabrielsen and Dunleavy, asking them give his client one more month to deliver the funds needed to bring its accounts current with the town.

Pally had explained that a contract had been signed the day before with a financial firm in London to provide the money, but that it would take three weeks or so before the money could be dispersed.

Pally, who was in the audience today, but did not speak, said in an interview after the vote that his client was very appreciative of the Town Board's move to extend its deadline one more time. Pally stressed that Auerbach, the lawyer Walter referred to, has absolutely no involvement with Riverhead Resorts, a point that Walter confirmed.

Walter noted that Riverhead Resorts has already paid the town $7 million in nonrefundable funds, so that even if the deal ultimately falls through, the town would still remain $7 million richer.