A profitable proposal Under details of Calverton ski resort deal, Riverhead town could get millions even if project is never built
By Daniel Wagner
Dec 17, 2007

Even if the proposed billion-dollar destination resort planned for a large, town-owned site in Calverton is never built, Riverhead could still see substantial revenue from the project. That's because, under a draft contract delivered to the town clerk Thursday, developer Riverhead Resorts Llc would be bound by numerous provisions aimed at keeping the project on track and guaranteeing the town fair compensation. The official sale price for the site is $155 million. Town Supervisor Phil Cardinale confirmed that the draft had been delivered so that members of the town board would have time to review it before taking it up this week. The developers propose to build a massive, multipart resort that could include a 350-foot-tall indoor ski mountain, an equestrian center, a water park and a conference center. Under the contract, it would be constructed to meet green building standards and would be substantially complete within 3 1/2 years after a building permit is issued. That's just one provision intended to ensure that the town does not end up mired in a slow-moving process beyond its control. The town's agreement with the developer that has proposed to redevelop downtown Riverhead contains no such benchmarks. "It's not just $155 million; the income is ongoing," said Jack O'Connor, the Newmark Knight Frank principal who has acted as the town's broker and adviser on the former military site now known as the Enterprise Park at Calverton. O'Connor mentioned that, if and when the resort is built, the draft contract guarantees that the town will receive room taxes and entrance fees from it. Before the contract goes into effect, two things must happen: The supervisor must obtain the town board's approval, and the developer must be deemed "qualified and eligible," meaning that it has the resources and ability to complete the project. Riverhead would begin to benefit from the deal as soon as the contract is signed and the eligibility is approved. The buyer would contribute $2 million to the town when the agreement goes into effect and, a year later, pay an additional $1 million. At closing, the buyer would pay the town an additional $5 million. In addition, the developers would put $4.5 million of the purchase price into escrow. The town would keep the interest on this money no matter what, and would receive $3 million of it on the two-year anniversary of the contract's execution. The contract also provides for the donation of 15 of the 755 total acres to the town for use as parkland. If the deal is not closed within 23 months, the developer would be able to apply for up to five three-month extensions - but those, too, will come at a price. The town will receive $1.938 million for each extension, which would count against the purchase price but which the town would retain if the contract is terminated. The deal also appears to provide some assurance the developer will not merely purchase the land, then build a project that is entirely different from what it has proposed. Whether the town agrees to grant the variances necessary for construction of the indoor ski mountain, for example, the buyers will have to sign a deed stating that the project will be "substantially complete" within 3 1/2 years after the closing. Barring any extensions or unforeseen problems, that means the project could be mostly built by the end of 2012. Don Secunda, an attorney with Weber Law Group who represents the developers, said he cannot comment until the contract has been signed.

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