Developer Suing After $40M Contract Canceled in Riverhead

A developer is making good on its not-so-veiled threat to enforce its contract to buy thousands of acres on the North Fork.

Calverton Aviation & Technology sued Riverhead and two of its agencies on Monday, the Long Island Business News reported. The lawsuit alleges the town and its agencies schemed to cancel a $40 million contract to sell 1,644 acres to CAT, which is an affiliate of Canada-based Triple Five Group.

CAT claims it was fraudulently induced to allow the Riverhead Industrial Development Agency to determine if the firm remained financially qualified to redevelop the former Naval Weapons Industrial Reserve Plant in Calverton.

The company said the town and its community development agency “improperly influenced” the IDA to conclude that the developer lacked the financial means, despite its offer to pay the full contracted price in cash.

The developer wants the town’s decision to be reversed and for Riverhead to honor the purchase agreement. CAT also wants damages, claiming it invested millions of dollars to advance a plan for the site.

In October, legislators voted unanimously to kill the sale to Justin Ghermezian’s company, one day after the IDA declined to provide financial assistance to the developer.

Riverhead officials were pressured by community residents who opposed CAT’s Enterprise Park at Calverton plan, which promised the delivery of a technology and aerospace hub.

For nearly 30 years, the site has been mostly dormant — since the Grumman Corporation closed the property it leased from the U.S. Navy for the testing of military aircraft. The government handed the land to Riverhead in 1998 so the town could do something useful with it, but 20 years passed before it signed the contract with CAT in 2018.

Riverhead is trying to back out after angry residents complained that an airport was part of the proposal, which CAT claims was untrue. Ambiguity about CAT’s plans for the site might have contributed to the rumors. The developer put forth a mixed-use plan with an estimated cost of $247 million for the first 1 million square feet, but whispers about a cargo jetport persisted, despite company denials.

CAT’s association with Triple Five has also been a point of contention, as the Ghermezian family’s real estate firm is often associated with the American Dream megamall, a troubled retail and entertainment complex in East Rutherford, New Jersey. The IDA claimed CAT tried to distance itself from Triple Five.

— Holden Walter-Warner