chevymadman
01-09-2008, 03:14 PM
R'head Resorts Set To Sign Deal With Town
By:Hank Russell
01/09/2008
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After months of debate about the project's merits and a recent qualified and eligible sponsorship hearing that became very contentious, the Riverhead Town Board finally approved a resolution last week to enter into contract negotiations with Riverhead Resorts LLC.
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As previously reported, Riverhead Resorts has proposed eight themed resorts - including a 35-story indoor ski mountain - to be built upon 755 acres of recreationally zoned property on Enterprise Park at Calverton. The firm offered a $155 million purchase price, beating out RexCorp's bid of $152.5 million. The Riverhead Resorts project includes a village square, lake, indoor ski slope, convention center, campgrounds, a fitness and recreation center, hotels and 2,500 timeshare units. Construction is expected to be completed by Christmas of 2012.
Riverhead Resorts representative Mitch Pally, a member of The Weber Law Group in Melville, said this is one more step to making the project a reality. "Now we can start our due diligence period [of six months]," he said. "There's a lot of work to do. This is not the end."
Under the deal, the town will receive $4.5 million when the contract is signed, of which $2.5 million will be put into an escrow account, and the other $2 million will go to the town, according to Don Secunda of The Weber Law Group. During the due diligence period, Riverhead Resorts will pay the town $1 million every two months. In addition, the developer has agreed to pay $500,000 to cover the town's legal and consulting fees.
"If we don't close title, we can buy [up to five] extensions," he said. Each extension, lasting six months, will cost Riverhead Resorts $1.94 million, according to Secunda. "If we decide to close title [and complete the project], we have to pay the balance of the $155 million [purchase price]," he said.
In addition, Riverhead Resorts will give the town $5 million to build an animal shelter and ball fields, according to Secunda, who added that 15 acres will be given back to the town so it will be "contiguous with the parkland and the park [that the town is] already building [Calverton Recreational Park]."
Town Supervisor Phil Cardinale wanted to vote on the deal on December 28 - the day after the qualified and eligible sponsorship hearing - but he said he spoke to the town board and decided to wait until the new town council members, Timothy Buckley and James Wooten, came on board to vote.
"We wanted to set a tone of respect and cooperation between the board members," Cardinale explained.
Both Buckley and Wooten voted against the project. Buckley said the resort, for the most part, will offer entry-level jobs and seasonal positions, and those employees will not be able to afford to live in Riverhead. "I feel [Riverhead Resorts] won't be able to staff themselves," he said.
But Town Councilman John Dunleavy countered Buckley's assertions. "Seasonal? No. Year-round? Yes," said Dunleavy. "This place is going to be open all year long. It's not just skiing or ice skating - it's horse riding, it's an indoor water park, it's a hockey rink." He said his decision to vote in favor of the project was "not an emotional decision" but "a decision ... for the residents of Riverhead Town."
Stating that he had serious reservations about whether the developer had the financial wherewithal to pay for the construction costs and the purchase price, Wooten expressed his own concerns. "I see too many obstacles and I think that will stall any development or major tax relief [for the residents]," he said.
Pally said Riverhead Resorts has a conditional letter of commitment from Royal Bank of Scotland. "Now we have the contract," Pally said. "We can start the process with the financing agent."
Julius Schwarz, executive vice president of The Bayrock Group, said that some of the other potential financiers include Corus Bank in Chicago, Capmark Financial Group in San Mateo, and the Icelandic investment firm FL Group, among others.
As previously reported, motorsports enthusiasts protested the town board's decision to choose Riverhead Resorts' project. Instead, they preferred RexCorp's proposal, which included a 10,000-seat motorsports arena. But at last week's meeting, some in attendance spoke out against RexCorp's race track proposal, which Cardinale emphasized will not happen.
A self-described proponent of racing, Calverton resident Dave Macknee, who owns two modified stock cars, said it would be disrespectful to have the racetracks too close to Calverton National Cemetery. "I have two uncles buried at Calverton Cemetery," he said. "Do you think they would have [auto] racing next to Arlington [National] Cemetery?"
Calverton resident Hal Lindstrom said he was bothered that "the people who were pro-racetrack didn't live in Riverhead. It's unfair for these people to come in and tell us what to think."
While she said she would prefer a racetrack, Riverhead resident Laurie Downs said she was "not too crazy" about non-town residents "pounding my [town] board" to get a racetrack put in. Stating that a professional motorsports event would generate more revenue than a themed resort, Downs said a racetrack would be "a good thing for Riverhead."
Most of the controversy about the project centered around the 35-story indoor ski mountain. According to Pally, Riverhead Resorts will apply for all the necessary permits to get the zoning variances for the ski mountain. If they cannot get the variances, "then we'll substitute something else," he said. When environmental concerns were raised about the ski mountain, Pally replied, "From an environmental standpoint, it's much better to go up [to build] because you reduce the amount of ground area to be covered."
Cardinale said he was "astounded" that Buckley and Wooten voted against the project. "I don't believe it's the town's job to predict whether [the ski mountain] is going to be built or not," Cardinale said. "I'm not a predictor of the future; I don't know [what will happen] in the six-month due diligence period, or 23 months from closing. I do know that, when the contract is agreed [upon], the town will receive a $2 million, non-refundable deposit ... Over time, Riverhead will be richer for it."
"I'd like to see a constant stream of steady nickels," Buckley countered, "rather than a one-shot of the quick buck."
By:Hank Russell
01/09/2008
Email to a friendPost a CommentPrinter-friendly
After months of debate about the project's merits and a recent qualified and eligible sponsorship hearing that became very contentious, the Riverhead Town Board finally approved a resolution last week to enter into contract negotiations with Riverhead Resorts LLC.
Advertisement
Face Fact or Fiction: The Truth about Skin Care Products
Is Your Computer Slower Than When You Bought It?
How to Get a Healthy, Full Night's Sleep
As previously reported, Riverhead Resorts has proposed eight themed resorts - including a 35-story indoor ski mountain - to be built upon 755 acres of recreationally zoned property on Enterprise Park at Calverton. The firm offered a $155 million purchase price, beating out RexCorp's bid of $152.5 million. The Riverhead Resorts project includes a village square, lake, indoor ski slope, convention center, campgrounds, a fitness and recreation center, hotels and 2,500 timeshare units. Construction is expected to be completed by Christmas of 2012.
Riverhead Resorts representative Mitch Pally, a member of The Weber Law Group in Melville, said this is one more step to making the project a reality. "Now we can start our due diligence period [of six months]," he said. "There's a lot of work to do. This is not the end."
Under the deal, the town will receive $4.5 million when the contract is signed, of which $2.5 million will be put into an escrow account, and the other $2 million will go to the town, according to Don Secunda of The Weber Law Group. During the due diligence period, Riverhead Resorts will pay the town $1 million every two months. In addition, the developer has agreed to pay $500,000 to cover the town's legal and consulting fees.
"If we don't close title, we can buy [up to five] extensions," he said. Each extension, lasting six months, will cost Riverhead Resorts $1.94 million, according to Secunda. "If we decide to close title [and complete the project], we have to pay the balance of the $155 million [purchase price]," he said.
In addition, Riverhead Resorts will give the town $5 million to build an animal shelter and ball fields, according to Secunda, who added that 15 acres will be given back to the town so it will be "contiguous with the parkland and the park [that the town is] already building [Calverton Recreational Park]."
Town Supervisor Phil Cardinale wanted to vote on the deal on December 28 - the day after the qualified and eligible sponsorship hearing - but he said he spoke to the town board and decided to wait until the new town council members, Timothy Buckley and James Wooten, came on board to vote.
"We wanted to set a tone of respect and cooperation between the board members," Cardinale explained.
Both Buckley and Wooten voted against the project. Buckley said the resort, for the most part, will offer entry-level jobs and seasonal positions, and those employees will not be able to afford to live in Riverhead. "I feel [Riverhead Resorts] won't be able to staff themselves," he said.
But Town Councilman John Dunleavy countered Buckley's assertions. "Seasonal? No. Year-round? Yes," said Dunleavy. "This place is going to be open all year long. It's not just skiing or ice skating - it's horse riding, it's an indoor water park, it's a hockey rink." He said his decision to vote in favor of the project was "not an emotional decision" but "a decision ... for the residents of Riverhead Town."
Stating that he had serious reservations about whether the developer had the financial wherewithal to pay for the construction costs and the purchase price, Wooten expressed his own concerns. "I see too many obstacles and I think that will stall any development or major tax relief [for the residents]," he said.
Pally said Riverhead Resorts has a conditional letter of commitment from Royal Bank of Scotland. "Now we have the contract," Pally said. "We can start the process with the financing agent."
Julius Schwarz, executive vice president of The Bayrock Group, said that some of the other potential financiers include Corus Bank in Chicago, Capmark Financial Group in San Mateo, and the Icelandic investment firm FL Group, among others.
As previously reported, motorsports enthusiasts protested the town board's decision to choose Riverhead Resorts' project. Instead, they preferred RexCorp's proposal, which included a 10,000-seat motorsports arena. But at last week's meeting, some in attendance spoke out against RexCorp's race track proposal, which Cardinale emphasized will not happen.
A self-described proponent of racing, Calverton resident Dave Macknee, who owns two modified stock cars, said it would be disrespectful to have the racetracks too close to Calverton National Cemetery. "I have two uncles buried at Calverton Cemetery," he said. "Do you think they would have [auto] racing next to Arlington [National] Cemetery?"
Calverton resident Hal Lindstrom said he was bothered that "the people who were pro-racetrack didn't live in Riverhead. It's unfair for these people to come in and tell us what to think."
While she said she would prefer a racetrack, Riverhead resident Laurie Downs said she was "not too crazy" about non-town residents "pounding my [town] board" to get a racetrack put in. Stating that a professional motorsports event would generate more revenue than a themed resort, Downs said a racetrack would be "a good thing for Riverhead."
Most of the controversy about the project centered around the 35-story indoor ski mountain. According to Pally, Riverhead Resorts will apply for all the necessary permits to get the zoning variances for the ski mountain. If they cannot get the variances, "then we'll substitute something else," he said. When environmental concerns were raised about the ski mountain, Pally replied, "From an environmental standpoint, it's much better to go up [to build] because you reduce the amount of ground area to be covered."
Cardinale said he was "astounded" that Buckley and Wooten voted against the project. "I don't believe it's the town's job to predict whether [the ski mountain] is going to be built or not," Cardinale said. "I'm not a predictor of the future; I don't know [what will happen] in the six-month due diligence period, or 23 months from closing. I do know that, when the contract is agreed [upon], the town will receive a $2 million, non-refundable deposit ... Over time, Riverhead will be richer for it."
"I'd like to see a constant stream of steady nickels," Buckley countered, "rather than a one-shot of the quick buck."