Riverhead sued over canceled contract for Enterprise Park development

A venture aerospace group is suing Riverhead after the town in October canceled a $40 million contract with the company, calling it “null and void.”

Calverton Aviation & Technology filed a lawsuit Monday in Suffolk County Supreme Court alleging the town, its Community Development Agency and Industrial Development Agency “planned [a] scheme” to back out of the contract to sell more than 1,600 acres at the Enterprise Park at Calverton for development.

The suit claims the town pressured the IDA to deny the application as public opposition over the company's plans for a cargo jetport mounted ahead of the November election.

Riverhead killed the deal in a 5-0 vote on Oct. 24, a day after the IDA determined the company didn’t have the financial ability to develop a technology and aerospace hub at the site and denied its application for financial aid.

Attorney Marc Kasowitz, of the Manhattan-based law firm Kasowitz Benson Torres LLP, said in a statement the company “intends to vindicate its contractual right” to develop the property and “create a world class center for industry and innovation for the benefit of the people of Riverhead.”

Town Supervisor Tim Hubbard declined to comment Tuesday, referring a reporter to Town Attorney Erik Howard, who did not respond to requests for comment.

The deal with Calverton Aviation & Technology had been pending since 2018 and stalled after Riverhead failed to obtain a state approval to complete the sale.

In March 2022, the town board transferred the property to the Riverhead IDA in order to lease the property to Calverton Aviation & Technology.

Under that agreement, the IDA was charged with reviewing whether the company was still financially capable of developing the site, allowing the town to cancel the contract if it determined otherwise.

The lawsuit seeks to force Riverhead to honor the original purchase agreement by closing on the property, in addition to unspecified monetary damages.

In the legal filing, the company said it was led to believe the termination option was “solely for optics” and that the town intended to close the deal regardless of the IDA's decision. The town board had found the company “qualified and eligible” in November 2018.

Pushback to the proposal swelled after a September 2022 meeting at which company engineers described uses for the site that included a logistics center and cargo jetport.

Company officials later distanced themselves from those plans, insisting it would not build a jetport. 

The lawsuit also claims Riverhead breached the agreement when it rezoned the property last week, banning cargo and commercial flights. 

A company spokesperson previously said Calverton Aviation & Technology was willing to agree to covenants restricting runway use.

John McAuliff, coordinator of the EPCAL Watch civic group, is concerned the deal will be resurrected.

“The crucial question right now is will the town stand up to them or will it buckle?” he said.

Kasowitz said there’s “absolutely no question” the company is qualified to develop EPCAL and said it has offered to pay the balance of the $40 million purchase price in cash at closing.

The company is primarily owned by Triple Five Group, a Canadian conglomerate that owns several malls, including the American Dream mall in East Rutherford, New Jersey.

For decades, the U.S. Navy leased the site to the Grumman Corp. to test military aircraft before the plant shuttered in 1996. Two years later, the federal government gave the site to the town on condition it be used for economic development to offset the loss of tax revenue and jobs caused by the Grumman closure.