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Luminati seeks to buy town’s land at EPCAL for $40 million

04/05/2017 1:31 PM |

The Riverhead Town Board on Tuesday unanimously authorized the signing of a letter of intent to sell most of the remaining town-owned land at the Enterprise Park at Calverton, including both runways, to Luminati Aerospace LLC for $40 million.

Luminati has had a presence at EPCAL since 2015, when it purchased the former SkyDive Long Island property for $3.4 million. More recently, it leased space in a portion of the former Hangar 6 building, which also houses PODS and Mivila Foods.

The purchase involves most of the remaining 2,300 acres owned by the town, about 600 of which are developable, according to the town. Supervisor Sean Walter said he believes the state will require a covenant prohibiting any additional development within those 2,300 acres.

There are also about 500 privately owned acres at EPCAL.

“My goal is to quite simply to use it for its intended purpose, which is an aviation manufacturing base,” Luminati CEO Daniel Preston said in an interview Tuesday. “My focus is going to be on getting the greatest economic impact locally, and the largest number of job creations, which is between 800 and 2,000 people by the end of the fifth year, and that’s quite conservative.”

Only about 15 people are currently employed at Luminati, spokesman Jeremy Freeman said. That number, he added, is about to expand as staff is hired to run the machines the company recently brought into Hangar 6.

Asked if there will be high-paying jobs at Luminati, Mr. Preston said, “It’s a mixture across the board. We’ve already been partnering with Composite Prototyping Center for training local people for the high-tech positions.”

“CPC is a nonprofit set up with state funds to train local people in high-tech composite jobs,” he added.

The town announced last fall that it had reached a tentative agreement to sell about 600 acres at EPCAL to Suffolk County Industrial LLC for $45 million, but Mr. Walter said those negotiations broke down about 12 weeks ago.

Luminati then jumped into the picture.

Mr. Walter said the deal with Luminati would include an easement allowing the EPCAL bike path to remain, although the western portion of the path would need to be moved farther west to avoid the 7,000-foot runway.

The town’s Henry Pfeifer Community Center and its sewer plant would also be excluded from the sale, the supervisor said.

While the zoning the town has approved for EPCAL allows some housing and as a supporting use to commercial and industrial development, Mr. Freeman said Luminati has no plans to build housing or retail at the site.

“This is a place designed for aerospace and that’s what we’re using it for,” he said. “Housing has no place in that realm.”

The 50-lot industrial subdivision the town was planning at EPCAL also won’t be needed if the land is sold to Luminati, but a smaller subdivision will be, according to Mr. Walter.

He said there would probably be just a five-lot subdivision, with two large lots owned by Luminati and three lots for town property like the sewer plant and the Pfeifer center.

If the Luminati deal goes through, the town would also be relieved of the ongoing costs of mowing the grass and maintaining the runways, he said.

The town spends about $100,000 per year to cut the grass at EPCAL and the original concrete runways that were used by Grumman have never been repaired, according to Mr. Walter.

“Our engineer estimated it would cost several million dollars to pave them,” he said. “We would never have done this and, at some point, the town would have had to shut those runways down. A huge liability would be taken from us if this deal goes through.”

Mr. Preston said Luminati will “properly maintain” the facility.

“It’s on the cusp of being unusable, and that’s from absolute neglect over 20 years,” he said.

David Pennetta of Cushman & Wakefield, the real estate brokers hired by the town to market EPCAL, said six parties had been interested in buying the land and four made offers.

“They were all around the $40 million number,” Mr. Pennetta said. “I think that’s evidence enough that this is the value of the property.”

Councilman Tim Hubbard said that without infrastructure, the property could never realize its full value.

Mr. Walter said there would also be a covenant attached to the sale of the runways prohibiting them from appearing on aviation charts and that they will never be used for commercial passenger aircraft.

“When we sign this agreement and move forward, we have reintroduced a defense contractor to Calverton,” Mr. Walter said.

From 1952 to 1995, EPCAL was home to the Grumman Corporation, a defense contractor that made and tested military planes. The land was owned by the U.S. Navy, which gave the bulk of it to the town in 1998 for economic development that would replace the jobs lost when Grumman left.

Mr. Walter called it “divine providence” that Luminati entered the picture, because the zoning the town was developing for EPCAL didn’t intend for aircraft manufacturing to take place on the site, and was geared more toward a “mixed use” development that allowed some housing.

Luminati is currently building solar-powered unmanned aviation vehicles for a client whose identity remains confidential.

Luminati also recently entered a partnership with DuPont to produce fabric for body armor that can be used not just for people but to protect airplanes or military drones, Mr. Freeman said.

Once the “definitive agreement” is signed with the town, Luminati will pay an initial deposit of $500,000 within three business days. That money will be placed in escrow, pending closing of the deal.

Next, there will be a 90-day due diligence period during which the Town Board must hold a “qualified and eligible sponsor” hearing to determine if Luminati has the resources and ability to carry out its plans for the property. During this period, existing town environmental reports on the property will be made available to Luminati.

An additional $500,000 payment will be required one day after the due diligence period concludes.

The balance of the $40 million will be paid at closing, according to the letter of intent.

Mr. Walter said the land value of the EPCAL property alone is expected to generate about $1.6 million in annual property taxes before anything is built there.

Laura Jens-Smith, who is seeking the Democratic nomination to oppose Mr. Walter in this fall’s supervisor election, had held a press conference last week to criticize both the town’s pace in developing EPCAL and the fact that housing was permitted there by zoning.

On Tuesday, she said, “I think their offer has raised a lot of questions.”

“Do they have a product or a prototype or contracts with anybody to do the things they say they are going to do?” she asked. “Two thousand jobs is a lot of jobs to create and I don’t see any of their history coming anywhere near that.”

Top photo caption: Luminati chief pilot Robert Lutz prepares to fly at a press event in June 2016. (Credit: Katharine Schroeder, file)

Daniel Preston, CEO of Luminati, speaks at a press event in June 2016. (Credit: Katharine Schroeder, file)

Ghosts of EPCAL past

EPCAL proposals have helped fill the pages of the News-Review for many years but, to date, none has ever come to fruition. Here’s a sampling of some of those offers.

• In 2007, Riverhead Resorts and RexCorp both offered to buy 755 acres at EPCAL and engaged in a public bidding war for the property. Ultimately, the Town Board selected Riverhead Resorts, which offered $155 million to build an indoor ski mountain and eight themed resorts. The deal fell apart in 2011, although Riverhead Resorts did pay $8 million for numerous contract extensions.

RexCorp offered $152.5 million and planned to build a racing-themed family entertainment center.

• Rechler Equity Partners offered to purchase 300 acres for $35 million in 2007 to build an industrial park, but by 2009, had dropped its bid to $19 million. That deal fell apart in 2010 when Rechler sought changes to include some housing in the project.

• In 1999, long before he became president, Donald Trump offered $55 million for the entire 2,900-acre EPCAL site in order to build a NASCAR race track.

• In 2013, an Argentine group called International Polo Organization offered $40 million to buy 500 acres for an “equestrian village.” That proposal never had support from the Town Board.

• In 2010, a Florida group called Palm Beach Polo offered $33.58 million for 1,600 acres.

• In 2001, a company called Calverton Motor Sports sought to buy 250 acres for $6.2 million to build an auto race track. That same year, the Riverhead School District discussed the possibility of building a new high school at EPCAL.

• In 1993, the Long Island Regional Planning Council suggested building an international air cargo jetport at EPCAL, a concept that encountered strong community opposition.

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