Riverhead Town’s agreement to lease runway space at Enterprise Park at Calverton to a company storing flood-damaged cars from Hurricane Sandy may be scaled down soon.
Riverhead Supervisor Sean Walter said Insurance Auto Auctions, the Illinois-based company that has been leasing town-owned runways at EPCAL to store flood-damaged cars, has asked that the town allow it to lease a lesser acreage and for a shorter time period than the three-month extension option that the contract calls for.
The alternative, Mr. Walter said, would be that IAA leaves altogether, and the town doesn’t make any additional money off the deal.
IAA inked a lease with the town Nov. 15 for 52 acres at the site’s western runway, which is inactive, for car storage. The company later added cars to 52 acres on the eastern runway through a Dec. 4 agreement with the town and the Skydive Long Island company, which had been using the runway and agreed to halt operations for a time to make room for the cars.
A third agreement on Dec. 27 allowed IAA to utilize about 7.8 acres of town-owned taxiways that run alongside the eastern runway that weren’t included in the second lease.
In each of the agreements, the town received $3,200 per acre per month from IAA. Vehicles have since been removed from the eastern runways and taxiway, but remain on the western runway.
Under the terms of the agreement for the western runway, IAA leased the property for six months, after which the company had an option for up to two three -month extensions, which would have totaled a full year.
But with the agreement due to expire May 15, IAA representatives have asked that rather than agree to a three-month extension of the full 50 acres, they instead lease just 15 agrees until the end of June, Mr. Walter said.
Mr. Walter said company officials will not agree to the full 50 acres, as per the original contract, because there aren’t that many cars left.
The proposed contract revision would enable the town to receive at least some additional revenue, he said.
“We’ve made $1.7 million from IAA so far,” Mr. Walter said Friday.
The exact amount of what the town would receive under the new proposal has not been determined, since IAA officials are debating leasing 10 acres instead of 15, and the end date has not been set, he said.
Had they stayed on the site for a full year at 50 acres, the town stood to make about $2.7 million.
The revised agreement would need to be approved by the full Town Board, Mr. Walter said, adding that the other board members have not yet reviewed the revised deal.
All the cars on the runway were deemed total loss cars that have been acquired by insurance companies, according to IAA. Those companies hire IAA, which holds weekly online auctions to sell off the flood-damaged cars to licensed auto recyclers or salvage shops.
Officials said more than 200,000 cars in the New York Metropolitan area were destroyed by Sandy floodwaters on Oct. 29, and flood-damaged cars were being stored at large parking lots all over Long Island following the storm by IAA and other auto auction companies.
The town paid a 5 percent broker fee on the money it received from IAA to Corporate Realty Services of Hauppauge, according to town records.