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Bidder says NY chose Andrew Cuomo donor for Republic contract

The state selected an affiliate of Talon Air,

The state selected an affiliate of Talon Air, an aeronautical company headquartered in Farmingdale, for the contract to develop five parcels of land at Republic Airport. Talon, its principals and their relatives have donated $200,000 to Gov. Andrew M. Cuomo since 2009. A Talon hangar at the airport, Oct. 26, 2015. Photo Credit: Kevin P Coughlin

ALBANY — The decision by the administration of Gov. Andrew M. Cuomo to choose a campaign contributor to the governor for a $50 million development contract at Republic Airport in Farmingdale has generated opposition from a rival bidder, local civic groups and state Sen. Phil Boyle, who represents the district.

The losing bidder, a development consortium called LI Cleantech, filed a formal complaint May 10 with the state Department of Transportation and the state comptroller’s office.

The complaint came after the state selected an affiliate of Talon Air, an aeronautical company headquartered in Farmingdale, for the contract to develop five parcels of land. Talon, its principals and their relatives have donated $200,000 to Cuomo since 2009.

LI Cleantech on May 6 sent a letter to the state inspector general seeking an investigation. Cleantech said Daniel Gazzola, a private-sector real estate agent hired by the state, told the consortium in a telephone call “that although financial offers . . . were ‘right in line’ with where the market was, ‘the pot needed to be sweetened’ since this is a ‘a political issue.’” Gazzola denied that account in an interview.

Sean Brady, LI Cleantech’s president, said in an interview that the state “disregarded competitive bidding requirements every step of the way.” He said the state never informed the company when its designation as the winner of a portion of the contract to lease and develop five parcels was taken away and given to Talon’s affiliate, Stratosphere Development Co. LLC.

LI Cleantech says the state changed its original call for development that included a wide variety of retail and commercial — criteria around which LI Cleantech built its proposal — to aeronautical, Stratosphere Development’s specialty.

Stratosphere and Cuomo said campaign contributions by Talon Air CEO Adan Katz, the company’s principals and their relatives to Cuomo’s campaigns had no impact on awarding the contract and all accountability measures were followed.

“These are baseless and frivolous allegations by a disgruntled bidder who frankly wasn’t competent enough to make good on the part of the project they did win,” Cuomo administration spokeswoman Amy Varghese said Saturday. “This project was competitively bid by the book under the highest ethical standards and all bidders had access to the same information.”

Talon, Varghese said, “had a superior proposal that generates $50 million for the airport, $27 million in new investment and creates dozens of quality jobs. The fifth parcel was initially awarded to Clean Tech, but they failed to make good on key provisions of the RFP and outright ignored our repeated attempts to get them to come back to the table. After a while, we had an obligation to move onto the second-highest-scoring respondent.”

In 2013, a member in the LI Cleantech consortium made a similar assertion of favoritism against Talon over a previous contract from the Cuomo administration for airport services at Republic. The Federal Aviation Administration found the complaint to be “irrelevant” and rejected it. The state DOT declined to comment about the complaint made to state DOT and the FAA.

Also, two of the companies in the joint venture of LI Cleantech contributed to Cuomo. Brady Risk Management contributed $10,000 to Cuomo’s campaign in 2016 and Breslin Realty Development Corp. contributed $5,000 in 2013, state records show.

The Cuomo administration said Stratosphere Development’s bid to develop the five parcels at Republic was subjected to several levels of state oversight and still faces reviews by the independently elected comptroller and attorney general.

The governor’s office said the proposal by the Talon subsidiary will create 73 permanent jobs and is supported by the Long Island Association, among other business and academic groups who agree with Cuomo’s plan. The LIA’s Kevin Law said Cuomo’s plan “holds enormous possibilities to be an economic driver.”

Katz said the “proposals were scored solely on merit.”

State Comptroller Thomas DiNapoli’s spokeswoman, Kate Gurnett, said the awarding of the contract is “under review,” and that the office had received LI Cleantech’s request for an investigation under its legal authority to examine whether the bid award was fair.

If DiNapoli finds a bid was awarded unfairly, he can rescind the contract. A review could take several weeks. Gurnett declined to comment further.

The award to Talon has angered local civic groups that say the Cuomo administration put together a deal to benefit a campaign contributor and ignored their input.

The groups say the new contract will increase air travel at the small airport rather than bring in taxpaying retailers and other companies. They also say they fear that more frequent flights and cargo service will threaten their suburban lifestyle.

In response to the controversy, Boyle (R-Bay Shore) has asked Cuomo to rebid the contract. In a May 24 letter to Cuomo, Boyle questioned whether proper procedures were followed and said there may be “potential fundamental flaws” in the request for bids.

“I think we really need to go back at this and start with a clean slate,” Boyle, the Republican designee in the race for Suffolk County sheriff this fall, said in an interview. “With what’s going on upstate, we don’t want even a whiff of impropriety.”

Boyle was referring to the federal investigation surrounding Cuomo economic development programs under Empire State Development designed to create jobs upstate.

Among the upstate projects is the “Buffalo Billion” plan, which has spawned federal bribery and bid-rigging charges against two former Cuomo aides. They include Joseph Percoco, a former top aide to Cuomo who was indicted on charges of extortion and soliciting bribes to influence the administration to land large contracts for commercial property developers.

Percoco has pleaded not guilty. Cuomo isn’t charged with any wrongdoing.

Boyle’s spokeswoman, Jennifer Hayen, said they never received a response from Cuomo. Cuomo’s office declined to comment.

The development contract at Republic first was bid by the transportation department in 2015. The contract was to include commercial uses such as retail for up to five parcels at Republic.

The state announced in 2016 that part of the contract to develop the parcels for commercial use would go to Breslin Realty Development Corp. in Garden City, which was part of a joint venture with LI Cleantech.

The portion of the contract to manage the airport went to AvPorts, an airport operations and management company based in Dulles, Virginia.

But in 2016, the Cuomo administration took the project out of the Department of Transportation and put it under the control of Empire State Development. ESD is designed to act faster in working with businesses to create jobs, and is subject to fewer reviews and audits than other state agencies.

The administration also changed the development criteria from commercial and retail to aeronautical use — Talon Air’s specialty — according to the May 6 letter to the inspector general. Plans shifted to allow consideration of development of up to six parcels. The administration said it wanted to maximize the airport as an asset and to create the greatest economic benefit.

In February, development rights to lease five parcels for a total of more than $1 million a year for 49 years were awarded to Talon Air. Talon, through its affiliate Stratosphere Development, promised to invest at least $27 million for new hangars and other facilities.

Howard Zemsky, CEO of Empire State Development, said then that development of a total of 41.5 acres over five parcels at the airport would create hundreds of jobs. ESD said it asked developers for offers to develop any of five parcels “and to consider aviation and nonaviation uses.”

In a state news release, Talon CEO Katz said for more than a decade “it has been our dream and vision to help transform Republic Airport into an entity that benefits both Long Island’s and New York State’s economies.”

ESD spokeswoman Amy Varghese, in written responses to questions from Newsday, said, “We required all outside consultants involved in the project to disclose potential conflicts of interest and recuse themselves when necessary.”

“This is just an attempt to smear Mr. Katz,” Talon wrote in a response to LI Cleantech’s complaint to DiNapoli.

LI Cleantech said it initially won the right to develop one of the parcels. But company officials said they were surprised when the state then told them to pay a $50,000 “nonrefundable contract deposit” or the state would move on to the next bidder. The state said the need to make the deposit was made clear in the request for proposals and the company failed to meet other provisions, then refused to return to talks. LI Cleantech disputed that characterization.

“As expected, Talon . . . was awarded the development rights to four of the five development parcels,” said the May 6 complaint to the inspector general by Eliot Bloom, LI Cleantech’s vice president, and Brady.

Brady said LI Cleantech’s analysis projected it would create more jobs, although he provided no specific numbers, through commercial uses such as retail compared with Talon’s proposal.

The Talon subsidiary said its plan would create 490 permanent jobs. The state will judge these assertions in their ranking, or “scoring,” of the proposals, which hasn’t been released.

“They then issued a new RFP and treated the Talon entity differently than us, by fast-tracking their proposal, charging us fees that were not charged to Talon, ultimately taking away our one parcel and giving it to Talon, and, most importantly, ultimately awarding Talon the entire project although Talon’s proposal is directly opposite to the needs of the community and the future,” Brady said.

In a January 2017 letter to Empire State Development that preceded the formal complaints to the state DOT and the comptroller, LI Cleantech said the state’s real estate agent “attempted to modify the terms . . . to create a roadblock to our finalizing this project and to benefit Mr. Katz and Talon Air.”

Gazzola, the state’s real estate agent, said in an interview that was “an outright lie.”

Gazzola said the real estate company he works for — Newmark Knight Frank, which is based in Manhattan — was hired by the state to generate interest in the airport development among developers.

Gazzola said state officials told him they already were aware of Talon’s interest but wanted to make sure other companies knew of the project to submit competitive bids.

“The decision wasn’t made until all the [requests for proposals] were in after a multi-month . . . public process,” Gazzolla said.

Katz, who also is a real estate developer, Talon principals and their relatives and Talon subsidiaries have contributed more than $200,000 to Cuomo’s campaigns since 2009, according to state campaign finance reports.

In 2014, Cuomo used a Talon helicopter for a flight to a state Business Council meeting. The Cuomo re-election campaign reported that as an in-kind contribution from Stratosphere. The campaign later paid the $1,000 expense in a check “out of an abundance of caution,” a campaign spokesman said.

ESD spokeswoman Varghese said the comparison “scoring” of the merits of each bid requested by Newsday would not be released because Talon was “conditionally designated,” not legally awarded the job.

The Cuomo administration chose Stratosphere July 20 pending final, routine reviews by the state attorney general and comptroller offices. But no details of the scoring were released, said state spokesman Joseph Morrissey.

“Given that this is still an open procurement, the department is not in a position to release any information related to the (request for proposals) until the leases have been fully executed by the comptroller,” Morrissey said.

The Department of Transportation also so far has not responded to a Freedom of Information Law request made May 10 seeking a record of findings “due to the complexity of the request.” Empire State Development, New York’s primary economic development agency, told Newsday to file a FOIL request for records on the state and federal findings.

Talon said LI Cleantech is a competitor trying to mar Talon’s name in order to secure more work at Republic. Talon said its proposal to bring in aeronautical services rather than offices and stores proposed by LI Cleantech will attract many more jobs and revenue to the airport.

Talon projected 490 jobs with $35 million in annual wages would be created in its retail and commercial plan. It said the project would produce $115 million in business, and that the state would receive more than $1 million in rental income and “significant” revenue from fuel taxes and fees.

“Utilizing airport land for nonaviation use is doomed to fail,” Talon said in a written response to questions from Newsday. The company noted the 56th Fighter Group Restaurant, which had a World War II motif, closed in 2012 after nearly 30 years in operation.

Talon also said airport land “owned by the state should be used for aviation purposes because aviation businesses have the advantage of not having to pay real estate taxes or PILOT [payment in lieu of taxes] fees,” Talon said.

Earlier this month, the state determined the project won’t harm the environment, although some area residents argued that all of their concerns were not addressed. Frank Nocerino, chairman of the Republic Airport Commission, said the environmental review likely will be discussed at a commission meeting Tuesday.

Local civic groups that oppose the Talon subsidiary’s contract also say the selection wasn’t subject to “normal protocols.”

“The red lights started going on,” said Lindenhurst resident John Lisi, 72, the longtime head of the Daniel Street Civic Association, one of a dozen neighborhood groups around the airport.

“This wasn’t handled in the normal protocols. This went through the Empire State Development,” Lisi said. “We heard about it through the rumor mill . . . the question is whether it was intentional or accidental.”

“It looks a bit like politics, and favors,” said Alissa Taff, 66, of Huntington, head of the Civic Association of Sweet Hollow. “I can’t prove it.”

Said Lisi: “You want to be sure government is for and by the people, not in spite of the people. I would think that Andrew Cuomo is above getting involved in something like that.”

But campaign contributions “of that size, it raises eyebrows,” Lisi said.

Cuomo spokeswoman Dani Lever countered: “No contribution of any size will influence a government action, period.”

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