$65M ‘animal terminal’ in New York sits empty

NEW YORK >> The animals are not coming to the Ark at Kennedy International Airport. Not one by one. Not two by two.

On a recent Thursday morning, no million-dollar racehorses or sleek show horses from Europe were standing in the 48 specially designed stalls for their mandatory three-day quarantine. No pigeons or finches bound for pet shops fluttered in the 5,000-square foot aviary. Paradise 4 Paws, a posh dog and cat resort with 150 suites inside Ark, has yet to open.

The $65 million animal transit facility opened a year ago to great fanfare, as what “the world’s only animal terminal and the first full-service quarantine facility” for the import and export of horses, pets, zoo animals and livestock. Built just yards from the runways, the idea was that animals could be deplaned and within minutes be enjoying the Ark’s climate-controlled environment and, if needed, the services of its veterinary clinic.

Instead, just before the new year, John J. Cuticelli Jr., the Ark’s owner, filed a $426 million lawsuit in state Supreme Court in Queens against his landlord, the Port Authority of New York and New Jersey, the agency that oversees the airport and solicited the animal handling center.

Cuticelli says the Ark is incurring “massive operational losses” and is in imminent danger of shutting down.

The suit charges the Port Authority with failing to enforce his lease, which gives the Ark “exclusive rights” to handle the animals coming to the airport from overseas. The lease requires that the Port Authority “must use reasonable efforts to cause other providers to cease their provision of the exclusive services.”

The project was financed with a combination of conventional loans and tax-free bonds, with Ark responsible for all payments.

The heart of the Ark’s business is supposed to be horses coming from Europe, which must be quarantined for at least three days to prevent the spread of equine diseases.

The Ark’s primary competitor is the U.S. Department of Agriculture’s 40-year-old operation in Newburgh, about 90 miles north of Kennedy Airport.

Most of the hundreds of birds and more than 3,500 horses that enter the United States at Kennedy every year are still put onto trailers for the 2 1/2-hour ride to Newburgh, even though the cargo planes could practically pull alongside the Ark, where the horses could be transferred to a dolly and wheeled into a stall moments after landing.

“I watch them go by my door every day,” Cuticelli said, “trucked up to Newburgh.”

“It makes no sense to me why the Port Authority, the USDA and all the other agencies involved in the creation of this facility are not supporting its use,” Cuticelli said. “I entered into a technically, legally binding contract with exclusivity. Otherwise, I never would have done it.”

The Port Authority and the Department of Agriculture declined to discuss the lawsuit.

Joelle Hayden, a spokeswoman for the USDA, did say that her agency “does not mandate use of any one import quarantine facility, airline or animal handling service. We support the use of all approved entities and services.”

And a spokesman for the Port Authority said in a statement that the “limited exclusivity provision enables the private veterinary clinic to provide the first-class facility and services that JFK requested.”

Critics, mostly shipping agents and transporters, said the privately owned Ark was too expensive and unnecessary, given the existence of the Newburgh operation.

But Dr. Scarlette Gotwals, a veterinarian and director of flight operations for Horse America, a shipping agent, said she was mystified as to why Ark has not been embraced by the horse industry.

“This is exactly what we’ve been looking for,” said Gotwals, the first shipper to bring horses to the Ark in September. “It’s a world-class facility. It’s an indoor, climate-controlled facility. In Newburgh, you’re using outdoor barns.”

She said the price difference, which amounted to a couple of hundred dollars, was “not cost prohibitive.”

Cuticelli, who described himself as a “broken down real estate investor,” got involved with the project at the urging of Ken Rotondo, a veterinarian and a former member of the advisory council at Cornell University’s veterinary college.

In 2010, the Port Authority solicited companies willing to build a first-class animal facility at Kennedy Airport.

“I proposed moving quarantine” to Kennedy, instead of going to Newburgh, Rotondo recalled.

The Port Authority awarded the contract to Rotondo’s group, he said, “without going to bid.” After Rotondo retired, Cuticelli took over.

Ron Marsico, a spokesman for the Port Authority, said the former airport facility “fell far below the minimum appropriate standards.”

“The Ark contract was tailored,” he said, “to enable the private contractor to make the necessary investment to build and operate a world-class facility.”

After three years of negotiations, the Ark signed a 310-page lease in 2014.

However, in 2015, the Port Authority signed a 20-year lease with the USDA operation in Newburgh, on the grounds of Stewart Airport. Thomas Bosco, then director of aviation for the Port Authority, recommended that the authority’s board approve the lease, saying that the “Ark does not provide quarantine services.” It was a puzzling statement given that Ark had signed a lease requiring it to provide that service.

Before construction of could begin, Ark had to wait for the Port Authority to remove the heart of the airport’s Perimeter Intrusion Detection System, a high-tech system of cameras, radar and sensors.

Ark also had to comply with various regulations and requirements imposed by the Port Authority, the USDA, the Centers for Disease Control and Prevention, state and local health departments and the Department of Homeland Security.

The delays and requirements drove the cost of the project from $48 million to $65 million, Cuticelli said. He obtained private financing, put up $12 million of his own money and New York City provided a $35 million bond.

Ark opened in January 2017, although the USDA did not approve the equine quarantine for imported horses until September. Business was slow.

Cuticelli said he does not know whether he has stumbled into some bureaucratic nightmare with the Port Authority, a turf war between government agencies, or is the object of a boycott by livestock shipping agents and transporters.

“There are two big issues,” said Matt Haug, general manager for IRT Transport, which transports livestock internationally. “People aren’t acquainted with them. The other issue is the traffic difficulties at Kennedy Airport. Newburgh is situated near the interstates.”

“Nobody asked for an import facility,” said a shipper, who spoke on the condition of anonymity because he did not want to become embroiled in the litigation. “I don’t know how this became a $65 million facility. They’ll never recoup their money.”

A Port Authority official, who also spoke on the condition of anonymity, blamed federal officials. “It’s no secret that the USDA has not been friendly to this facility,” he said.

The official said the Port Authority was trying to work out the issues with the USDA.

Ark’s lease does appear to give it exclusivity, which is also generating friction with the horse racing industry.

The New York Racing Association, which operates several tracks including Aqueduct and Belmont Park near Kennedy Airport, has built its own USDA approved quarantine barns for international horse races, enabling the horse to compete right after they leave quarantine. The 40 or so racehorses a year that fly into Kennedy from Europe, Japan and elsewhere for races within two weeks of landing represent only a fraction of the total expected volume.

In December, Dora J. Delgado, a senior vice president of racing and nominations for the Breeders Cup, sent a letter to the USDA expressing its concerns about the Port Authority’s plans to require “international equine athletes” to use Ark, rather than the USDA-approved quarantine barn at Belmont.

Alison McGowan, who runs Ternary Performance Horses on Long Island, was importing two show horses from Belgium and Holland in September. She said she told her shipper — whom she declined to name — on numerous occasions that she wanted the horses taken to Ark.

The day before the horses were to leave Amsterdam, she discovered that the shipper planned to take them to Newburgh.

She canceled the flight and hired a new shipper, Gotwals, who brought the horses to Ark.

“For me as a horse owner,” McGowan said, “I would never ship horses halfway across the world on a long flight and then put them on a trailer for 2.5 hours to quarantine. The Ark is outstanding. I’d rather have a state-of-the-art facility providing the best care.”

Cuticelli said he may not be able to wait much longer.

“What sense does it make to build a multi-, multimillion-dollar state-of-the-art facility to, among other things, mitigate the risk of hoof-and-mouth disease contamination, and then do what they are doing,” said his lawyer, Stephen B. Meister. “It’s totally insane.”