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GREENBURGH, N.Y. – A discussion on a large sports bubble, dubbed the Westchester Field House, is set to take place this week at the Greenburgh Town Board meeting on Wednesday, with a vote on the proposed 15-year lease set for Friday.
“This facility will be designed to be a premier indoor sports facility, serve a diverse user group and include sports fields,” Town Supervisor Paul Feiner wrote on the Greenburgh website. “The proposed facility would provide local residents with four season access to world class training and instruction in multiple sport activities, while generating over a quarter of a million dollars on an annual basis for 15 years.”
Game On 365 wants to put a 94,000-square-foot bubble and outdoor soccer field on a seven-acre parcel on Dobbs Ferry Road, where Frank's Nursery and Crafts used to be.
A discussion on the proposed lease will take place during Wednesday's Town Board meeting at 6 p.m. at Greenburgh Town Hall. A special Town Board meeting has been set for Friday at 1 p.m. at Greenburgh Town Hall.
Under the proposed lease, Greenburgh seniors would receive free membership. Feiner said the property is currently generating zero revenue.
Game On would pay approximately $260,000 in rent for the Dobbs Ferry Road site. Game On would also pay Greenburgh $125,000 to complete an environmental study and clean-up of the former Frank's Nursery property.
Greenburgh residents have been actively opposing the proposed lease. A group launched the helpburstthebubble.com website and has sent out mailings with criticism of the project.
A vote on the lease was scheduled to take place in June, but town officials pushed it back to July to give residents adequate notice.
Comments (3)
I think Hal summed it up well even if it was somewhat lengthy.
Now let's comment on the article.
True there is a 94,000 sf under the bubble sports field(s) and there is a (50,000 sf) outdoor playing field(s) but there is also a 15,000 sf brick and mortar two story clubhouse, which by renting just half of it (7,500 sf), Game On expects to generate more rent ($330,000) than they are paying Greenburgh to rent the entire property.
When is rent not rent? When it includes taxes paid to the Town and the taxing districts, when it includes "rent credits" for lending the Town money to remediate the problems. Meanwhile, of the unknown cost of the soil remediation, Game On's contribution is but the $125,000 to be used as follows: to pay $43,500 for the Phase II environmental study and $81,500 toward the clean-up but only if the total cost does not exceed $250,000 at which point Game On is permitted to bail out and lay claim to the unspent $81,500. Should they remain (and why wouldn't they with this sweetheart lease that is the bait to catch would-be investors) it is the Town's taxpayers who will be doing the heavy lifting by paying for the clean-up. The purpose of the Phase II study is to learn the extent of the problem -- without knowing this the Town has no ability to gauge the total cost -- an obvious fact that hasn't stopped Feiner from putting a $100,000 price tag on it.
Yes the Town Board is voting on the controversial matter at a Special Town Board Meeting but casual readers should know that a Special Town Board Meeting is the vehicle of choice because it doesn't allow public comment.
And despite the reporter's fondness for disinformation or its synonym Paul Feiner, the vote was not held over from June "to give residents adequate notice" but because the Town Board did not release the draft Lease until the week after the 4th of July and adequate notice is not defined as "mark your calendars" but by providing the information that is to be discussed.
This is a very controversial lease and its existence and rush toward execution violates almost every precept of fairness and legal process. Residents have every right to be angry with how this matter is being handled -- not in the philosophical or abstract but because Game On is getting such a good deal and the Town is not that it naturally raises suspicions of under the table payoffs.
Here's a lease that is being adopted for no other reason than only one offer was received; that the offer (GameOn's) was being discussed even before the RFP (such as it was) went out is even more cause to investigate. That only one offer was received is more indicative that the Town doesn't know how to market its assets rather than market conditions (this alone should have been reason to "take it off the market" nor is this the apparent lack of interest surprising in light of no advertising or hiring of commercial real estate brokers if the Town was truly desirous of leasing the property.
This matter will not end with the Town Board's vote to execute the Lease. The Town Board will really be executing their political futures on Friday and for certain, what Feiner already knows from the relentless ticking of the clock, he won't be around to face the disgrace when the lease expires somewhere around the year 2027+.
Finally if your are lulled into believing that the property will be worth more in 15+ years, what if the Town had been able to sign this 15 year lease in 1992? That would mean the lease ended in 2007; the aftermath of which had far-reaching market consequences, leading to Feiner's explanation of why the property should not be sold in 2012. Real estate goes down in price too as any homeowner knows. No one knows about 2027 prices either, especially not Feiner.
Here's a serious, point by point, look at Feiner's July 23 email using the Town's email system to deliver it.
I'm going to explain, in communication terms, what he is trying to persuade readers to believe is true or special when he lists these items.
And I'm talking about real world commercial real estate leases. This is intended as a tutorial, for even the dumbest reader, so even they (Feiner's following) can understand the game Feiner is playing and using taxpayer paid media to disseminate his untruths.
I am writing in boldface to distinguish between Feiner's comments and my own. From time to time I may condense some of Feiner's comments but I am doing so only to reduce the burden of re-typing and I am not altering any of his meaning.
1) the term of the lease is for 15 years
it's such a good deal that the Town is lucky to have it for such a long period of time
2) the annual rent for Year 1 is...
he only goes as far as the first 4 years because that's where the reasonable and visible increases are; it's in years 9-10 that the giveaway is most noticeable.
3) Game On will be paying the full amount of the taxes...which will be included in the rent.
He writes this in bold because that makes readers think this is important and to their good when in fact it is the opposite.
Whether or not you believe that the new assessment is fair, Feiner avoids saying what the taxes actually are. He does this because he doesn't want anyone to be able to subtract taxes from what he calls "rent" and be able to see how little the rent portion remaining really is. All real estate comes with a tax obligation; the Town has no control over how District taxes rise or fall and, often this is equally true re Greenburgh, but Feiner is willing to assume a bottomless risk pool by burying the tax portion within what he calls rent. The Tenant almost always pays the taxes (existing taxes being accounted for only in the first, called base year, rent) but almost always taxes in following years are stated as additional rent and the single tenant occupant of the tax lot assumes either the entire burden from the start because the initial rent is pegged at a high enough level to include both the taxes and the Landlord's investment profit. In this Lease, the initial rent starts low and remains lower over the life of the Lease (diminished by reassessment and rent credits). However in either case, a single tenant lessee, Game On (as compared to a multi-tenant facility like a shopping center where each tenant is billed only for their percentage share of the tax increase based on how much space they occupy) becomes responsible for 100% of the tax increases -- this is an obvious and essential protection for the Landlord (the Town). Feiner has not taken any such step to protect residents from increases in taxes he doesn't set.
4) In Year 5 the rent after taxes will increase by 1% and every year thereafter to the end of the lease. In Year 5 property taxes paid by Game On will also increase by the percentage that all Town property taxes increase for the remainder of the 15 year lease.
Here Feiner is really playing a loose game with taxpayers' minds and wallets. He is trying to make readers think that he is getting rent increases when he is not. And here's how he is doing that. First he subtracts the taxes (I have been saying all along that there is little "rent" in this rent [think of the commercials "where's the meat"] and Feiner knows it) so that the 1% increase is on purpose calculated against only the amount remaining after the subtraction occurs (not against the larger amount called yearly rent), whatever that amount is. Then going forward, he further reduces the "rent" portion of rent by subtracting rising Town property taxes from whatever "rent" remains. What this probably works out to (can't be calculated without knowing what the tax portion now and going forward is) is that the "rent" portion of the rent will likely be declining as the tax portion increases. In legitimate commercial leases, rent increases and tenants have to deal separately with their share of rising property taxes. What Feiner wants here is to protect the single most odious portion of the Lease. As for only 1.0%, the CPI which affects individuals, companies, the entire economy, has become the benchmark for rent increases. In the last five years, the CPI has been +2.8%, +3.8%, -0.4%, +1.6% and +3.2% (the most recent +3.2% triggering this year's Social Security increase). It would be more useful, however and serve to smooth things out over time were CPI increases averaged over say, a 5 year period. If that were the case, the averaged annual increase would be +2.2% which could easily encompass taxes if conforming to Feiner's rent model.
5) Game On will only pay rent if it receives a building permit.
This is relief to taxpayers to know that there is no money coming in to address the carrying charges (the District taxes) that Feiner cites as the reason to sign the Lease as of yesterday? Given that Feiner, supposedly, is writing to Greenburgh residents, is he implying that this is some benefit to them when the only party it benefits is Game On.
6) GameOn will pay all electric, water, gas, telephone and other public utility charges in connection with its occupancy of the property.
In communication terms, this is known as a variation on a "straw man" argument. Straw is not thought of as a particularly strong building material, thus any argument built from straw can easily be defeated. The items listed to be paid for by the tenant are the items that the tenant would be paying for anyway -- not items that the landlord is responsible for -- especially when all the (to be built) buildings are occupied solely by the tenant or the tenant's sub-tenants (the retail space Game On intends to rent). Whether you own your residence or rent, who pays the phone bill? If you leave the lights on, it is your wallet that opens to pay the electric bill. However Feiner knows that some of the residents he sends this mail to will be fooled into thinking that his statement demonstrates how he is looking out for taxpayers and prevent the Town from being bilked.
7) GameOn will pay the Town $125,000 for an environmental study and remediation of the property upon execution of the Lease. Remediation of Old Frank's Nursery is expected to cost approximately $100,000. Game On will pay an additional $125,000 if further remediation of the property is necessary but would receive rent credits in exchange for this payment.
This, appearing in boldface like it was good news, cannot be expected to be taken seriously by anyone with an educational achievement higher than a GED. Sophistry comes to my mind. The Town has said previously that the Phase II environmental study will cost $43,500. So what is Feiner saying here? Let's separate the elements.
GameON will pay the Town $125,000 for the study and remediation. So subtract the $43,500 and the balance, $81,500, is what's left toward the (Feiner stated remediation cost of $100,000) which means the Town will be left paying only $18,500 toward that purpose alone. "That's" a good deal? But "that" depends on whether or not the cost is the $100,000 cited. The "given" is that the purpose of doing the Phase II study is to discover what needs to be fixed and only with that knowledge, the cost to do it can be determined. Thus the $100,000 number is pulled from the air with nothing standing behind it. Ok, Feiner kind of admits that when he allows that the remediation cost could be higher (and in #8 following, he allows it could be even higher than higher) so he deliberately has written the news for those that who can't read a long sentence from beginning to end and remember the last words. "Game On will pay..." an additional $125,000 but that is not what "pay" means to most people. To most people "pay" means you transfer legal tender to another without the expectation of getting it back. If you expected to get it back, the operative verb would be "loan" $125,000. And here is Feiner, the Town Supervisor, reporting to the public and the media that Game On has agreed to "pay" when really it is "loaning" $125,000 to address the remediation cost because it is getting it back in the form of a rent credit against already small rent. The contractors who perform the remediation expect to be paid; they don't expect to give their pay back to the Town for credit to their account. So, the reality is that it is the Town, not Game On which is paying the cost of remediation above $81,500. And the reason the Town has set it up this way is even more devious. The Assessed valuation of a commercial property has a lot to do with "the income" that it produces; in this case the income is the Lease's rent portion paid to the Town. The Town, seeking the lowest Assessment, and not the highest, is setting up the argument that the revenue produced from the Lease is really very little. Therefore the Town Assessor is only doing her job when she determines the Assessed value based on the revenue. In this case, by design, the "millions of dollars of revenue" that the Lease will provide the Town with are sharply reduced by 1) subtracting the taxes from rent and 2( subtracting the rent credits (return of the $125,000 loan proceeds). This in turn, ultimately and most graphically when the improvements are in place, (three years from signing) becomes meaningful when the property is reassessed. At that point or perhaps by the famous Year 5, the Town, by reducing the amount of the taxes to be subtracted from rent, will be able to point to "rent" and see a more significant number since less of the rent will be going toward the payment of taxes and the loan repayment, the rent credit reduction which will likely have been wholly amortized in the first 4 years -- while the required land use reviews, hearings and construction period were in effect.
Meanwhile, there is great harm being done to the taxing Districts whose tax revenue will be lower because of the way the Town is stacking the deck so as to produce good copy for press releases, like the one I am commenting upon.
8) If remediation exceeds $250,000, Game On can terminate the Agreement. If remediation exceeds $400,000 the Town can terminate the Agreement.
This means that if the cost of remediation exceeds $250,000, a meaningless number in that whatever the cost, Game On's exposure is only limited to the $81,500 (the balance remaining after the cost of the Phase II study) and after the $175,000 LOAN, Game On can cut its losses and beat a hasty retreat. Clearly Game On isn't impressed by the Town's advice that the cost of remediation is but $100,000. But look at how these tipping levels are reached; the numbers aren't pulled from a hat. Game On puts in $125,000 at signing. Town uses $43,500 for the study. The $81,500 won't be spent until the total remediation cost is known -- otherwise Game On won't have its opportunity to terminate the Agreement before the $81,500 is used toward remediation that Game On no longer cares about.
Likewise, Game On put up the original $125,000 and agrees to lend another $125,000 but ONLY if the cost of the remediation does not exceed $250,000 ($125,000 + $125,000 = $250,000). So, as "helpful" as Game On is trying to be in these harsh times, at $251,000 they can choose to be history. Would they split and why do they care if all they have at risk is the already spent $43,500 and $81,500 somewhere in escrow until the remediation is green lighted? In dollars spread over 15 years (and in the low rent context), any additional sum incurred at Town expense should not appear to be a deal breaker. And even if they decided to dig deeper into their pockets and pitch in more, say were costs to exceed the $400,000 escape hatch for the Town, any further contribution would be insignificant when spread over the 15 year lease term and the profits (requiring first a lease) being boasted of to potential investors.
The Town has chosen for its fail safe point an arbitrary $400,000 number, $300,000 more than the cost being told to residents in advance of the vote on the Lease. Isn't that a 300% margin for error?
So why does Game On care what the Town spends on remediation if their risk is limited to only the first $125,000?
Why doesn't Feiner explain this. The property requires remediation; it belongs to the Town; the market value of the property has already suffered from the uncertainty; does Feiner think it will be worth more after it gets further encumbered by this story in the making: "would-be developer of "premier indoor sports facility...providing local residents with four season access to world class training..." decides to pull up stakes and cut its losses."
9) Game On agrees that it shall, at its own expense, ...have insurance.
What a surprise and probably around the same coverage level as the Town of Greenburgh takes out on all its owned real estate combined. If anything, this makes the Town government look dumb (see fallen tree settlement) by comparison while the tenant is essentially taking out a standard owner's and operators package. To "lay" residents, especially older residents, the world they haven't adjusted to is one that a child killed through negligence at the facility, (children being the prime market of the Game On business plan) can be expected to have lifetime earnings of many millions of dollars all of which will be taken into account by those who deal with insurance claims. Sadly, a million dollars just doesn't go as far as it used to. The relevant point is that the insurance is adequate and not anything that Feiner should be crowing about except that in the absence of anything to crow about, he has to settle for table scraps.
10) Senior Citizens will be admitted free...
Feiner includes in the email "I received the following information from Game On...". This information includes:
"The bubble is designed around programs and clinics, primarily for children..." Either Feiner doesn't read what he forwards (he doesn't even read what he writes) or he has a really low opinion of the intelligence of his constituents or he doesn't care what he writes. Given that relatively few Greenburgh residents of any age (see GameOn's comments) will end up using this facility -- however wonderful it is -- it would be better for all Greenburgh residents were the rent to be higher instead of giving some residents freebies or discounts. GameOn is always encourage to do so, being the master of its fate, to provide these goodies but taxpayers should not be subsidizing these freebies indirectly by collecting below market rent.
11) No tennis will be permitted...
This is a benefit to? Not to residents, not to GameOn who might be forced to alter their business plan in the future and seek tennis revenue. The only party that seeks this "good news" is Sportime which is considering a lease with the Town at the Town-owned Veteran Park -- and would be hurt by nearby indoor tennis competition. Not unlike the Town government (Feiner) knifing in the back the nearby (Ardsley) the GameOn direct competitor, House of Sports, nearing the end of its construction. Apparently encouraging "competition" is a phrase that Feiner uses selectively depending upon whose attention he has got and whose he has not. And while universally competition is assumed to be a good thing, locally it never seems to work out that way (see Verizon entering Cablevision's turf). But while in the broad sense competition is thought to work, there is no justification for Feiner to promote competition by using taxpayer dollars or assets for that purpose. Providing a sweetheart lease to one side's benefit along with its rent and tax breaks, changing the zoning, ignoring the wishes of residents and generally burying be press release what is known as due diligence and all of the dozens of other complaints regarding specifically the GameOn Lease: this is neither playing by the rules or adhering to legal guidelines.
12) The Town has conducted an environmental review of the proposed Lease Agreement and determined that there are no adverse environmental impacts. A more thorough environmental review of the bubble itself will be conducted and studies when a plan for the site is submitted.
What does this mean? A less thorough review has been conducted? A secret Phase II exists or is
Feiner referring to an old Phase I review? Aspects of the Lease were environmentally reviewed but the largest structure to be built was not part of this review? Clearly Feiner wants to impart, to those unfamiliar with how he operates, the view that he takes due diligence seriously. A serious person (is he) who wants to do the right thing but one who has not obtained an independent appraisal of the property, a Phase II study, undertaken a SEQRA review (traffic, enviro, site), held optional but officially sanctioned and organized Public Hearings, advertised the property's availability, initiated required Public Hearings on a needed Zoning change(s)...
13) Game On will continue to pay rent during the Lease term even if the property is destroyed by fire or other casualty.
And that is another reason (by no means original or unique to Game On) for Game On to maintain insurance. Just because Feiner has no clue to what an umbrella insurance policy means, this doesn't mean that Game On, operating two facilities elsewhere, was born yesterday. Attention: Homeowners, if your house burns down who pays off the mortgage?
The rest of the email contains information submitted from Game On to address "questions" that may have been asked.
Traffic
Game On tries to quash those concerns by reporting that their "busiest hours of operation will be between 4pm and 8pm on weekdays." And, "the majority of the traffic to the bubble will be after school programs and evenings as well as weekends".
Sad isn't it that this schedule corresponds to the same hours when most residents who work are not at work and thus at home in Greenburgh and during some of these hours in their cars and stuck in GameOn traffic. Apparently only a few who visit the facility will be parking there or visiting the retail area. "The clubhouse will be open in the morning for a few sports related retail business. We anticipate a minimal amount of traffic at that time. The dome is not designed to be open 24 hours a day." The clubhouse rent is anticipated to bring in a steep $44 psf (on an apple to apple basis, this is probably 40x what GameOn is paying Greenburgh for "rent") solely because Game On is telling its investors that the enticement of the indoor sports business will bring in lots of foot traffic (from those who got there by car). Obviously not only sports program participants but visitors, drivers and employees will arrive there by some means other than "if wishes were horses".
Clubhouse
"We do not cater to outside customers. Our cafe and services are meant to enhance the experience of our customer base and not to attract outside visitors. The Clubhouse is not a destination for outsiders. Additionally most of the rented spaces are small studios, roughly 1000 sf and perhaps 3500 sf for a physical therapy office, too small to attract large crowds. There will not be a video arcade for outsiders. There will be a birthday party room with games, and only party guests have access to this room. No children will come into the facility without a purpose for being there".
Rather than take the additional effort and space to point out the many incongruities and misleading statements of this "assurance" and despite what it is pitching to would-be investors in the Business Plan, would it be possible to includes these representations in the Lease and make them subject to Default of Lease? Feiner can get away with anything only because he is a Town employee, using taxpayer assets and oath bound to be honest, upstanding and respect the law -- yet he still doesn't care. On the other hand any "answers" given by GameOn have no legal significance and those seeing this foolishness in print or hearing spoken at informal "information meetings" have absolutely no recourse when "things change" -- even by 180 degrees.
Hal Samis