Numbers, specifically the amount of net rent to be realized by the Mineola School District, are important in the Cross Street lease situation.
Dr. Nagler, the Mineola School District Superintendent, justifies the danger to St. Aidan’s students and surrounding residents that the increased traffic and congestion will bring, along with the loss of use of the fields, based on the net rent amount he alleges Mineola taxpayers will realize from the deal.
He states the net rent will be just over $1.1 million over the prospective five year term of the lease, an average of approximately $225,000 per year. At the same time, the parents of children in Mineola schools are being told the money will enable extra curricular programs to continue. The implied threat is that the district might cut the programs if the lease doesn’t go through.
In this manner the interests of Mineola School District parents are being played against the interests of St. Aidan’s parents and of Williston Park residents in general, causing the conflict that’s occurred. All over the value of the net rent figure.
So I think all would agree that it’s important to determine what that figure is. Then all parties will understand how much money the fight is actually over. I contend that amount is $0. Literally. When the numbers are reviewed, it’s easy to see that there’s no net value in the Cross Street lease to Mineola taxpayers at all. None. In fact, there are only losses. Solomon Schechter makes out well. Mineola taxpayers don’t.
What Dr. Nagler fails to disclose is that the $1.1 million figure he touts is a gross rent figure, not a net rent figure. Solomon Schechter is not entering into a net lease, where the tenant pays all expenses, though Dr. Nagler is presenting it as if they are. This is his first major deception.
A good question to ask is why it isn’t a net lease. In stand alone buildings where you have one tenant occupying the entire building, the normal lease is a net lease. But not in this case. Why.
Dr. Nagler’s second deception is his contention that the $100,000 Solomon Schechter is contributing towards the capital work that is being done to customize/prepare Cross Street for its use will cover the costs of that work.
This is untrue as well. In fact, it’s absurd. Consider.
That work includes the following: (1) the reconfiguration of the gymantorium space into a regulation-sized basketball court, 2) the expansion of the current parking lot to accommodate no fewer than eight long busses, 25 short busses and 20 vans on site, 3) the creation of two science labs of 600 square feet apiece, including necessary plumbing and electric work, 4) the painting of the entire building, 5) the installation of telephone wiring throughout the building to accommodate VOIP and high speed internet service, 6) the demolition of the projection room, 7) the moving of telecom patch/panel switches from the projection room when demolished, 8) the installation of video security cameras, intercom and remote door lock entry at select building entrances, 9) the use of a storage trailer, 10) the filing of requisite SEQRA documents, and 11) the payment of associated “soft costs”, i.e., architects engineers, etc.
The list of work is as taken from the Solomon Schecter Day School written offer of December 7, 2010 which Dr. Nagler stated he agreed to on December 16, 2010. There may be additional work contained in the lease agreement that Dr. Nagler continues to refuse to provide. We’ll find out eventually. What’s set forth above is the minimum, what we know of.
In any event, Dr. Nagler contends that the foregoing items will be paid for by the $100,000 contribution by Solomon Schecter Day School. I don’t think that much needs to be said about this contention. It’s clearly untrue. Obviously, the cost will be far in excess of $100,000, with all of the excess costs to be borne by Mineola School District taxpayers. So right off the bat, even before Solomon Schecter School District takes possession, the Solomon School District lease is a major money loser for taxpayers.
A good question to ask here is why Solomon isn’t funding its own capital work. Why are Mineola taxpayers picking up the tab. Generally, the tenant funds its own work. Why not here. This is especially so in this case as Solomon has the option to cancel the lease after two years and walk away. Under such circumstances, it’s unheard of for a landlord to fund capital work. So why is it being done here.
Back to the net rent issue. To arrive at the net rent, you deduct the total capital costs, to the extent they exceed $100,000 from the $1.1 million potential gross rent. Whatever is left is the potential net rent to the district.
That amount, in turn, is to be reduced by the costs of the lease to the Mineola School. If this were a net lease, as it should be, all costs, including all maintenance costs, would be borne by Solomon Schecter. But because it isn’t a net lease, the Mineola School District will be obligated for many costs, in whole or part.
These costs include those associated with responsibility for snow removal, sanding, landscaping, building and site improvements, structural maintenance, maintenance of building systems, trash and waste removal, IT support/management and all other maintenance costs, all of which Dr. Nagler has made Mineola School District responsible for under the lease. Additionally, it seems the Mineola School District may be responsible for Solomon Schecter’s utility costs above a certain amount, though this isn’t yet clear.
In short, under the proposed lease it appears the Mineola School District will continue to be responsible for all the costs of maintaining the building and grounds, including personnel costs, just as they currently. This while operating Cross Street for the benefit of the children of the taxpayers of Mineola School District. But next year those taxpayers will be incurring those same costs for the benefit of the kids of Solomon Schecheter, not Mineola. That’s a major difference.
Per a review of the Mineola School District’s current, 2010-2011 budget, it can be estimated that these costs to Mineola School District will total in excess of $230,000 annually. This amount is greater than the amount of gross rent that Mineola School District is going to receive from Solomon Schecter.
So, in addition to the hundreds of thousands of dollars in capital costs that the taxpayers are going to incur customizing Cross Street for Solomon Schecter, they are going to incur additional annual losses maintaining the property for Solomon Schecter. This will include maintaining the fields for Solomon students, fields their own kids won’t be permitted to play on. Talk about adding insult to injury.
In summary, there is no net revenue to the district to be realized from the proposed lease. Only losses. Substantial losses. Everyone has been set to fighting over nothing. Literally. There is no profit in this deal to the taxpayers.
This lease does not produce net revenue that’s going to save extra curricular activities or anything else. In fact, it’s producing losses for the taxpayers.
Fields are being taken away and residents and schoolchildren endangered and inconvenienced for no financial gain. Just the opposite.
We can only speculate as to why Dr. Nagler negotiated such a poor lease for Mineola taxpayers and such a sweetheart deal for Solomon Schecter. He’s supposed to be the fiduciary of the Mineola School District, not Solomon’s agent. Are his actions due to favoritism, inexperience (he stated this is the first lease he’s negotiated), incompetence or something else? While we can only speculate in this regard, what’s clear is that the lease can’t be justified on the numbers. It should be killed by the Mineola School District Board of Education.
Failing that, I don’t believe the lease will stand up in court. There are statutory problems with the way the lease was handled. There was no fair market value appraisal obtained and no marketing of the property was done. Only one prospective tenant was negotiated with and the resulting agreement is going to saddle the taxpayers with losses. Under the circumstances, I don’t think the Mineola School District Board of Education is going to be able to make the case that they obtained the maximum benefit for the district, as required under the applicable law.
Additionally, because the proposed lease is not a net lease but rather requires Mineola School District to undertake a myriad of obligations in connection with the operation of Cross Street for the benefit of Solomon Schecter, it entangles the Mineola School District and taxpayer money with the operation of a private, religious school. That raises First Amendment issues.
This is especially so since, under the unfavorable terms negotiated for them by Dr. Nagler, the taxpayers are going to be subsidizing the private religious school. While one can never be sure how things will turn out if litigated, from what I know of the law in the area, I don’t think the lease will pass constitutional scrutiny.
The lease should be withdrawn. Otherwise, it should be challenged in court.
John O’Kelly
East Williston
