Wednesday, October 24, 2007

$225,000 License Fee for 70,000 Sq. Ft. of Waterfront on Roosevelt Island- Pretty Good Deal

I received message yesterday from RIOC President Shane in regard to this earlier October 11 inquiry regarding the proposed, now approved, Roosevelt Island Racquet Club License Modification.

Mr. Shane writes:

To answer your questions as raised in your e mail of 10/11 (and I do want to apologize for not having specific answers earlier, but as you know, I was in Europe until last Thursday, Thursday being the day of the meeting and the press thereof, Friday, the day after and yesterday I was in Albany at the Internal Control seminar called by the Comptroller and DOB.)
I responded:
Thanks for the reply. I will post later today or tomorrow. You are right that I knew you were out of town last week and may not have been able to respond to my inquiry of !0/11. That is why I also copied Erika Wilder, RIOC's community relations officer, so that I might get a response prior to the Board meeting when such information would have been of use to the community. if she is not the appropriate person to contact in your absence, who would you suggest to be the contact person in the future?
Here are the questions and Mr. Shane's answers. Mr. Shane's replies are indented. When Mr. Shane references a "schedule" to 9/27/07 memo he is referring to the memo that is included in this earlier post and I inserted the relevant portion into his answer.

What is the approximate square footage of the premises?
Approximately 70,000 sf
I understand from the webcast of the Real Estate committee meeting that the current base license fee is $225 thousand with approximately an additional $60 - $70 thousand in % fee. Is that correct?
Yes, but, see the entire schedule presented in my memo of 9/27/07, copy attached
What is the new proposed license fee?
See above schedule

How does the license fee for the Roosevelt Island Racquet Club compare to other similarly situated clubs in New York City? Is it comparable in terms of fees and term? Is it even a relevant question?
Other racquet clubs not relevant. We have ours. The property is devoted to recreational purposes in the GDP but unusable as "open" space because of the shower of auto parts from the bridge and is already under license to 2031, now as extended.
Since the current license term extends through 2031 why does it have to be extended for an additional 15 years? The waiver of any potential liability for tram discontinuance does not seem reason enough to justify such an extension. After all there have been previous occasions when the tram was out of service and to my knowledge no such liability occurred. The willingness of the Tennis club owner to spend additional sums on a market study to determine the potential of a business opportunity for themselves hardly seems reason for RIOC to extend the license term either. Please explain what benefit does RIOC receive in exchange for the additional 15 year term?
There was no "have to be" about the extension, but was part of the negotiation. Your judgment about the value of the waiver of liability for tram discontinuance is, of course, your judgment. While no action was brought for prior outages of the tram, the issue exists.
Why does the Public Authorities Act not apply to such a large space as the Tennis Club with a license term extending to the year 2048. These premises are not the small shops on Main Street where applying the Public Authorities Law makes no sense.
The Public Authorities Act does, in literal interpretation, apply to each space, including the Tennis Club. Extension of the existing license is deemed by RIOC to be not subject to the immediate application of the PAA. Any significant change (see the possible results of the study, as yet unknown) will require an RFP.

-->How many Roosevelt Island residents are members of the club, either adult or children? What is the discount rate for Roosevelt Island residents and for how long has that been in effect?
See attachments for report on community participation and programs.

Eventually, if an RFP is issued for the Sportspark facility and a bidder other than the current tennis club operator wins the RFP, under the terms of the proposed license modification, what exactly does that bidder have to pay the tennis club operator. I watched the webcast of the real estate committee meeting and am unclear in the event that another bidder wins the RFP what you meant by the winning bidder having to pay the tennis club for it's "going business value". Do you mean merely the value of the current tennis club or do you mean to include the potential value of a new "Chelsea Pier" type complex at the combined Sportspark/tennis facility. If you mean the potential value of the new facility that would put a competing bidder at a severe and unfair disadvantage in any bidding process.
Appraised value of the existing business.
...I was also surprised that none of these questions were raised during the RIOC Board's Real Estate subcommittee meeting. Is it that they either already knew the answers to these questions, do not think them relevant or some other reason that I am not aware of?
I have no comment on your surprise, but am unaware of any other reasons held by the members of the Committee.
Again, I thank Mr. Shane for participating in this dialogue which I believe is of benefit to the Roosevelt Island community.

However, my objection to this License modification for the Roosevelt Island Racquet Club remains. No further or additional rights should be bestowed upon the tennis club or obligations assumed by RIOC until other potential recreational, cultural, entertainment or public uses that would benefit the Roosevelt Island community are explored for this prime waterfront site. Unfortunately, the Roosevelt Island Board of Directors disagrees and chose to extend the license term another 15 years through the year 2046.