Rent Relief May Be Coming For Roosevelt Island Main Street Retail Stores From RIOC And Master Leaseholder Hudson Related But What About The Residential Tenants? RIOC Videoconference Board Meeting April 23 To Discuss Deferring Commercial Lease Payments Among Other Items On Agenda

The Roosevelt Island Operating Corp (RIOC) Board Directors will hold a meeting tomorrow, April 23, not in person but by videoconference due to the Coronavirus Pandemic social distancing protocols.

Image From RIOC

According to RIOC:

TO VIEW THE RIOC BOARD MEETING ON YOUR MOBILE DEVICE OR COMPUTER, CLICK HERE:

TO SUBMIT YOUR COMMENTS TO BE READ DURING THE PUBLIC SESSION OF THE BOARD MEETING:

http://rioc.ny.gov/FormCenter/Meetings-4/Speakup-43

* Please keep all comments to below 500 words.

**This is the same form that is used for registering to speak at a RIOC Board Meeting. It has been changed to accept comments from the public.

Among the items on the April 23 RIOC Board Meeting Agenda are:

• 4. Authorization to Amend the Master Sublease Agreement for Main Street Retail Space with Hudson Related Realty LLC (Board Action Required)
• 6. Authorization to Amend the License Agreement with Roosevelt Island Racquet Club Associates (Board Action Required)

What is the Main Street Retail Lease and Tennis Club License amendment about?

On March 31, I asked Roosevelt Island Operating Corp (RIOC) President Susan Rosenthal and Hudson Related's David Kramer, developer of Roosevelt Island Riverwalk residential buildings and Main Street Retail commercial landlord:

As you know, legislation is being proposed for a commercial and residential rent moratorium during the current Coronavirus Pandemic.

Also, April monthly rents will be due next week.

Does RIOC and Hudson Related have any plan on providing rental moratorium/assistance to the Roosevelt Island commercial retail stores forced to close/limit service to take out and residential building tenants.

Will RIOC provide any assistance to Hudson Related on their Main Street Retail Lease payments and building ground lease rent payments to encourage Hudson Related assistance to commercial and residential tenants. ...

At the time, there was no definitive answer other than RIOC Public Information Officer Terrence McCauley replying:

We are obviously aware of the situation and we are in the process of working with our stakeholders to address this concern. We will keep everyone informed when we have more information.

Now we have more information.

Today, I learned that an agreement has been reached between RIOC staff and Hudson Related to defer some money owed to RIOC by Hudson Related under the retail Master Lease agreement to the extent that Hudson Related defers rent to any of the Main Street Commercial retail tenants.

The details are in this April 20 memo from  RIOC President Rosenthal to the RIOC Board of Directors in support of amending the Retail Master Lease.

In August of 2011, Roosevelt Island Operating Corporation (“RIOC”) entered into a Master Sublease Agreement (“MSA”) with Hudson Related Retail LLC (“HRR”) for operation and management of substantially all commercial real estate properties owned or leased by RIOC on Roosevelt Island. The most important payment from HRR to RIOC, contemplated under the MSA, is the Guaranteed Rent. Currently, the Guaranteed Rent amounts to $933,515.21 per year, or 77,792.93 per month.

Due to the ongoing COVID-19 pandemic and the orders issued by the New York State Governor in relation therewith, many of the Island commercial establishments were required to temporarily cease or significantly reduce their operations. As a result, several of the proprietors have approached HRR with a request to defer their rental payments for a certain period of time. The principal of HRR, in turn, asked RIOC whether it would allow for partial deferment of the Guaranteed Rent where appropriate. Based on the ensuing discussions and negotiations, the following terms have been agreed to by the parties subject to approval of RIOC’s Board of Directors:

1. Where HRR is able to collect rent from the commercial tenants and no rent deferral is appropriate, HRR shall remit all such collected rents to RIOC in without any delay or deferral as partial payment of Guaranteed Rent;
2. The unpaid portion of the Guaranteed Rent for April, May and June of 2020 shall be deferred (the “Deferred Rent”);
3. HRR will timely pay entire amount of the Guaranteed Rent due to RIOC for July, August and September of 2020;
4. Commencing with October of 2020 and for the following six (6) months, HRR will continue to timely pay Guaranteed Rent then due, as well as to pay back with no interest the total amount of Deferred Rent in six (6) equal monthly installments.

As such, all Deferred Rent would be paid back to RIOC withing the Fiscal Year ending on March 31, 2021, and present minimal impact on RIOC’s budget and operations. At the same time, we believe that it would provide much-needed relief to the businesses adversely impacted by the current crisis. Needless to say, that supporting the fragile commercial establishments on Roosevelt Island is of great benefit to its community. Therefore, I recommend this amendment for Board approval.

Today, again I asked RIOC President Rosenthal and Hudson Related's David Kramer:

I understand that RIOC is entering into an agreement with Hudson Related to defer certain amount of Master Retail Lease payments in the event that some commercial tenants have their rent deferred by Hudson Related during the Coronavirus Pandemic.

Is that true? Any details as to how it will work.

Also, any similar agreement for rental tenants.

No comment from Hudson Related and no reply yet from RIOC.

RIOC will also agree to defer rent from the Roosevelt Island Racquet Club. According to this RIOC President April 20 Memo

Roosevelt Island Operating Corporation (“RIOC”) entered into the original License Agreement for the tennis bubble with HCK Recreation Inc. (“HCK”), the predecessor in interest to the Roosevelt Island Racquet Club Associates (“RIRCA”), in November of 1989. HCK/RIRCA is one of RIOC’s oldest and most reliable commercial licensees. Currently, RIRCA pays RIOC: (1) $275,000 per year, or $22,916.67 per month, in licensee fees for the tennis bubble; as well as (2) approximately $25,300 per year, or $2,108 per month, in parking licensee fees1. (Hereinafter, collectively, “License Fees”)

Due to the ongoing COVID-19 pandemic and the orders issued by the New York State Governor in relation therewith, RIRCA, as many other businesses on the Island and throughout the City and the State, had to shut its doors and temporarily cease its operations.

As a result of the above, RIRCA has been suffering from a lack of income necessary to keep its employees on payroll, as well as to pay its rent. The principal of RIRCA asked RIOC whether it would allow for temporary License Fees deferment to alleviate some of the financial burden placed on the business by the current situation. Based on the ensuing discussions and negotiations, the following terms have been agreed to by the parties subject to approval of RIOC’s Board of Directors:

1. RIOC would agree to defer License Fees due from RIRCA for April, May and June of 2020 (the “Deferred Fees”);
2. RIRCA would timely pay all regular License Fees due to RIOC for July, August and September of 2020;
3. Commencing with October of 2020 and for the following six (6) months, RIRCA will continue to timely pay Regular License fees then due, as well as make up the Deferred Fees in six (6) equal monthly installments.
4. RIRCA has applied for the Federal Small Business Administration (“SBA”) loan intended to assists businesses affected by the COVID-19 epidemic to defray costs of payroll and rents. If such loan becomes available to RIRCA before the Deferred Fees become due, RIRCA will commence repayment of the Deferred Fees, to the extent the SBA loan funds are available for repayment of license fees, on the month following the receipt of such SBA loan funds and repay the entirety of the Deferred Fees in six (6) consecutive monthly installments. If the SBA loan funds prove to be insufficient to pay all or part of the Deferred Fees, RIRCA shall provide RIOC with appropriate accounting, to RIOC’s satisfaction, and commence repaying the Deferred Fees on October 2020 as outlined above. In all cases, RIRCA will be obligated to repay all Deferred Fees prior to March 31, 2021.

Since all deferred fees would be paid to RIOC within the Fiscal Year ending on March 31, 2021, this arrangement would present minimal impact on RIOC’s budget and operations. At the same time, it would provide much-needed relief to one of the oldest businesses on the Island, which is adversely impacted by the current crisis. We believe that supporting commercial establishments on Roosevelt Island is of great benefit to RIOC and the Island community. Therefore, I recommend this amendment for Board approval.

1 The parking license has expired on April 15, 2020, and would be negotiated with a 5% increase in fees.

Here's the full RIOC April 23 Board Meeting Agenda.

APRIL 23, 2020 MEETING OF
THE ROOSEVELT ISLAND OPERATING CORPORATION BOARD OF DIRECTORS VIDEOCONFERENCE1
5:30 P.M.
I. Call to Order
II. Roll Call
III. Approval of Minutes
1. March 5, 2020 Board Meeting (Board Action Required)
IV. Old Business
V. New Business
1. Ratification of Certain Insurance Policies for FY 2020-21 (Board Action Required) 2. Approval of Certain Insurance Policies for FY 2020-21 (Board Action Required) 3. Authorization of Amendment of Public Purpose Grants Expenditure for FY 2019-
20 (Board Action Required)
4. Authorization to Amend the Master Sublease Agreement for Main Street Retail
Space with Hudson Related Realty LLC (Board Action Required)
5. Ratification of Contract with New York State Industries for the Disabled, Inc. for
Custodial Services at RIOC’s Facilities (Board Action Required)
6. Authorization to Amend the License Agreement with Roosevelt Island Racquet
Club Associates (Board Action Required) 7. President’s Report
8. Committee Reports
a. Audit Committee
b. Governance Committee
c. Operations Advisory Committee
d. Real Estate Development Advisory Committee
9. Public Safety Report
VI. Adjournment
1 Due to public health concerns and as authorized by Executive Order of the Governor, this meeting will be conducted via videoconference. The RIOC Board Meeting will commence following a public comment period. The comments must be submitted to RIOC in writing. The public comment period is not part of the meeting.