State legislation was passed in Albany last week allowing East Hampton Town to sell its 50-percent share of the Poxabogue Golf Center in Sagaponack to Southampton Town, which bought the facility with East Hampton for $6.5 million in 2004.
Under the public trust doctrine, state authorization is needed for the alienation of parkland — selling off public parks or recreational land.
Citing a fiscal crisis, East Hampton officials had agreed in October to sell off the town’s interest in the recreational facility for $2.2 million. The town board at the time was split on the decision along party lines, but the Republican majority prevailed.
Though the sale price was less than the $3.25 million East Hampton spent on its portion of the purchase, Town Supervisor Bill Wilkinson said in proposing the sale that the move would enable the town to make payments of about $180,000 a year for four years on the debt issued to buy the half share, and then to pay the bond off in full, saving $100,000 in interest costs.
Town Councilman Peter Van Scoyoc said yesterday that the town still owes just over $3 million in principal and interest on the bond issued to buy its share of Poxabogue, so the sale will be “for a net loss, plus the commitment of that amount of community preservation funds.”
According to the state legislation sponsored by Assemblyman Fred W. Thiele Jr. and Senator Kenneth P. LaValle, the town will be required to spend an amount equal to the sale revenue — $2.2 million — for capital improvements at existing park and recreational facilities, or for the acquisition of new parks or recreational lands.
The revenue from the sale to Southampton will go into the town’s general fund — the fund that incurred debt to pay for Poxabogue in the first place — but the town intends to use money from the community preservation fund, a dedicated land-purchase account funded with the proceeds of a 2-percent real estate transfer tax, to satisfy the state requirement.
However, Councilman Van Scoyoc said he supports the sale. “I came to the conclusion that the cost to the town would be greater if we went forward” as an owner of the facility, he said. Though user fees have covered the golf center’s operating costs, Mr. Van Scoyoc said it would “cost a lot more to stay the course” and contine paying off the purchase.
Market-value price of the 39-acre site, which is in Southampton Town but so close to the East Hampton border that the town was legally allowed to invest in it, had dropped not only because of the overall economic climate but because appraisals setting the initial purchase price were based on the potential for the property’s development. It had been slated for an 18-lot residential subdivision before the towns resolved to buy it.
“It’s interesting in some ways, because basically the asset is diminished because it’s now parkland,” Mr. Van Scoyoc said.
The original purchase, he said, achieved the goal of avoiding development of the site, which was a “plus.” However, he added, “What did we get for our expenditure? Reduced fees for people who use the course. I think this is the better route to go, divesting.” But, he said, “It would be nice if we got more out of our involvement.”
The legislation authorizing the sale also requires the Town of Southampton to continue to provide access to Poxabogue to East Hampton residents. It does not address concerns raised by some residents at a hearing on the sale about whether East Hamptoners will continue to be offered residents’ discounted fees. However, town officials have said that fees will be part of the agreement, for an initial term of five years, with options to extend the agreement upon the towns’ mutual consent.
Councilman Van Scoyoc suggested that East Hampton officials should try to assure reduced fees for the town’s residents for a lengthier term. “Ultimately financing the sale for Southampton, it would be nice to have a little quid pro quo for that,” he said.
A portion of the revenue in East Hampton’s 2012 budget relies on the proceeds from the Poxabogue sale. In comments on the proposed budget before it was adopted, the New York State Comptroller expressed concern about assuming revenues from a sale for which contracts had not yet been signed.
Zachary Cohen, a Democrat who tried to unseat Mr. Wilkinson in the 2011 election, also questioned the move during a budget hearing last year. He said that a “good general rule of municipal finance” is that one-time income, such as money from the sale of assets, should not be used as general operating revenue. Because that particular revenue source will not exist in the future, he said in a letter to the board, “it builds a tax increase into the next year’s budget equal to the amount of revenue recorded.”
Southampton Town will use its community preservation fund to buy East Hampton’s half of the site, thus protecting it from future sale or development.
The sale of public land and the state law regarding “alienation of parkland” is one of the central issues in a lawsuit against East Hampton Town over a proposed sale of the Fort Pond House property in Montauk, another action approved only by the Republican majority.
When the board majority resolved in 2010 to put the four-acre waterfront property on the market for $2 million, numerous community members objected, citing the use of the house and grounds by various groups, including the Third House Nature Center and the Montauk Boy Scouts.
The nature center, along with the Concerned Citizens of Montauk and several individuals, sued, saying the property qualifies as a public park and the sale should have been subject to state legislative approval.
State Supreme Court Justice William B. Rebolini has twice ruled against motions by the town to dismiss the suit, and the case is proceeding.
Even though town officials had said the site was never considered a park, Judge Rebolini said that the petitioners had “set forth sufficient allegations . . . supported by sworn statements, that the premises may have been dedicated as parkland by implication,” and cited several court cases.
The lawsuit also alleges that in adopting the resolution authorizing the property sale, the town board violated the state Open Meetings Law regarding executive sessions, or meetings held out of the public eye, and the judge wrote in his decision that “the petitioners have properly pled a failure by the town board to conduct said executive session pursuant to a majority vote taken in an open meeting, and to show that publicity would substantially affect the value of the property” — the only instance, according to the law, when a property sale or purchase may be discussed in executive session.