TOWN POSTS PROPOSED 18-YEAR LEASE FOR WESTHELP APARTMENTS The Town yesterday posted on its website a proposed 18-year lease for a company to manage the 108 County-owned apartments at the former WestHELP facility on the campus of Westchester Community College. The Town had selected Group MRH LLC, a two-year old start-up company based in Connecticut, to renovate and manage the apartments that, under the terms of the Town’s lease with the County, must be used for low- and moderate-income rental housing. Group MRH LLC has no long-term management experience and no experience with affordable housing, and admitted falsely representing to the Town that it was in “partnership” with a reputable, nationally known affordable-housing company which had such experience. That company, the Richman Group, also based in Connecticut, had sent MRH a “cease-and-desist” letter directing that it stop representing that they were “partners” working together on the WestHELP project. In addition, the Westchester District Attorney’s office has started an inquiry to determine whether there was any criminal wrongdoing in connection with the Town’s selection of MRH. The Town Board nevertheless selected MRH because it apparently offered more money to the Town -- $500,000 a year in rent – than companies with affordable housing experience had offered. The proposed lease raises many questions. First, Group MRH had offered to spend $2 million to renovate the apartments and, to ensure that such expenditure will in fact be made, Group MRH had offered to put the $2 million in an escrow account. But the proposed lease imposes no requirement on the part of Group MRH LLC to spend $2 million and there is no requirement that any money be held in escrow. It is also unclear from the proposed lease whether the Town or MRH will be responsible for removing the mold and mildew that, because of the Town’s neglect for the past 22 months, have made the apartments uninhabitable. On the one hand, the lease states that MRH “accepts” the apartments in their “present physical condition, without any representation or warranty by the Town as to the condition thereof,” but elsewhere in the same lease, the Town is required upon execution of the lease to “clean” the apartments and deliver possession in “good condition.” Responsibility for removing the mold and mildew is thus left unclear. Equally troubling are the provisions protecting Greenburgh taxpayers in the event of a default by Group MRH LLC. Group MRH is offering the Town no security and no guaranties from its principals – none of whom are even identified – that the rent will be paid. MRH itself is identified in the lease as having no principal place of business other than a post office box in Greenwich. Thus, if MRH, which has no management or affordable-housing experience, fails to provide management oversight or fails to comply with federal, state and local requirements for affordable housing, the Town will have no recourse other than to give MRH a 30-day notice to cure, and failing that, the Town can get an order evicting MRH from the premises and requiring that MRH “deliver vacant possession thereof” to the Town. But if the apartments have been rented to tenants, all of whom have leases requiring them to pay MRH, it would be impossible, as drafted, for MRH to “deliver vacant possession thereof” without forcing tenants to move out. And even if MRH fails to maintain the property, there is little the Town can do about it. The lease merely provides that the Town can come in and maintain the property at taxpayer expense, and then bill MRH for the costs, but if MRH is otherwise in default, and not paying the Town what it owes in rent, there does not appear to be anything the Town can do. The Town’s proposed form of lease also appears to contemplate that, even though the premises are owned by the County, which is exempt from property taxes, the Town will nevertheless be levying property taxes on the property. As a result, a portion of the $500,000 in rent will apparently be paid by the Town to the Valhalla School District, which will receive about 60% of the property taxes to be levied. Because payment of these taxes are left up to the Town, it is not clear how much, if any, of the $500,000 per year the Town will actually receive after payment of property taxes. The Town posted the lease on its website with the understanding that it will be sending it to Westchester County for its approval. Under the terms of the Town’s lease with the County, no subleasing is permitted without the County’s express written approval. It is unclear whether given all the red flags that have been raised about MRH – its having misrepresented its background and experience, its having no management or affordable housing experience, the lack of any security or guarantee that the promised $2 million in renovations will be made, and the lack of any practical recourse in the event that MRH fails to maintain the property or use it for the purposes intended, i.e., as low or moderate income rental housing, that the County will give its approval and allow a company with no track record to be responsible for maintaining a County-owned asset for 18 years. Consequently, the 23-year old property, which was once the Town’s largest non-tax source of revenue, and which has remained vacant and deteriorating with no revenue to the Town since September 2011, will likely continue in that state unless and until the Town either comes up with a different lessee, or the County Board of Legislators exercises its right to declare the Town in default, takes back the property, and brings in someone else to restore and manage the apartments.
Posted on: Thu, 06 Jun 2013 17:04:37 +0000
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