Coalition Speaks Out On Five Corners Lease

The Heathcote Five Corners Coalition has sent a strong letter to Scarsdale Village Trustees, commenting on the proposed lease renewal of the driveway to the Heathcote Tavern parking lot to developers Fish and Oder. Fish and Oder have located a new tenant for the building who plan to open an Italian restaurant called Apulia in mid-September and require access to the parking lot for customers.

In addition to their objections to the terms of the proposed new lease, the Coalition expressed their dissatisfaction with the lack of transparency in the negotiation of the lease, saying, “the lease apparently has been substantially negotiated without any community input, even though, in particular, the Coalition specifically requested participation in the process and asked that the Village Board of Trustees keep it informed during the negotiation process … This process disregards the considerable involvement and strong views of the community and various community organizations, including of the Coalition and several neighborhood associations in Scarsdale concerning development at Heathcote Five Corners.”

The proposed new lease has a term of five years with automatic renewals of up to ten additional years provided there is an existing lease for a restaurant at the time of renewal. In exchange, Fish/Oder will pay the Village $15,000 per year.

The Coalition was formed to relieve traffic congestion at the Five Corners, improve pedestrian safety and ensure development consistent with the “Village in the Park” concept. They currently have a membership of 200 Scarsdale families, and in their view, the new contract does little to achieve their goals:

• The new contract has no provisions limiting the development of the site or preservation of the Tavern building
• A long term lease is not necessary –renewal of the old lease would suffice
• The benefits of the lease to the community are not clear
• The current lease will last for five years, with renewals every ten years, even if the existing restaurant ceases operation in the intervening years.

Read their letter below, and view the most current public version of proposed lease at www.heathcotefivecorners.com. Please share your comments!

Dear Mayor Stevens and Trustees:

On Monday evening, August 2, 2010, the Law Committee of the Board of Trustees reviewed a draft of a new lease of Village land from the Village to the developer of the Heathcote Tavern (2-4 Weaver Street) property and scheduled a hearing on such lease for 6:55 p.m. on Monday, August 9th. The proposed lease covers the same land the Land Use Committee of the Board of Trustees (LUC) considered selling to the developer in 2009. We understand that the Board of Trustees currently intends to vote on the lease on September 14.

Background – The Proposed Sale of the Village Land

For much of 2009, the LUC was in favor of selling the developer such land, including the current driveway to the Tavern parking lot, pursuant to a contract that had been materially negotiated with the developer prior to it becoming public. In response, residents throughout Scarsdale formed the Heathcote Five Corners Coalition. More than 200 Scarsdale families are dues paying members of the Heathcote Five Corners Coalition. The Coalition’s mission is to provide a voice for the public, to articulate the concerns of residents of Scarsdale, and to persuade the Village to relieve and reduce traffic congestion and improve pedestrian safety at the Heathcote Five Corners and ensure development in the Heathcote Five Corners area consistent with the “Village in the Park” concept of Scarsdale’s Master Plan.

The LUC held hearings at which it stated its goals in selling the land to the developer and explained how it believed that the proposed contract achieved those goals. At a LUC meeting on May 14, 2009, the Trustees’ goals were displayed on a chart (a copy of which is attached), namely:

1. Minimize Overall Project Density to a Level Well Below that Permitted by Zoning.
2. Mandate Restricted Age Residential, Rather than Commercial, Use Consistent with the Village’s Comprehensive Plan.
3. Reduce Current Curb Cuts on Weaver Street
4. Ameliorate the Volume of Vehicular Traffic Through 5 Corners.
5. Enhance the Visual Streetscape and Improve Pedestrian Friendly Amenities at 5 Corners.
6. Ensure the Preservation of the Existing Tavern Building.

The Coalition agreed with the LUC’s goals. At issue was whether and to what extent the proposed contract of sale to the developer actually achieved the goals.

The New Direction – a Long-Term Lease

The proposed lease with Fish/Oder, the developer of the Heathcote Tavern site, would replace a former lease that recently expired. The former lease had a five year term subject to termination at the option of either party on 90 days’ notice with a fixed annual rent of $14,000 payable in advance; and, most importantly, provided that the lease automatically terminated if the operation of a restaurant ceased. The proposed new lease provides for annual rent of $15,000 per year and a minimum term of five (5) years, with automatic annual renewals up to ten (10) additional years simply if a lease for a restaurant exists on May 31, 2015 and on each May 31st thereafter. The proposed lease includes references to a lease between the developer and a restaurant company from Italy called Apulia, for a restaurant that is currently anticipated to open in mid-September. To access a copy of the mostly recent publicly available version of the proposed lease between the Village and the developer, click on www.heathcotefivecorners.com. The Apulia lease has not been made public.

Set forth below are the comments of the Heathcote Five Corners Coalition on the lease currently proposed by the Law Committee with the developer of the Heathcote Tavern site:

1. Lack of Transparency; Process. There has been a lack of transparency in the negotiation of the draft lease agreement as the lease apparently has been substantially negotiated without any community input, even though, in particular, the Coalition specifically requested participation in the process and asked that the Village Board of Trustees keep it informed during the negotiation process. Moreover, it is a less than desirable governmental process that something as significant as what is being proposed is scheduled to be approved by the Law Committee at a time when many Scarsdalians are not in town and to put the lease on a direct fast track for approval by the Trustees in mid-September. This process disregards the considerable involvement and strong views of the community and various community organizations, including of the Coalition and several neighborhood associations in Scarsdale concerning development at Heathcote Five Corners.

2. Financeable Contract Potentially Forecloses Village Board’s Ability to Address Trustees’ Objectives Developed In Connection With Proposed Land Sale. The new lease creates a 15-year financeable contract, enabling the developer to get long-term financing for development of the Tavern property “as of right” without any limits on such rights. In addition, the proposed lease disregards all, and does not in any way achieve any, of the goals the LUC identified as a quid pro quo for granting the developer title to the Village land. In effect, the Village is giving up any meaningful ability to address the goals of the LUC (and the community) identified in connection with the land sale negotiation, including the obligation to maintain and preserve the Tavern building. A long-term lease is not materially different from a sale for these purposes.

3. After Months of Discussion of the Land Sale, it is Not Necessary to Enter into a Long Term Lease at this Time. It is not necessary for the Village to enter into a long-term lease with the developer before the restaurant opens. The critical elements for the survival of a restaurant, particularly one apparently on the verge of opening, do not include the length of the lease for the Village land. The restaurant’s leasehold improvements are not affected by the term of the lease for the driveway to the parking lot. The critical elements include the quality of the chef and the food and the restaurant owner’s fixed costs, the largest of which probably is the rent being charged by the developer. Prior restaurant tenants did not require a long-term lease of Village land, so what is different now? Nevertheless, a 6, 9 or 12 month renewal of the old lease would be acceptable, and during that time, a proper, new longer-term lease, structured to enable the Village to reduce the density of development of the Tavern site below "as of right" development and address other LUC goals, could be negotiated and properly reviewed and commented on by the community.

4. Village Has Not Explained the Need for this Lease or its Benefits to the Community. Other than to please the developer at the expense of the community, we do not see benefits to the community of the long-term lease being proposed. We appreciate that it could be prudent from the Village's perspective for a lease to be in place if the property is being used for a desirable purpose governed by the lease, but the proposed lease has significant deficiencies, as discussed herein. In fact, the approval of the presently proposed 15-year lease could be interpreted as an effective repudiation of the LUC’s goals and as a surrender of the Village’s opportunity to control development of the entire Tavern site in exchange for $15,000 per year.

5. Term/Termination Provisions. The draft lease currently provides that it remains effective for 5 years even if there is no restaurant lease, and it also states that if a restaurant lease exists on May 31, 2015 (even if there is no functioning restaurant), the lease will automatically be extended. The term/termination provisions should be revised as follows:
a. Need a Restaurant; Not Merely a Lease. The discontinuance of the “operation” of a restaurant and cocktail lounge in accordance with past practice for more than a modest number of consecutive days specified in the lease should automatically terminate the lease. The draft lease only requires that a lease exist; it does not require that a functioning restaurant and cocktail lounge be operational. (The old lease provided that the cessation of the operation of a restaurant and cocktail lounge immediately terminated the lease.)
b. Possible 5-Year Term without a Restaurant or Lease. The proposed lease provides that if the Apulia lease or any replacement restaurant lease terminates prior to the end of the 5 year term of the Village lease, the Village lease stays in effect for 5 years. The new lease should automatically terminate as discussed above and should require Apulia to open within a period of time specified in the Village lease.
c. Type and Size of the Restaurant Should be Specified. The Village lease should require the operation of a restaurant of the same type (e.g., serving food, drink and dessert to be eaten on the premises) and scale as in the past for the duration of the lease. For example, the new lease would not be breached if the developer expanded the size of the Tavern building and/or reduced the amount of space utilized by a restaurant.
d. Make Terminable on same Basis as Old Lease. The proposed lease should be terminable by either party upon 90 days’ prior written notice, as was provided in the old lease.

6. Prohibit Use of Village Land for Greater Development of the Tavern Site. The lease should prohibit construction on or other improvements to the Village land without the approval of the Board of Trustees. Similarly, the Village land should not be usable as access to a decked parking lot for any purpose – the leased land should not be available for access to the parking lot for expansion of office space or other development of the Tavern site which may be of the same type but expanded from its “current uses.”

7. Other Comments. The Coalition has provided the Law Committee with, and posted on the Coalition’s website, www.heathcotefivecorners.com, additional comments on the proposed lease, correcting various other deficiencies, including clarifying permitted uses and rights of the developer’s mortgagee, limiting transferability of the lease, allocating maintenance responsibilities to the developer, and being more precise with respect to rent escalations.

Sincerely,
Millicent Kaufman Chairperson,
Heathcote Five Corners Coalition