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State of New York

County of Fulton

Town of Caroga

Minutes of a Caroga Town Board work session held Wednesday May 22, 2019 at the municipal building located at 1840 State Highway 10 at 7:00 pm with the following persons in attendance by roll call:

Supervisor James K. Selmser - Here

Council Member John Glenn - Here

Council Member Jeremy Manning - Absent

Council Member James Long - Here

Council Member Kent Kirch - Here

Attorney Greg Dunn Town Attorney and approximately 94 members of the public were in attendance.

Supervisor Selmser opened the meeting to order at 7:05 pm with the roll being called. The flag salute followed. Supervisor Selmser introduced Attorney Dunn who was going to explain why the board has done certain things and why he has certain recommendations.

Attorney Dunn began by giving information on his background and noted the other municipalities he represents. He has been representing the town for the last year and a half.

Attorney Dunn addressed the public to inform them of the reasoning behind the town’s intended plan to sell the Sherman’s Property to the Caroga Arts Collective (CAC) for a sum of approximately $50,000.00. Turning the property over to a not-for-profit could be a beneficial thing. He discussed the donation agreement: a document which notes the town recognizes the Sherman’s Property as a historic site and an important part of the town. Mr. Abdella gave the property to the town with the promise to maintain and not sell the property. When the Caroga Arts Council came to the board, one of the first questions asked of Attorney Dunn was do you think this is something we should do. Mr. Abdella said he would sue the town if we attempted to sell the property. Attorney Donn spent some time researching the issue and the term declaratory judgment started getting thrown around. He explained that a declaratory judgment is a legal action where you go in front of the judge and ask them to make a decision for you. He explained the basis for overturning a contract which was reasonably entered into is; fraud, duress, mistake, undue influence, and illegality. The agreement was signed by Ralph Ottuso Supervisor and approved as to form by the town attorney. Attorney Dunn did not think there was any fraud or misrepresentation by Mr. Abdella to get the town to enter into this agreement. He referred to town law which governs many of the board's actions, specifically to accept gifts of real property. Even if the agreement has conditions it's still a valid agreement. If the town accepts the agreement we are supposed to be bound by its promise. The basis for setting aside the donation agreement doesn't seem to be there. He does not see this agreement as being set aside in a declaratory judgment. If the town went in front of the judge and the agreement was rescinded then the contract becomes null and void and the court puts the parties in the original position they started in. Which means the property goes back to George Abdella. Then, we have no right to determine what is done with the property at all. It is his understanding that Mr. Abdella would turn it over to the Caroga Arts Collective. From a legal standpoint it does not appear to be in the best interest of the town to file a lawsuit to seek a declaratory judgment. We have talked to George Abdella and he has threatened to sue us if we do something like that.

The benefit is that rather than spending money in a lawsuit that is risky which will very likely end up putting the property back in George's hands and doing with it as he pleases. Or we can at least get paid back for our carrying cost for the last four years. For those legal /financial reasons, the board has thought that this would be a better decision than getting into a lawsuit. Attorney Dunn noted not everyone on the board has the same thought. From a financial standpoint this purchase by the CAC seems to be beneficial to the town. He stated we know the party and the intentions of the party that the property would be sold to. They have a mission to bring arts to the community. Attorney Dunn stated not to say there aren't other things that could benefit the town as well. "None of us are trying to convince you that this way is the only way." He noted the town board had received another offer of $225,000 to purchase of property. However he stated there were lots of other legal loopholes. Attorney Dunn stated we believe we have a known entity here with the Caroga Arts Collective. Attorney Dunn stated they spent several months working on putting a contract together. George Abdella didn't think the town should be paid at all. Attorney Dunn stated the board has considered all of the options that they had and they are looking for the best solution. From the crowd's reaction it showed him that there is a set opinion that is not going to answer all of these questions. "If you approach it in a more positive attitude it's going to work out better." One of the reasons we believe that selling the property to the CAC is going to is beneficial is that we've obtained a release and waiver from George Abdella to accomplish this transfer. Attorney Dunn stated the town has a right, within the next 3 years, if the CAC were to for some reason sell the property to buy the property back under the right of first refusal and George's claims are waived at that point.

Attorney Dunn noted the town has received consent from the CAC to put this contract before you the voters for a referendum vote. He noted when the town chooses to sell property it is subject to a permissive referendum. It is placed in the voters hands to obtain a petition. If you didn't do it then the contract would stand and the town could sell the property. But the board understands that the decision for this is in your hands and got the Caroga Arts Collective to agree that this would be submitted on a mandatory referendum. If this property were placed in the hands of a private investor you will not have any real promise that this will benefit the community. You will also not have a promise that they will be able to maintain this property. He noted the unique opportunities a non-profit has for getting grants and loans and donations in order to improve the property. He noted the town would avoid the threat and cost of litigation. He stated CAC would not threaten the lake ecology or environment or overburden the utility. It was noted that any member of this community could serve on the CAC board.

Attorney Dunn wanted to bring up the issue of morality on the issue before us. He stated there was an agreement that was entered into by George Abdella. He has spoken to him a number of times and described him as a “good ol’ boy.” He stated George Abdella donated a substantial piece of property to the town with some good intention that it would benefit the town and the town accepted it on the conditions he laid out but also noted it was for his own benefit. From a moral standpoint to try to set aside an agreement that was made fairly and understandably and without fraud, the town has to seriously consider whether they should try to break the agreement or find another solution. This has weighed on the minds of all the board members.

Supervisor Selmser noted next on the agenda was Rick Ruby President of the CAC. Mr. Ruby turned the program over to Kyle Price. He walked through a handout with those in attendance. There would be questions at the end. The handout included the following topics:

What is Caroga Arts Collective?

Mission

The Caroga Arts Team

218 Season highlights

What has Caroga Arts accomplished in our community since its inception?

What are the future plans for Caroga Arts?

A 5 year plan

What would you see at Caroga Arts Campus?

Caroga Arts Campus outline (showing conceptual drawings)

Objectives/Priorities

How would we do it?

The effects

Demystifying what a nonprofit is

Economic Impact of Nonprofit Organizations

Small Town Economic Development through the Arts

Property Key points and conclusions

Contact information was the last bullet.

Mr. Ruby noted through a donation, they have the My Hill property. There is a good chance they can keep Sherman’s accessible to the public. The CAC would be the umbrella organization so things could move forward. He noted it will never be what it was but it could have aspects of what it was. Mr. Ruby listed the many events that could be held on the property. He wanted this for the community. He noted there was miss information out there. He does not get paid. He stated the music festival makes Caroga a go to destination. He stated it is not a playground for rich musicians. He noted the mowing that the volunteers did today. He stated that the CAC has paid the town to rent the property for the last few years.

Jeff Grimshaw, former Executive Director of VIEW (the Arts Center in Old Forge), was in attendance to support the CAC. The movement was started in 1951 to bring Arts to the Adirondacks. It works everywhere and has a tremendous economic impact. They have brought in numerous performers year round. They work in conjunction with the school. It gives the kids a sense of community. It brings families come back to the area.

Dan MacIvor wants what is best fiscally for this town. He is a volunteer for CAC and serves on the board. This is about what is in the best interest for the town. He hears three things: CAC will not bring in enough revenue; this is our asset; and what happen if it fails. He felt $225,000 is a drop in the bucket. If we put all of our hopes and dreams on one developer it does not make good financial sense. What makes sense to him is bringing families back into this town. Let’s turn low priced real estate $40,000 to $100,000 and turn it into houses that sell for $100,000 - $150,000. That is what will raise the revenue in this town. Not a single property with a single developer. When he looks at the balance sheet of assets and liabilities he thinks we have an opportunity to get rid of a liability. He didn’t believe there is a risk to doing this. If we strictly go for a declaratory judgment or if we try to sell this property what do you think is going to happen? If we win, the property will go back to Mr. Abdella and it will go to the CAC or we are going to lose and we lose.

The floor was open for questions limited to 3 minutes each. Supervisor Selmser asked people to give their names and to be respectful.

Jed Potocar noted the previous attorney spoke about the legality of the agreement. He suggested there was a bigger principal in municipal law and that is marriage of contracts. You could not marry a contract to a lease. It was not enforceable. Attorney Dunn seems to contradict what the previous attorney said. The donation agreement was separate from the deed. Attorney Dunn did not believe personally that has any effect as to the legality of the agreement. The contract can stand on its own. He noted no legal action was ever taken to get a judgment from an actual judge. That is what would have created a rescission. The town has waited too long.

Mr. Hogan asked about the right of first refusal. Attorney Dunn explained if the CAC decides to get rid of the property in the next three years the town would have the right to take the property back at the price it was being offered for. The town would have to purchase the property at the price they were asking. Mr. Hogan thought the $50,000 should be a percentage of what the actual appraised value ($500,000) of the property is. So say the town would only have to pay 1/10 of the appraised value. He likes the CAC but did not want to lose a big chunk of cash by going down this road. He thought that bothers a lot of people.

Kyle Price noted they have a mission statement. He wants Sherman’s to be a destination.

Attorney Dunn noted Mr. Abdella feels he has the right to stop a sale by filing a law suit.

Mr. Ruby wanted to assure him it is a not-for-profit. There is no reason to want to sell it. None of them would personally gain by that. It is a not-for-profit organization.

Rick Sturgess asked Attorney Dunn if this was a smart move for the town to sell the property for fifty thousand dollars when you don’t know the value of it. The attorney responded that we know the fair market value on the books through the assessor. Fair market value is a tough thing to get because it depends on what a person is willing to buy it for and what a person is willing to sell it for. Currently it is on the rolls for $491,000.00. In the donation agreement Mr. Abdella claimed it was worth 2.2 million dollars. Mr. Sturgess again asked his question. Attorney Dunn stated it was in the town’s best interest to sell it for $50,000 because there are other things to consider outside of just money coming in the door. Litigation would be avoided, deteriorating property that the town will have to spend money on for upkeep. So you are removing a liability off the tax rolls. He noted there was a sales tax benefit. Mr. Ruby has offered to pay the town tax and fire tax. Based on all this he did think it was in the best interest of the town.

Supervisor Selmser noted 20 years ago Mr. Abdella brought a legal judgment against the town regarding the value of the property. At the time the court set the value at $272,000.

Ralph Palcovic was on the Board of Assessment review and stated for the record that Mr. Abdella was never happy with the value of the property. He came to Grievance Day every year and many times took the town to court because he always wanted it reduced. It was noted that there are no comparable properties to Sherman’s in this town. It is a unique property.

Mr. Sturgess asked what amount in taxes CAC would pay. Mr. Ruby stated based on the current assessed value of $491,000. The town would get $1,749.00. That does not include school taxes.

Laura Nealon stated we can’t sell it unless we are bullied into sell it to CAC by George Abdella. Why do we have to sell it? Gloversville is doing wonderful arts programming. We can apply for waterfront revitalization grants. That is huge right now. There is absolutely no reason to sell this property. We can allow the CAC to use it; town’s people can use it. We can have community gardens all under the CAC umbrella. There are other ways to do this. Attorney Dunn stated Mayor DeSantis is a friend of his. He has been a client. He noted his many accomplishments and has not done it on his own. He has an organization with motivation. Ms. Nealon reiterated that there are other ways to do this. Just because she doesn’t think the town should give away Sherman’s doesn’t mean that she doesn’t think that the CAC have an admirable mission. Some of the political shenanigans to accomplish this have may have been a little back handed. She suggested a two year lease to CAC. What is the huge push to sell the property before the town has had a chance to apply for some grants. If the volunteers to the CAC are so committed they should be able to help fix up the property so it is beneficial to all. We could all ban together and use it collectively. Why should we give away the town landmark to do with it what they want? As far as the liability they have three years then it goes back to the town. Attorney Dunn stated the town does not have to take it back. It would revert back to the county.

Supervisor Selmser noted the City of Gloversville has applied for 5 years for a 10 million grant. He stated the grants were politically made and controlled by Mohawk Valley Group.

It was asked if who can vote on the referendum. Only registered voters can participate.

Gene Centi was in favor of waterfront revitalization. The town should be tapping into these grants. If the referendum fails where do we stand? The response was the town retains the property. Would the town then go for a declaratory judgment? Attorney Dunn stated time would be wasted and we would be in the same place.

Bill Bishop asked if the referendum does not go through can the board turn the property back to Mr. Abdella and then he can in turn give it to CAC anyway and the town isn’t going to get nothing anyways. He would rather see the town take the $50,000 then to have a lawsuit.

Dan MacIvor wanted to address the liability point. The town has had it for 4 years and done nothing with it. That is through no fault of the board. Boards change every two years. To get momentum in a small town to pursue these projects….The town doesn’t have the resources or plan to do this process. He would like CAC to take it over.

Phil Addeo wanted a clarification on if the referendum is voted down the property would go back to Mr. Abdella. No it would stay with the town was the response. Mr. Addeo stated there should be a plan B.

Attorney Dunn noted this was a long process. They discussed a lot of different options.

Barbara Lee asked how much the town has been able to budget for maintenance at Sherman’s since they have owned it for the past five years. Supervisor Selmser stated there was a budget line item for $10,000.00 for basic repairs which were done in the first 2-3 years of ownership. There were some structural integrity inspections and electrical inspection of the buildings. More recently the expenses have been insurance and electricity. We have spent money on doors on the carousel and broken windows. They have tried to minimize the cost to the town. If the property was sold yes some of the expenses are reduced. We have some revenue right now to offset this. It was stated that the board did vote on the budget for this line item.

Barbara Lee noted the mailings from a committee to Save Sherman’s for All. Mr. Livingston was named as the chairman and she asked who the other members were. He stated he was a committee of one. He did the mailings himself.

Mr. Palcovic spent 12 years on the town board. Ten of those years he spent in court because the town was getting sued for various things. Year after year would hear how people were going to sue the town. One case in particular lasted 10 years in cost a lot of money. There are principles that have to be maintained if you back down from everybody who says they're going to sue you, you are not going to be able to conduct business.

Barbara Lee conveyed a message from Becky and Charlie from the 19th Hole they were unable to attend the meeting this evening. The Ward's wanted to respond to dispels some rumors. They have had a wonderful relationship with CAC the last couple of years. Due to the revitalization of their property they now are able to rent the rooms for more than the CAC is able to pay. That is why there has been a physical parting not an emotional one. Becky Ward noted they have been together since 2017 and have developed a relationship with a group. They are very successful and the kids are a huge part of what they stand for. They care for this town as much as we do and want to make it a place everyone talks about.

Deb Price is Kyle's mother she has been coming to Caroga for 4 decades. She is from Ohio where she runs an arts program. They have a committee of 10 people along with one person who oversees the recreation center. The center is in the suburbs of Columbus and it's a not-for-profit. They were sold the property for $1. They were able to raise money and have grown exponentially. She noted there is an art center in almost every suburb. They are providing for the community and bringing in dollars.

Barbara Lee asked if it was true that the Cristiano person who has put forth an offer would not tell the town what he's going to do with the property. Supervisor Selmser responded the initial presentation was very vague in discussion with him he is given the town of page-and-a-half narrative of some possibility. It pretty much reflects what the comprehensive plan states. It has a similar narrative to what John Lorence had presented before - it's a similar vision but it's very brief. John Lorence’s vision and presentation was quite broad and had a lot of details a lot of substance. This other proposal has a very minor amount of information to digest and understand. We invited that person to come to us sit down with a board and explain his thoughts and how he can accomplish things and he has refused to meet with us. His letter/ intent is to have clear title to the property. We feel we can't give this at this time. It was noted that he also wanted to ask for a pilot program which legally we are unable to do it can only be given to a piece of property one time.

Barb Lee asked the supervisor to explain what a pilot program is. Supervisor Selmser stated it was a tax relief program traditionally it could be over a 10 year period. It allows them to pay a small about of tax at the beginning of that 10th year. And there is a progression to a full taxation in the 10th year. This will help their business to grow and employ people. Council Member Glenn stated this was not a stipulation of the agreement it could be waived. Supervisor Selmser spoke to the real estate agent early in April and express what the board's concerns were at that time. I have yet to have a reply back other than a recent letter that was brought to us by an associate.

Rick Sturgess pointed out that he is not against the CAC. They bring revenue to his business through catering. When they are in town his business does increase. He doesn't know about the other businesses in town. I feel like a lot of what's going on here is the secrecy of not telling the people about the other offers that are on the table in detail. The board has made all these decisions behind closed doors on these offers and we don't know about them.

Attorney Dunn stated no decision has been made. We've been presented with an offer from the CAC and we have not signed that offer. We have not agreed to that. We've brought that to you before signing it but we're telling you that we feel based on everything that’s been presented to us that this is the best offer. We think that if we were to agree to an offer from Mr. Cristiano for $225,000 that what we would find is George Abdella would file an action against us against the town. Then before we could move forward on the project we would end up in a lawsuit. We have to resolve the issue. Based on what I see it is either a rescission of the contract and it goes back to him or we're stuck with the property and we can't sell it. We haven't accepted any offers at this point. Attorney Dunn stated we have not agreed on all points but we've gotten to the point that we feel that this is the best option and this is the one that is preferable to the current board. It was noted there is some restriction when the board is in contract negotiations that information is attorney-client privilege. Attorney Dunn stated any decisions the board makes or any resolutions are presented to you. The negotiations and the decision-making are meant to be confidential.

Gene Centi wanted to comment about being left in the dark. In the contract dated 12-21-18 the only stipulation is that the town had to deliver a good marketable title. A tax relief was not part of what Mr. Christiano was looking for.

Attorney Dunn stated that was a significant issue because that gets to the heart of the matter could we transfer the property to him. We don't think that we can.

Mr. Bishop noted the town has the property for 5 years. So the town has spent $50,000. Several board members noted that there was $10,000 in the budget each year - it was not spent. Supervisor Selmser stated there was a certain amount of legal cost too. Council Member Glenn was asked to respond to this question. He noted that several years ago Barbara Lee was involved in an Article 78 against the board. This was about the legality of the donation agreement.

Barbara Lee responded that in that article 78 against the town Council Member Glen was the only one named in the suit for failing to do your due diligence and duty in accepting that donation agreement and ratifying it. It was withdrawn upon agreement with the town attorney after it was decided to rescind the acceptance of that donation agreement. The citizens of the town were upset at the board.

Attorney Dunn stated there was no formal agreement by a court that would have rescinded that agreement and the town has operated as though it has been its property the entire time. He didn’t think any rescission has occurred.

Billy Bishop noted the town is not trying to make money it is just trying to recoup what they put into upkeep of the property.

Supervisor Selmser stated there is an opportunity to be reimbursed for expenses incurred during the time that we have owned it. If this opportunity goes away then those expenses won’t be paid back.

Mr. MacIvor stated if the referendum doesn’t pass it will revert back to the town right? If we try to sell it we will be sued. We will spend a lot of money and a lot of time. The property will continue to deteriorate. If we get a declaratory judgment – if we win –if we win, it goes back to Mr. Abdella its going to be given to the CAC. We have one small opportunity to win on this referendum let’s not throw it away.

Shirley Holiday thinks that $50,000 is too low. She was thinking $300,000 but would compromise at $200,000, or $100,000. Attorney Dunn noted the board talked about trying to get more than that but the CAC is a startup business. George Abdella doesn’t believe the town should get paid anything and in order for our deal to go through with him he has to give us a release. They spent months trying to agree on a number. Mrs. Holliday noted the $125,000 donation Kyle mentioned in a previous meeting. Mr. Ruby stated it is a matching challenge to build a sound stage, an entertainment venue.

Mr. Ruby thanked everyone for coming out tonight. He gave his phone number and encouraged people to call him. He does not know a better solution than we have.

Supervisor Selmser reminded everyone that John Lorence was going to meet with the board next Wednesday night at 7 pm. He will come back and provide any more information that would change his proposal or that could convince us that it would be a viable solution. Some of those proposals like we said before are based on the availability to transfer property and availability to come to an agreement but it can’t be a lease agreement other than for a short period of time.

At 9:07 pm Council Member Long made a motion to adjourn. The motion was seconded by Council Member Kirch. All board members were in favor of the motion.

Submitted

Linda M. Gilbert RMC, CMC

Caroga Town Clerk