Kings Point Park Lease Agreement
GREAT NECK PARK DISTRICT
FINALIZATION OF 2023 LEASE AGREEMENT
WITH VILLAGE OF KINGS POINT FOR KINGS POINT PARK
The Park District is pleased to announce that a year-long negotiation between the Park District and the Village of Kings Point has concluded in the finalization of a new lease entitling the Park District to operate Kings Point Park as a Park District facility.
Since the last ten year lease expired in 2015, the Park District has continued to use Kings Point Park on a month-to-month tenancy. As a month-to-month tenant, the Park District refrained from investing in any facilities or improvements at Kings Point Park. The lack of investment has negatively impacted the attractiveness and utility of this 172 acre asset.
The current administrations of the Park District and the Village revived lease renewal conversations last year. Now, after much effort, we are pleased to announce that the Lease tentatively agreed to several weeks ago has now been finalized, signed and exchanged by the parties. As a result, the Park District can invest in improvements to the Park to make it the recreational asset that we believe it can be.
The new Lease involves a significant increase in annual rental from the long-standing far-below-market rental that the Park District enjoyed as a month-to-month tenant, and under the prior leases for a term. Kings Point Park is village parkland that, but for special New York State Legislation allowing the rental to the Park District, would be available only to Village residents. The Park District understands the Village’s first obligation is to its residents, and the Village Board’s position that the Village and its taxpayers (who also pay a significant portion of Park District taxes based upon property value assessments) have for decades subsidized for the greater Great Neck community a unique and valuable asset that is the property of Village residents.
To establish a basis for the new annual rental amount, the Park District and the Village each obtained an independent appraisal of the value. The new annual rental amount is lower than both appraisals, reflecting the facility investment obligations of the Park District under the Lease.
Some key terms are as follows:
1. Term. The term is ten years, which is the maximum term allowable under New York State legislation enacted in 1967 that ratified and authorized the Village to ‘alienate’ Kings Point Park, which is village parkland, through a lease to the Park District.
2. Renewal Options. The Park District has conditional options to extend that ten year term for three additional ten year renewal terms, for a total of forty years from now.
3. Annual Rental. The annual base rental is $350,0000 during the entire ten-year initial term. For Lease year eleven, there will be a 10% increase, which again will be a fixed annual rental during the entire ten years of that first renewal term, covering Lease years 11 to 20. The same approach will apply to the second renewal term, covering Lease years 21 to 30, with an increase of 10% over the annual base rent during the first renewal term. The cumulative base rental increase over the first 30 years of the Lease will be approximately 21%, or less than 1% per year. For the 3rd renewal term, covering Lease Years 31 to 40, the annual base rent will increase by the greater of 10% over the annual base rent during the second renewal term, or the increase the Consumer Price Index during the second renewal term.
4. Park District Investment in Improvements to Kings Point Park or Steppingstone Park or other Park District Assets in the Village. The Lease obligates the Park District to invest at least $15 million in Park District assets to make improvements to parks in the Village of Kings Point, at least $10 million of which will be invested in improvements to Kings Point Park. If the Park District does not have funds available from other sources (property taxes, grants, donations, etc.), then the Park District must apply for and obtain bond financing approval from the Town of North Hempstead to enable such investments. In the unlikely event that the Park District fails to pursue or obtain the required funding or complete the investment projects within time frames established under the Lease, then the annual rental will increase until the obligations are satisfied, while a failure to timely obtain the bond financing will give the Village the option to terminate the Lease, exercisable until the Park District obtains the bond financing. The types of improvements pre-approved by the Village are contained in Schedule F to the new Lease.
5. Reimbursement of Park District Investment upon Early Termination or Non-renewal of Lease. So long as the Park District is not in default under the Lease, if the Village terminates the Lease early, or fails to accept a renewal option exercise, then the Village will be required to reimburse the Park District for the amount invested in the bond financing, plus $10 million.
6. Right to Lease Village DPW Property if Village relocates. If the Village is able to relocate its current DPW facility, then the Village will lease the current DPW yard to the Park District. That current DPW yard lot is close to Steppingstone Park, and could be used by the Park District for its own maintenance facility or to relocate parking for Steppingstone, allowing the current Steppingstone parking lot to be transformed into green space or other recreational facilities for users of Steppingstone.
Update - Addressing confusion circulating about the Kings Point Park Lease:
1) Bond Financing. GNPD is not obligated under the Lease to obtain bond financing in the amount of $15 million. It is obligated to make improvements in that amount, which it can fund with general fund money, capital reserve money, grants, or bond financing, provided that it applies for and receives bond financing that, along with other GNPD funds, equals $15 million.
2) Early Termination or Non-renewal of Lease. If the Village terminates the Lease early, or fails to consent to a renewal, then the Village must reimburse the Park District for the amount invested in all capital improvements and bond financing, plus $10 million – this is strong incentive for the Village to consent to the renewal options. If the Village terminates the lease after the GNPD invest $10 million in capital improvements then the Village would have to pay the GNPD $20 million ($10 million reimbursement and $10 million is termination penalty).
3) Alienation of 5 acres of Kings Point Park: The 5 acres in question are not subject to the Lease or part of Kings Point Park. This area was removed from the Kings Point Park lease in the 1940’s. The GNPD is seeking to lease 1.32 acres at the current Village of Kings Point public works area which abuts Steppingstone Park. This 1.32 acres would become parkland for the GNPD residents whereas the 5 acre area in question is not available for GNPD residents and is not part of the KPP lease.
The GNPD has great interest in the 1.32 acres as it would allow the Park District to invest in creating additional waterfront greenspace, parking and amenities to Steppingstone Park. As part of the lease we would also be able to invest 5 million of the required 15 million in capital improvements at Steppingstone Park.
4) “Sneak Provision” under Lease where GNPD allows VKP to alienate 5 acres of parkland without reducing the lease rent. The 5 acres in question are not subject to the Lease so GNPD would have no basis to have its rent decreased if NYS allows VKP to use the 5 acres for something other than parkland. In any event, VKP is not proposing to convert 5 acres of parkland; those 5 acres have already been reduced by 1.1 acres alienated several years ago and now used for the VKP Salt Shed; we know that NYS will likely require the same amount of new parkland to alienate existing parkland; so, the lease contemplates that VKP would convert its existing 1.32 acre DPW lot to Parkland, and lease it to GNPD. Therefore, VKP expects to ask NYS to alienate another 1.32 acres of the 5 acres for its new DPW lot.
The GNPD Board has approved an amendment to the lease to clarify the intent regarding the 5 acres – that intent affects only 1.32 acres. We are presenting to the Village a proposed amendment of the Lease which has already been discussed to be approved at the next Village meeting.
5) Appraisal for Kings Point Park. The Board obtained an appraisal of the parkland, by a highly regarded independent appraiser with whom GNPD had previously worked. That appraisal values the annual rental value at $381,000. The Village obtained its own appraisal, which valued the property at $ 650,000 annually. The annual rental is lower than the appraised value, and so we are comfortable that Park District resident are obtaining fair value.
6) Sewer Obligations. Under the old lease, GNPD was obligated to pay to VKP, as additional rent, all sewer charges imposed upon VKP for sewage discharged into the sewer treatment system from VKP’s Village Hall and Public Works Building. Then, at the expiration of the old Lease, GNPD remained obligated to permit VKP to use GNPD’s sewer line and pumping system into the sewer treatment System, provided that VKP pays the sewer charges associated with the flow from VKP Village Hall and DPW building, and an allocable portion of GNPD’s costs to maintain and operate its pumping station and transmission line to the sewer system. We believe that GNPD agreed to this many decades ago as it reflected that GNPD was paying a nominal rental to VKP under the old lease.
Under the new Lease, GNPD ‘shall continue to permit’ that same use by VKP, but now VKP must pay for any charges imposed by the sewer district for effluent coming from the VKP buildings. Concerns that GNPD is obligated to provide a sewer system for private property in Kings point is unfounded. However, we are presenting to VKP an amendment to the new lease clarifying the point.