|
RCBJ-Audible (Listen For Free)
 |
Haverstraw Supervisor Howard Phillips Convinced Knights To Donate Building; Haverstraw Paid Knights $56,000 To Cover Rent & Expenses For First Half of 2024; Plans to Pay Knights $7,000 Monthly Until AG’s Office Makes a Decision About the Deal
By Tina Traster
For two years, Todd McGowan, the then Grand Knight of the Knights of Columbus (581 Haverstraw), along with the organization’s executive council, worked on a deal to sell its brick building at 56 West Broad Street in the Village of Haverstraw to an affordable housing developer.
The Town of Haverstraw has retained Brown & Weintraub, LLC, a consulting firm in based in Albany, to lobby for Attorney General approval. The agreement says the town will pay up to $400 per hour for lobbying services.
McGowan was thrilled that the building would be used for a good cause, while the Knights would walk away with $2.4 million once the deal closed. And to sweeten the negotiation, the Knights were promised ongoing free space in the new building.
Last May, without warning, the deal collapsed after the new Grand Knight negotiated secretly with Haverstraw Town Supervisor Howard Phillips and others to donate the building to the Town of Haverstraw.
McGowan says the deal is ill-gotten; he is hoping the New York State Attorney General will agree with him because the transfer of a building owned by a nonprofit requires state approval from the New York State Attorney General, Charities Bureau.
In a complaint filed last week, McGowan writes: “As the former Grand Knight of the Council, a deal was prepared to be signed with a developer bringing affordable housing to the village for a payment to the Knights of $2.4 million and perpetual tenancy. At the 11th hour, the parties named (Town of Haverstraw, Howard Phillips) negotiated an outright donation of our building to the town, with free permanent tenancy for our Council.”
Nonprofit organizations are required to show the AG’s office that a fair market transaction is taking place. The Attorney General’s role is to determine that the terms of the transaction are “fair and reasonable.” The Attorney General will generally reject the petition if it is not supported by an appraisal done within the past twelve months and by a party that’s independent of both the buyer and seller.
McGowan is asking the Attorney General to stop the donation, arguing the Knights are on the losing end of the deal.
In response, Executive Board of the nonprofit corporation that holds the title to the Knights’ property has called for an emergency meeting to take disciplinary action against McGowan, including ousting him from his leadership position, for opposing the donation to the town and speaking to the media.
The Town of Haverstraw has retained Brown & Weintraub, LLC, a consulting firm in based in Albany, to lobby for Attorney General approval. The agreement says the town will pay up to $400 per hour for lobbying services.
“In addition to the sacrifice of a sum that would have been used for many years in our mission, the current deal would result in a Catholic Fraternal Organization subsidized by Town taxpayers, raising issues of improper use of taxpayer funds, and constitutional tax issues separating church and state,” the complaint says.
The Executive Board of the nonprofit corporation that holds the title to the Knights’ property has called an emergency meeting to take disciplinary action against McGowan, including ousting him from his leadership position, for opposing the donation to the town and speaking to the media.
McGowan points out that the town is paying the Knights $7,000 monthly, even though no deal has been completed.
“I am filing this complaint with a request for investigation and ultimately a denial of the deal being submitted for your approval,” he wrote to the Attorney General’s office.
Until April, most of the Knights, along with Village of Haverstraw Mayor Mike Kohut, believed the deal to sell the building to affordable housing developer St. Katherine Group of Port Chester, was set in stone. For several years, Kohut and the Village have been working collaboratively with developers to bring direly needed affordable housing to the village.
However, Knights board member Joseph Vargas, who voted for the affordable housing project, became the new Grand Knight and backroom conversations began unravelling the deal. Vargas for years had been hoping to get the Town of Haverstraw to allow the nonprofit to receive tax-exempt status, relieving the financially strapped organization of its obligation to pay property taxes.
In a surprise turnaround in April – one that blindsided Kohut, the developer, and others who were working on the deal and rooting for desperately-needed affordable housing in the village – the Knights shelved the agreement after backroom talks led to an ad hoc agreement to donate the building in exchange for a raft of short-term financial incentives and promises from the Town of Haverstraw. Those included allowing the fraternal organization to occupy forever 1,500 square feet of space in the building, a fraction of the space it has occupied since 1970s.
The proposed deal also included provisions for the Town of Haverstraw to continue to use the building for its seniors and BINGO night, while the Knights have been exclusively allocated the office, the meeting room, and a storage closet.
On March 26, 56 West Broad Street Angels Holding Inc., the Knight’s holding entity for the property, and at least three Haverstraw Town Board members, along with town Attorney Bill Stein, and others, met to discuss an alternative path for the building, according to at least two people who were present. New York’s Open Meetings Law prohibits public officials who make up a quorum (in the case of Haverstraw, the number is three) to meet in private to do the town’s business.
At the time of the unpublished meeting, the developer, Kings Katherine LLC, an entity created by St. Katherine Group, had submitted final contracts for the deal based on a Letter of Intent previously signed off on by the Knights. But during that afternoon meeting at 56 West Broad Street, Haverstraw Town Supervisor Howard Phillips told the Knights, according to sources at the table, he was aware of the pending sale including the price but emphasized the seniors need a place to meet and that there are no equivalent halls that can accommodate that group.
Phillips went on to say, according to those present at the meeting, that the town couldn’t match the $2.4 million offer but told the Knights to make him an offer. Stein attended the meeting and “took notes.” McGowan said the fraternal order’s lawyer was not present at the meeting and the organization did not take minutes.
On June 25, the town voted to enter into a formal contract with the Knights. The agreement acknowledges that the donation is subject to Attorney General approval or to the New York Supreme Court. The AG’s office can kick the approval to the courts.
The approved resolution also called for paying the Knights $56,000 in back rent with taxpayer money for January through June, before the contract between the two entities was signed. It is not clear why the town has paid rent for a period of time prior to the transaction. In addition, the agreement calls for paying the Knights $7,000 monthly until the Attorney General signs off on the deal.
The resolution built in a provision in case the AG’s office denies the donation: Starting the first day of the next month after such a denial, rent shall be reduced for the remaining lease term to $2,000 a month.
Total payments promised by the town could easily exceed $200,000.
The Knights had been paying property taxes; the building, if owned by the town, would come off the tax rolls, affecting the Village, Town and School District.
In addition to paying back rent and rent going forward, the town may well find itself on the hook for $85,000 in expenses the developer incurred in preparation for the deal, including engineering and architectural designs. The developer in May sent an email demanding reimbursement for project costs. It is unclear whether the developer will sue for breach of the confidentiality clause in the executed letter of intent and for its costs.
