By Dan Hust
LAKE HUNTINGTON — December 10, 2010 — At last week’s meeting, the Sullivan West school board considered three options in weighing its vote on the bids for the closed Narrowsburg and Delaware Valley campuses, according to Superintendent Ken Hilton:
1. Accept NYC developer Ilwon Kang’s bids, as it did in 6-2 (DV) and 5-3 (Narrowsburg) votes, with Noel van Swol and Rose Crotty opposed to both, and Brian Grady opposed solely to the Narrowsburg bid’s acceptance.
2. Rebid both campuses, ensuring no confusing language in bid documents.
3. Reject bids for one campus but accept them for the other.
The district’s attorney, said Hilton, confirmed the legality of options 1 and 2, but since the confusing language in the bid documents applied to both campuses (see this past Tuesday’s story in the Democrat), option 3 turned out not to be a legally-defensible choice.
Those who will influence the next steps include Hilton, Dick Riseling and Ilwon Kang.
• Hilton admitted to “mixed feelings” about the sale, glad to almost be rid of two expensive, unused campuses but also worried about their future uses.
“I think we have a duty to the community to try to find an appropriate purchaser,” he explained.
Hilton feels that person has been found in Kang, noting that the developer put in bids for both campuses, which the district’s attorney advised could be accepted without legal worries.
“The ultimate objective is to find a future use for these buildings that the community will like,” Hilton acknowledged, “... to find a new life for these buildings and a fair price for the taxpayers.”
He rejected van Swol’s assertion that the sale price was too low, arguing that it was a “fair, rational real estate value” when compared to similarly abandoned school buildings littering upstate New York.
“If you’re looking at the emotional value of the buildings, it’s grossly underpriced,” Hilton added, “... but that’s not the choice we had.”
The reality is, he said, “we were lucky to find a good bidder offering serious money ... and it was the right decision to do.”
Even if it’s pushed to a public vote, he believes taxpayers will agree.
“I can’t imagine the voters of the school district will refuse once they understand what the situation is.”
Hilton nevertheless expressed regret that Riseling, a well-liked supporter and resident of the district, was rejected.
“If Mr. Kang doesn’t want the buildings,” he noted, “it’s kind of gratifying to know Mr. Riseling and his group of investors are waiting in the wings.”
• Kang, not surprisingly, left Thursday’s lengthy meeting feeling upbeat.
“We are certainly pleased with the result,” he confirmed.
Once the district adds its signature to the purchase agreement, Kang said he’ll move forward with his due diligence – and at the same time meet not just with the board and involved town officials, but the public, as well.
He noted that financial references had already been provided to the district and promised to work with the district and its residents to create viable futures for DV and Narrowsburg.
“I thought the school officials overall were very receptive,” he explained, “and we are very encouraged by that.”
• Riseling admitted that he had gotten “out of the loop” until he saw the Democrat’s announcement of Kang’s bids, though he had submitted a lease offer a month prior.
Hilton had indicated Riseling will get his $36,250 deposit returned to him, though over the weekend Riseling said he had not yet heard anything from SW.
But while he’s exploring suing and welcomes efforts to mount a taxpayers’ challenge, Riseling said he continues to work with “a very small group of investors” to secure the financing needed to fulfill his $725,000 bid on Narrowsburg.
“We are not backing down on this,” he vowed.
Board members justify their vote
• Board President Mary Scheutzow offered a simple explanation:
“We have to sell the schools,” she remarked.
Fresh from a face-to-face meeting with NYS Education Commissioner David Steiner, Scheutzow said Albany is warning that education funding and challenges will get worse, not better, in the foreseeable future.
With Kang making two bids on time for buildings the district no longer needs, she felt the board’s best choice was clear.
“I have no reason not to take him [Kang] seriously at this point,” said Scheutzow, the only board member so far to have met personally with the developer. “... I don’t know what purpose there would be in [his] playing games in this.”
• Board Vice President Richard Tegnander was not present to vote and, citing unfamiliarity with the latest updates, declined to comment.
• “The fact is ... I don’t see where Dick [Riseling’s] bid was legitimate,” explained John Reggero. “It was an offering, but it wasn’t within the bid process time.”
Reggero added that he was surprised by Riseling’s admission of an “oversight” in not promptly submitting a bid.
“He had been looking at this carefully for some time,” Reggero observed. “... The vision was there, but some other things were lacking.”
As for Kang, “he had shown us some due diligence and sustained interest in those properties, which impressed us.”
Reggero hoped Kang would ultimately choose to purchase both campuses, but if either goes back up for sale, he’d be glad to see Riseling submit a bid.
“I’d welcome a bid from anybody at that point!” Reggero affirmed.
• Brian Grady was the only board member to vote differently on the two bids, agreeing to DV’s sale but not to Narrowsburg’s.
“It was a confusing and difficult decision to make over accepting Mr. Kang’s bids for me,” Grady acknowledged.
The Narrowsburg resident said neither bidder had completely fulfilled the bidding requirements, but since Kang was the only bidder on DV, Grady felt an approval made sense.
With Narrowsburg, “there was an opportunity to have a further discussion and perhaps do a further auction,” he related.
Such a rebidding with blind bids would “level the playing field,” he added, with a higher sale price the hopeful result.
“My feeling is we should have encouraged the competition,” Grady explained.
Still, he’s not unhappy with the process moving forward, and he plans to participate in whatever discussions with Kang are ultimately offered.
“I really do want what’s best for the community,” he said.
• Angela Daley, herself a longtime Narrowsburg resident, said the time had come to make a choice.
“It seemed to be the most prudent thing to do,” she remarked of the bid acceptance. “We had an offer, and we had agreed the offer was acceptable.”
She remains eager to meet with Kang and find out his plans for the buildings, especially the one that sits in the heart of Narrowsburg.
“I live here,” Daley affirmed. “I have a vested interest in what happens here. It’s very close to me, the school.”
Though she knows it’s not quite a done deal yet, she’s glad taxpayers and the district may no longer have to fund the ongoing costs of the two closed campuses.
“We were glad there was a bid,” she said. “... I think we were lucky to sell the buildings. ... I just hope something good comes of it for the towns.”
• “I just didn’t want to lose the opportunity we had,” explained Rose Joyce-Turner, who worried a rebidding process would cause Kang to disappear. “... I guess I didn’t want to tick him off.”
Joyce-Turner didn't want the district to be left in the lurch, especially with money for education so tight these days.
So she didn’t risk rejecting what she considers the lone legitimate bid: from Kang.
“Our goal ... was to sell them to save the district taxpayers money,” she explained.
• Rose Crotty minced no words.
“I felt the entire bid process was illegal,” she explained. “There was ambiguity in what was put down on paper. It was not ironclad, and as a result, there was confusion.
“... And since it wasn’t right and fair, it should be thrown out,” she concluded.
She hopes Kang’s efforts will bear fruit, but she admitted to “reservations” about his ability to rise above the ongoing parade of dreaming developers who ultimately bring nothing but disappointment to Sullivan County.
• “My feeling was that there was only one real bid,” said Ken Cohen, referring to Kang’s offer.
“Though there was a ... misunderstanding as far as the deadline for the earnest money [deposit],” he continued, “... his ultimate deadline was yesterday, and he got the money in.”
Cohen dismissed the ability of Riseling to sue.
“The only person who could sue is someone who bid,” he explained. “That was not a bid.”
Why not do a clean rebid then?
“Because I don’t think his [Kang’s] bid was that flawed,” Cohen related. “... And he was the only person that made any kind of interest in these buildings.”
Cohen’s also confident Kang is “the real deal,” saying he’s satisfied with Kang’s finances if the banks are.
Even if Kang doesn’t come up with the full $3 million to purchase the campuses, Cohen pointed out that SW will automatically keep the buildings.
• Noel van Swol considers himself the taxpayers’ “watchdog,” and as such, he’s an unapologetic critic of this latest deal.
“It is absolute fiscal irresponsibility,” he stated, noting the insured replacement value of the two campuses tops $30 million. “In effect, we are selling these two buildings at the bottom of this recession for 10 cents on the dollar!”
He also pointed out the approximately $12 million invested a decade ago in improvements to both buildings, dismissing as irrelevant the fact that much of that outlay is covered by state aid.
(Hilton confirmed that the district is “underwater on its mortgages” with the two campuses, though district officials could not pinpoint the exact amount due to the complexity of the construction financing and repayment structure.)
“This is an enormous hit on the taxpayers,” van Swol said, arguing instead that the buildings should have been fully shuttered, utilities turned off and minimal maintenance provided for a few years until the real estate market improves.
That would have cost taxpayers “next to nothing,” he said, instead of letting Kang obtain both campuses for, again, “next to nothing.”
Van Swol remains concerned about Kang’s financial ability and lamented that the structure of the purchase agreement allows Kang to walk away with his $150,000 deposit if he determines within the next five months not to proceed with the sale.
“That is absolute stupidity and insanity on the part of the SW administration to allow a deal like that to go through,” van Swol charged.
Though he wished the rebidding process had been chosen by the board, van Swol now hopes the district’s residents will force a public vote “to give taxpayers a chance to veto this bad deal.”