Business & Finance

Berkeley Heights Council Okays YMCA Lease, But Some Residents Give Thumbs Down to the Deal

August 21, 2013 at 6:05 AM

BERKELEY HEIGHTS, NJ - The Berkeley Heights Township Council on Tuesday gave its unanimous approval to a 50-year lease with the Summit Area YMCA of 10 acres of land on a township-owned plot adjacent to the Berkeley Heights Fire Department on Hamilton Avenue.

The YMCA plans to construct a health and fitness facility for physical therapy, a cafe or meal service limited to members and guests and physical training and hospitality services. Those services possibly would include catering for fund-raising events.

For the lease of the land the association would pay the township $50,000 for the first year of the agreement with increases every 10 years based on the average of the Consumer Price Index for All Urban Consumers –Unadjusted Year-on-Year Percentage Change for each year in the prior 10-year period.

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Councilman Thomas Pirone said the current proposed lease is much better than the one proposed by the Y in 2010, when the association was seeking a $1-per-year lease on land adjacent to the township swimming pool on Locust Avenue.

Pirone noted the $50,000 would pay the cost of educating three Berkeley Heights students or hiring a public works employee to clear debris from the Passaic River. He said the township, contrary to some resident suggestions, does not have the cash on hand to build a new police station on the site.

Council President Kevin Hall said the township had to look at what the YMCA contributes to the community. He also disputed contentions that the Y could switch hours for senior citizen programs, thus great inconveniencing and disorienting them, because, he said, this was “not in the character” of the organization.

If the township is able to finalize a deal to purchase land currently owned by Little Flower Church across the street from the proposed YMCA facility, Mayor Joseph Bruno said, senior citizens will be able to take advantage of a new municipal building, a new library and possibly a new multi-purpose room in the new municipal complex then go across the street to swim at the new Y.

Former Union County Prosecutor Theodore Romankow, a Berkeley Heights resident, said the township was not in such need of development that it had to take a deal that he believed was not in the township's best interest.

He said the lease should not be signed without an assessment of the property that the township was proposing to lease to the Y and the adjacent property on which they fire department facility is situated, especially in light of the fact that the Y's current lease on its Springfield Avenue property is about to expire and it might settle for better terms than the township proposes for the site near Hamilton Avenue.

Council Vice-President Jeanne Kingsley replied that the Y currently already has a building on its current property and, under the lease approved Tuesday, it would lease only the land and would have to erect its own building.

Romankow noted, however, that when he was prosecutor he had long urged the township to construct a new police headquarters and the proposed lease site was a good location for the new facility.

He urged the council to get an assessment on the property and to aim to get a deal with someone who would provide an agreement in the township's best financial interest.

Bruno told resident and Democratic council candidate Stephen Yellin that just because the site contains wetlands does not mean that it is environmentally protected and it can be built upon. The site has been undeveloped for 50 years, he said, and this is one of the reasons the lease was considered.

Hall noted that the state environmental protection agency would perform tests on the site and if it was not found viable the Y could get out of the lease.

Romankow replied, however, that the township would be in a far better position than the Y to mitigate any problems found on the site.

Aside from the environmental concerns, resident Thomas Foregger said the YMCA agreement was not negotiated to give the township the best financial advantage.

He noted the proposed lease cause for rental adjustments only in years 11, 21, 31 and 41 of the 50-year lease.

Foregger added a more common “escalator clause” was one that would provide yearly increases based on the CPU with each year's adjustment based on the prior year's payment—similar to the Social Security Cost of Living Adjustment for retirees.

He said the lease was unclear about the rent value in year 21 of the lease and later. The resident presumed, therefore, the year 21 year rent would apply the inflation percentage to the prior year's rent and not to the base year payment of $50,000, with similar calculations for years 31 and 41.

Thus, according to Foregger's calculations, the township would collect only $2,654,567.91 over 50 years, with a “proper” lease that he advocated yielding $5,639,843.36 over the same period.

Foregger added that the YMCA could afford to make the increased payments, citing the association's 2011 IRS 990 form stating they paid their CEO $260,000, compared to the Charity Navigator median of $160,000 for CEOs of charitable organizations in 2010.

Also, the resident noted, the YMCA's financial statements for 2012 the group paid $275,000 per year for their current 22,846-square-foot township facility, not including its proportionate share of common area maintenance charges, real estate taxes and other sundry charges. He noted that under the proposed lease the Y would not have to pay the $275,000 per year and would pay no property taxes.

The mayor replied the YMCA lease was based on commercial rentals, which do not include yearly increases ,like many residential leases, because those leases are encouraging the enterprises to succeed.

Bruno also told a resident of Roosevelt Avenue, which is near the proposed lease site, that his experience at the current town hall is that traffic was not as heavy as the resident feared and the combination of traffic from the proposed municipal complex and new YMCA site would not as adversely affect his neighborhood as the resident said it would.

In addition, township attorney Joseph Sordillo said, even if a lease is finalized, the YMCA would have to go before the planning board for site plan approval, and residents could raise their concerns about traffic at that time.

On another facet of the proposal, resident Carol Matula asked if any of the governing body members were associated with the YMCA or had contributed gifts to the organization which, she believed, might create a conflict of interest on their part if they voted for the lease agreement.

Hall said he was a member of the YMCA, but had no leadership role, and Kingsley said she had contributed to the Y through the United Way.

Sordillo said none of the council members would face a conflict in voting for the lease contract.

On another matter, the council adopted an $846,907 bond ordinance for capital improvements that will pay for a fingerprinting system, traffic bureau equipment, rescue squad equipment, including a power stretcher; police SUVs, dump trucks for the DPW and the recreation department, other DPW equipment, including a street sweeper, and improvements to a number of roads including microsurfacing and paving and street signs.

Councilman Edward Delia voted against the ordinance.


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