Waiting For The Judge
At the August 12th meeting of the Garden City Board of Education, district counsel gave an update on the litigation initiated by the school district and Village of Garden City against the Town of Hempstead Industrial Development Agency.
Both sides are currently waiting for a decision to be rendered by State Supreme Court Justice F. Dana Winslow, which he has said will be expedited. "At this point we're keeping our fingers crossed," said district counsel Vanessa Sheehan, a partner in the law firm of Guercio & Guercio. "We believe that the district has some credible arguments."
A day before an Aug. 7th court hearing, the IDA learned that the contract of sale between the reported buyer of the hotel, Alrose GCH LLC, and the current hotel owners, the Nelkin family, had expired in April. Without a valid contract of sale, the IDA does not have the legal authority to grant benefits.
Sheehan said Justice Winslow asked Alrose attorneys at least three times if they had a closing date and a valid contract of sale. Attorneys finally admitted that there is no closing date and they were trying to work things out concerning the contract.
The Village and school district commenced an article 78 proceeding on July 8th to halt the sale and block the benefits Alrose was granted by the IDA.
In return, Alrose attorneys filed a $20-million notice of claim against the Village and school district, contending that their client will lose a $6-million deposit if the deal with the current hotel owners does not close on time. The Village and school district have since dropped their pursuit of a permanent injunction against the sale of the hotel but still plan to challenge the IDA's granting of tax assistance.
The IDA deal with Alrose freezes the property's current $1.7 million total for school, county and village taxes for three years. The corporation will make payments in lieu of taxes, known as PILOTs, which will increase modestly over the next seven years. The agreement also includes sales tax exemptions for the hotel renovation and exemption from a one percent mortgage recording fee.
