After 18 months of discussions and an “agreement” announced at the June 21 town board meeting that subsequently fell apart, town officials and board members of the Skaneateles Recreation Charitable Trust remain at loggerheads over who owns what assets in the Skaneateles YMCA and Community Center facility and how much money — if any — ownership of the items should cost to resolve the disagreement.
The SRCT, which took over management of the community center facility in 2010 and was prepared to pay $68,500 to the town last month for the assets, recently said it found an exemption to state law that would allow the town to donate everything to the trust. The town maintains that the New York state constitution prohibits such a gift from a municipality, that the exemption claimed by the SRCT is invalid because the YMCA does not benefit every member of the community and the items in question were purchased with taxpayer funds and therefore cannot legally be given away without appropriate compensation.
With both sides certain in their legal interpretations of the state constitution, it appeared as of press time that no agreement would be reached. If such an impasse was to occur, the town would “have to pursue whatever legal remedy is open to us,” said Town Supervisor Terri Roney. “It’s been a very interesting two years. I perceive that this will end badly, and in litigation.”
(Be sure to read the full email correspondence between the SRCT and town officials, obtained through FOIL request, at the end of this story.)
Background
The town board transferred management of the Skaneateles Community Center to the SRCT on Aug. 1, 2010; all the assets inside the facility remained within the facility with no written agreement as to who owned the items or how and when any of the assets would be either returned to the town or purchased from the town.
In late December 2010, the town sent an inventory list to the SRCT of what it claimed were town-owned assets left in the facility that needed to be either purchased from the town or returned to the town. Since that time, the SRCT has been going over the inventory list, deciding what it believes is or is not town property or part of the community center — by virtue of being donated directly to the center and not to the town or purchased with funds from the W.G. Allyn Trust Fund, which was created for ice rink capital expenditures — and discussing the issue with town officials.
Last month, at the June 21 town board meeting, Roney stated that recent negotiations with the SRCT had amounted to an agreement for the SRCT to pay the town $50,000 in three monthly installments for the purchase of town assets they have been using with the community center since 2010, and $18,500 in monthly installments to the town for the purchase of an Olympia ice resurfacer and its associated equipment.
The SRCT also is seeking the transfer to its management of $78,000 in town reserve funds that originated and were paid out of the W.G. Allyn Trust. Roney said the town board did not oppose the transfer, but wanted a state court or state attorney general opinion on the issue to ensure a correct and legal transfer of the funds. Both the SRCT and the town agreed to jointly apply to the state attorney general’s office for guidance.
The town board unanimously approved the agreement at the June 21 meeting.
On July 9, SRCT member Joseph Hennigan informed the town board that the SRCT had recently discovered an article titled, “To Give and Receive: Municipal Donations,” published in the March-April 2011 issue of Municipal Bulletin newsletter, which the SRCT believed showed that the town could donate all the assets to the SRCT rather than requiring payment because the YMCA benefits the community. The SRCT’s attorney said the situation seemed to fit the requirements of the “gift and loan clause” of the state constitution. Essentially it states that any municipal donations must be beneficial to the public and in the public interest.
“In light of this new information we would like you to review your position, discuss with us and move forward via gifting of these assets to the SRCT,” Hennigan wrote in an email. “With respect to the WG Allyn trust funds we would continue to move forward as we agreed.”
The town board disagreed with the SRCT’s interpretation of the article and the state law, and was informed by its attorney, Patrick Sardino, that to gift the assets would be illegal because they were purchased with taxpayer funds and the YMCA has a limited scope in that it does not serve the entire community but only dues-paying members.
The board then asked the SRCT if it was withdrawing its previous agreement, and, if so, to let the town know so it could arrange to remove all town-owned assets from the YMCA. The SRCT responded last week with a proposal for the town to proceed with the municipal gift transaction with a provision that if the transaction is found to “not meet the legal requirements for such a gift,” that the SRCT would then be required to purchase the assets.
The disagreements
The disagreements between the town and the SRCT concern multiple issues starting with the original transfer of community center management in August 2010 and what was or was not agreed to at that time.
SRCT President Charlie Wallace told the Skaneateles Press that at that time, there was no discussion and no issue about who owned what assets — it “was just assumed” all assets were included with the facility. But then in December 2010, town officials suddenly declared they expected compensation for all town assets in the facility, which included items such as exercise equipment, office furniture, kitchen equipment and utensils, computer equipment, bumper boats for the pool, and an ice resurfacer.
Roney disputes that characterization, and said the assets were discussed by her and Town Budget Officer Bridgett Winkelman in July 2010 at the Auburn YMCA with its officials — at the behest of the SRCT — including CEO Kurt Kramer, finance director Denise Tabone and current Skaneateles YMCA Director Dorothea Hughes.
“To say this was not discussed is absolutely false,” Roney said.
“Yes, I was there,” Winkelman said. “There were many things we were working on that day,” including membership transfers, programs and the list of assets.
Tabone referred questions to Kramer, who said, “This topic may have been covered, but I don’t have a specific recollection two years hence. We had myriad meetings.”
Roney conceded that the asset issue was a verbal agreement and nothing was put in writing. “All of our discussions on this were, ‘Oh of course we’ll do this’” and the assets would be returned to the town after the YMCA got up and running, Roney said. “We thought we had a gentleman’s understanding that they would move forward with this.”
Wallace did not return calls seeking clarification.
In the original Dec. 28, 2010, letter from Roney to Kramer and Hughes, obtained by the Skaneateles Press through a Freedom of Information Law request, Roney wrote, “This letter is sent in connection with the personal property and equipment assets purchased with town tax dollars that we agreed the Y would need to facilitate a smooth transition of the Community Center operations. As you recall, there was significant discussion because the Y would not be infusing any cash as part of the transition, however, the town legally could not simply give the assets to the Y without fair compensation. … You will note that we took no credit for any rink-related property or equipment since those items were typically purchased using money that originated with the Allyns or a trust or entity controlled by them.”
The inventory of assets contains more than 850 items, from small things such as calculators, phones and DVDs; medium-sized items such as desks, chairs and televisions; and major pieces of equipment such as fitness machines, non-moving fitness equipment, a security system and the server and software with which the community center tracked inventory, memberships and similar information.
Dorothea Hughes, Skaneateles YMCA director, responded to Roney on May 11, 2011, disputing many of the assets included on the list, and including “revised values” for others. The letter does not include any statements disputing the basic premise of Roney’s previous letter, that there had been a previous discussion and agreement about the return of assets.
According to emails between officials at the SRCT and members of the town board, also obtained by the Skaneateles Press through a FOIL request, the June 21, 2012, agreement of $68,500 for the assets was initiated by the SRCT on June 11, discussed and agreed to by both parties on June 20 after a few minor adjustments in payment schedules.
The SRCT Board of Trustees “are OK with the $50,000 for the assets and preliminary OK with the proposed payment schedule … This is a fair and reasonable position,” Hennigan wrote to Roney that day. The next night, the town board voted to accept the agreement.
On July 9, the SRCT informed the town board it believed the assets should be donated rather than paid for and reneged on its previous agreement.
Wallace, however, denies there was ever any “agreement.” He said there was a “proposal” that some members of the SRCT approved but the board of trustees ultimately rejected.
“We’re working on this with the town and we’re going to get this resolved,” Wallace said. “This has not been an adversarial issue, both sides are working together.”
The emails between the two parties belie that statement, however, and show that after the town board rejected the donation proposal communications became more heated.
On July 13, Hennigan told the board, “Essentially the town board is saying that it just does not want to take the ‘gift’ route. The troubling aspect to all this is for some reason working together for the community does not seem to be the objective. The adversarial nature of this entire process to me … is unexplainable.”
Responding to Town Councilor Steve McGlynn’s query as to why the SRCT backed out of its previous agreement with the town, Henninger said, “The problem with this entire process is a lack of a common objective,” which is to do what is in the best interests of the community, “and for some strange reason the town board seems to be working exactly counter to that.”
What is a ‘community benefit’?
The main disagreement in the asset issue appears to be over the definition of the phrase, “community benefit.” The Municipal Bulletin article stated that municipal donations can be made if they are beneficial to the public and in the public interest. The SRCT believes the YMCA is just that. “This facility benefits the community, is paid for by the community, and we just want to make sure that whatever is done is of benefit to the community,” Wallace said.
The town board’s position is that the YMCA does not benefit the entire community because it serves only dues-paying members, and therefore the entire community does not benefit.
Many organizations serve the Skaneateles community, but that does not mean they are community organizations, Roney said. “There are plenty of people in this community that are not members [of the YMCA],” she said. “I appreciate that this is very emotional for them [the SRCT] but I have to set emotion aside and do my job and look out for the best interests of the taxpayers.”
Roney added that taxpayer money was used to purchase all of the assets in question — not money from the SRCT or the W.G. Allyn Trust.
Winkelman, the town budget officer, said “absolutely,” there is a paper trail of receipts showing that town funds paid for some of larger assets, such as the ice resurfacer, the commercial kitchen equipment, all the kickboxing bags, heavy weights, racks, pads in the free weight room and stationary bicycles. “Yes, I have the receipts for all these kind of purchases,” she said.
A number of these receipts were supplied to the Skaneateles Press in response to its FOIL request.
As of press time, no agreement had been reached between the town and the SRCT.
Roney said SRCT members requested a meeting with her on Wednesday, July 25, to get a “full understanding” of the town’s positions and objections to the asset gift proposal. She responded by asking if the SRCT understood that taxpayer money was used in the purchase of the assets in question, and not solely SRCT funds. After receiving no response she followed up with a message asking if the meeting was cancelled, to which Wallace responded that it was.
According to emails between officials at the SRCT and members of the town board, dated from Monday, June 11 to Wednesday, July 25, 2012, the asset purchase discussions started simply and turned adversarial after the SRCT reneged on an asset purchase agreement it initiated on June 11 and the town board subsequently rejected the SRCT’s proposal to donate the assets instead.
The emails were obtained by the Skaneateles Press through a Freedom of Information Law request.
—Monday, July 9, SRCT member Joseph Hennigan to Skaneateles Town Board (supervisor Terri Roney and councilors Nancy Murray, Jim Greenfield, Steve McGlynn and Rick Keyes): “We came across the attached article in Municipal Bulletin and asked BS&K to comment on relative to our current situation.
“Contrary to what we (via the town board) have been told, (apparently by the town attorney) that there really was no way to deal with the Community Center’s hard assets other than a public auction or a sale at a reasonable price, this article and BS&K state otherwise. … While the SRCT continues to seek funding, in light of this new information we would like you to review your position, discuss with us and move forward via gifting of these assets to the SRCT. … With respect to the WG Allyn trust funds we would continue to move forward as we agreed.”
—Friday, July 13, Skaneateles Town Board members to Hennigan: “We did review this article last year as we were attempting to determine the legality of what has been proposed. We do not agree with your interpretation of what the author states in her article. Further we have received legal opinion that what you have proposed is not permissible or legal.
“Bottom line Joe is we have an agreement that you and SRCT presented and we accepted; that agreement was presented to the public during our last board meting; a resolution was made to accept such agreement and was unanimously agreed to by all board members. If SRCT is withdrawing their proposed agreement please let us know immediately as we will immediately arrange pickup of the Olympia [ice resurfacer] and taxpayer owned assets.”
—Friday, July 13, Hennigan to town board: “Of course the SRCT disagrees with your legal interpretation as does their counsel (and village counsel). Essentially the town board is saying that it just does not want to take the ‘gift’ route. The troubling aspect to all this is for some reason working together for the community does not seem to be the objective. The adversarial nature of this entire process to me … is unexplainable.”
—Monday, July 16, Hennigan to town board: “The SRCT Board … voted not to accept the purchase option, while noting the availability of the municipal gift option which you subsequently have declined to consider.”
—Tuesday, July 17, McGlynn to Hennigan: “I, and probably everyone else, is unclear as to what happened to our agreement per below. SRCT proposed this agreement, accepted it and thus the agreement was accepted by the town as documented below. The municipal gift option has been considered, reviewed by legal counsel and interpreted contrary to SRCT interpretation.”
—Tuesday, July 17, Hennigan to McGlynn: “Steve, it’s simple and clear … it came to the SRCT’s attention, just days ago, that a municipal gift was legally possible and in this situation likely appropriate. … Speaking for myself, the problem with this entire process is a lack of a common objective …. The common objective I would expect in this situation is to do what is in the best interest of the people/community of Skaneateles … and for some strange reason the town board seems to be working exactly counter to that.”
—Tuesday, July 17, Roney to Hennigan: “Joe, you keep referring to two law firms with opinions that the town board can make a gift in this instance. If you would like us to consider your position on this, please forward those opinions to us. …
“Furthermore, we contacted the author of the article you are relying so heavily on, who is no longer with [the New York Conference of Mayors and Municipal Officials, publisher of the Municipal Bulletin] and received a response from someone else. But because the gift would go to a private, dues-paying member organization as opposed to all taxpayers in the community, a gift in this situation would not be appropriate. Really no different than if we simply gave all town-owned tennis-related assets to the country club. Somehow I don’t think the general populous would be in favor of that even though the value would be far less.
—Wednesday, July 18, Hennigan to Roney: “Here is the simple idea of what we discussed this morning and which I hope can work for both parties. … My suggestion we covered is as follows: Proceed with a municipal gift transaction … [and] add a provision which states that if it is found (for any reason at any time) that the transaction does not meet the legal requirements for such a gift, the SRCT is then required to actually purchase the assets at the value the town currently sets (use the values previously agreed to).”
—Monday, July 23, Wallace to Roney: “Do you have time this week to get together one more time with Joe and me so that we are clear as to the town’s objection to our latest proposed resolution of the inventory issue?”
—Monday, July 23, Roney to Wallace: “Can you give me an idea of whether this is going to be productive, or is it just going to be a beating to try to get the town to agree to the SRCT’s position on gifting; if it’s the latter I don’t think it will be a productive meting. I don’t mean to be curt or terse, but I just don’t want to waste your time.”
—Monday, July 23, Wallace to Roney: “We want to be sure that we understand the town’s hesitation in pursuing the municipal donation concept. … From our perspective, it seems that we can structure the gifting so that the town is protected, especially considering that the SRCT is willing to indemnify the town is it is determined that it was an illegal gift. If the town board’s intent is to put this issue behind us and move forward and truly doesn’t care about receiving any financial compensation, what is the harm in trying this approach? However, if there are other reasons why the town is unwilling to consider this approach, I need to understand what those concerns are … Does the town feel that the SRCT backed out of an approved resolution? Once you and Joe agreed to a proposed resolution, we discussed it at the June SRCT board meeting and it elected not to approve the proposal, under the same reasons as in the past (Why are we buying things twice? I know the town’s answer, but it is still a bitter pill to swallow).”
—Wednesday, July 25, Roney to Wallace and Hennigan: “Joe and Charlie, since I have not heard back from my last email, I am presuming we are not meeting today.”
—Wednesday, July 25, Wallace to Roney: “Correct, we are not meeting today.”
Jason Emerson is editor of the Skaneateles Press. He can be reached at [email protected].
