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New York Power Authority scolded for cutting rent rates to golf, yacht clubs in St. Lawrence County

By: NorthCountryNow.com |

The New York Power Authority is being criticized by the state comptroller’s office for the “unusual nature” of rental rates to private concerns such as golf and yacht clubs on property it holds in St. Lawrence County.

A report from the office of Comptroller Thomas DiNapoli notes that rents on places such as the Massena Country Club, the St. Lawrence Yacht Club, a St. Lawrence University boat house, and the Twin Brooks Golf Course in Waddington, are far below what would be expected in the open market.

In addition to the specific criticism of the examples in St. Lawrence County and elsewhere in the state, the audit is also critical of NYPA for not fulfilling its obligations to survey the properties, report the results and divest themselves of what they can.

“The unusual nature of these deals makes it critical that NYPA fully document and disclose the nature and justification for them,” DiNapoli said. “NYPA hasn’t shown that these tenants are the only ones that could provide required recreational use of these properties.”

NYPA officials told auditors that although it is difficult to determine the fair market value for leased land, 10 percent of the total assessed value is a good rule of thumb. For some properties, this amount may be further reduced if it is only usable part of the year. If NYPA followed those guidelines for the four St. Lawrence entities, it would collect at least $214,000 a year, the audit said.

During the audit period of January 2010 through July 2013, the Massena Country Club was leasing land assessed at $1.8 million for an annual rent of only $2,000 from NYPA, rather than the fair market rent of $180,000.

Auditors also found the private St. Lawrence Yacht Club leased property that was assessed at $180,000 for an annual rent of only $2,700, rather than $18,000, even though the club’s facilities are not open to the public.

Since 2010, the tenant was allowed to make improvements in lieu of paying rent, the report said. NYPA records show that the yacht club replaced a dock and a shed and purchased a woodstove without documenting how the cost of these projects compared with any rental offsets.

St. Lawrence University is leasing a boat house from NYPA that was assessed at $100,000 for an annual rent of only $1 (which NYPA waives), instead of $10,000.

The Twin Brooks Golf Course in Waddington is leasing property that was assessed at $123,000 for an annual rent of only $200, rather than $6,150 (reduced from $12,300 because the property is only usable for six months of the year). NYPA has waived the rent on this property since the 1990s.

“Our review showed three of the four tenants had not actually paid rent, although one of them has made some site improvements,” the report said.

“NYPA officials told us they consider all four tenants to be essential to meeting the land management plan, as required by its FERC licensing agreements. As a result, they are reluctant to raise the rents to fair market value, which might put these tenants out of business. Further, for tenants in financial difficulties, NYPA prefers to waive the rents rather than add to their economic hardship.”

DiNapoli’s auditors found NYPA failed to follow state law and notify the governor and Legislature that it was renting the properties below market value and justify why it was doing so.

Auditors found that NYPA had not accurately accounted for all of its real estate holdings. It has not determined the need to either hold or dispose of those properties, nor disposed of property on terms beneficial to the state, as it is supposed to under state law.

Responding to the audit’s draft report, NYPA officials indicated that they would enhance their practices and procedures for real estate portfolio management.

In addition, officials indicated they would strengthen NYPA’s automated real estate management systems and continue to improve system capabilities.

Last year, the Comptroller’s office issued another audit critical of NYPA noting that annual salaries to 35 percent of the authority’s employees are over $100,000, which amounts to nearly half of NYPA’s total compensation.

That audit also suggested that the millions of dollars the authority turns over each year to prop up the state budget might be better used to lower the price of the hydroelectric power the authority generates.

“The state regularly relies on NYPA for budget relief, which could pose future challenges for NYPA’s ability to deliver low-cost power,” DiNapoli said last year. “New Yorkers pay some of the highest electricity rates in the country and need the rate relief that NYPA could provide if it appropriately focused its resources.”

The report also reviewed executive and travel expenses incurred by NYPA, including a jet aircraft.