The East Hampton Town Airport would increase its annual revenue if the Town Board agrees to a new lease contract with Phoenix House, a drug and alcohol rehabilitation and treatment center that sits on East Hampton Airport property.
During a Town Board meeting last Thursday, October 2, the board held a public hearing on extending the lease agreement for 30 years, and drastically increasing rent payments from the current $100 to approximately $58,000 annually.
According to Phoenix House officials, the lease extension is required to obtain state funding for a planned $2.4 million upgrade to the rehab center.
Phoenix House is a national organization that helps approximately 25,000 people a year through prevention and rehab services and has outreaches in schools, prisons and courts. The organization is looking to add classrooms, recreational and counseling space in its basement, and surveillance cameras and a fence around the 4-acre Wainscott property where the office is located. The facility can house up to 45 clients, and the staff mostly works with teens. Residents of East Hampton Town get priority for admission and participation in programs.
Since it opened, Phoenix House has been paying $100 in rent each year as part of an agreement with the state, which allows service providers to pay special rates for rent, according to Phoenix House officials.
Decades ago, the town also tried to give small businesses renting at the airport a leg up by charging only a couple of thousand dollars a year, according to John Jilnicki, assistant town attorney. Today, there are about 10 to 15 buildings on Industrial Road housing a number of different businesses, some of which still pay lower rates for rent.
According to the town’s Budget and Finance Advisory Committee, the airport brings in approximately $500,000 to $600,000 from properties it owns.
Now that Phoenix House is seeking to renew its lease, it must pay fair market value in any new agreement, according to the Budget and Finance Advisory Committee. This also holds true for any other business or entity renting airport property when the terms of other leases expire.
Since the East Hampton Airport had taken grant money from the Federal Aviation Administration in 2000 and the FAA had more control over airport finances, the FAA became concerned that the town was leasing airport properties at below fair market rates. “As a result, the FAA was concerned rightfully that the airport, like every other airport that rents properties, gets fair market value for them,” Budget and Finance Committee Co-Chair Arthur Malman said.
After a settlement with the FAA, the town transfered $250,000 to the airport fund and agreed to enter into new leases with some non-aeronautical businesses, according to Budget and Finance Committee representatives. Any new leases or renewed leases would have to be set at fair market value, superseding Phoenix House’s agreement with the state to pay $100 a year.
Phoenix House’s new lease would come with Consumer Price Index adjustments for years two through nine, 11 through 19, and 21 through 30, with reappraisals in years 10 and 20 to establish fair market value.
Mr. Jilnicki said on Thursday night that over the next 15 years, the town will receive approximately $880,500 more than it would have with the existing Phoenix House lease, not including CPI or reappraisal increases. “It’s a very good opportunity for the town,” he added.
Robert Ratteni, who also owns a building in the industrial park, spoke up during the public hearing saying that he had wanted to know why Phoenix House got to renegotiate so early, before its lease was up. Mr. Ratteni said his lease is up in two years and he wants to start planning now for when his rent is renegotiated with the town.
“I’m trying to get direction on which way I’m going,” he said. “It’s clear this board has indicated it’s very agreeable and willing to adhere to my desires and wishes as far as getting that direction.”
“Anytime we can go from a $1,200-a-year lease to $58,000-a-year lease, we are happy to renegotiate,” Town Supervisor Larry Cantwell said.
The Town Board will vote on the Phoenix House lease renewal sometime in the coming weeks.