State of Rockland’s Economy

State of Rockland’s Economy

By Ken Mahoney

Like the rest of the country, Rockland County has been affected by the major recession and housing market collapse. Unemployment has increased from a December 2006 low of 3.2% to 7.4% in June and July of 2009. As of August the official tally had decreased to 7.3%, but challenges remain across New York as sales and income tax receipts are down. In Rockland sales tax receipts are down over 3% and money brought in from mortgage taxes has decreased as well.

The unemployment figures in Rockland are slightly higher than the recession in the early 1990’s and two percentage points higher than the downturn earlier in this decade. Nationally the unemployment rate is above 9%, the highest since the recession of the early 1980’s. New York State’s overall tax receipts are down 7.7% from last year as of September according to the state’s Department of Taxation and Finance. That is $516 million less than last year. The dip in revenue is the worst since the aftermath of the 9/11 terrorist attack. In Rockland, sales tax receipts are down 3.8%.

In response to the financial problems, the Governor of New York has proposed over $4 billion in spending cuts. County Executive C. Scott Vanderhoef proposed a 2010 budget with a 1% increase in spending and a 4% increase in County property taxes. Vanderhoef also said he’s responded to the weak economy by cutting $10 million in County salaries through early retirement buyouts. He has eliminated about 200 positions, he said.

The collapse of the housing market has caused a drastic decline in prices and a shift in strengths in the marketplace. The number of homes being sold has plummeted along with the price. According to the Greater Hudson Valley Multiple Listing Service the housing market in Rockland is still in decline at the moment. There were 248 new listings in September, at an average price of $559,102. That’s 10.6% less than new listings last September.

Below, compare prices homes were being sold in 2005 to 2008. In 2005 GHVMLS reported that

230 homes were sold in Rockland for over $750k 653 from $500 to 749k 557 from $400 to 499k 174 from $350 to 399k 94 from $300 to 349k

In 2008 GHVMLS reported that

102 homes sold in Rockland for over $750k 348 from $500 to 749k 392 from $400 to 499k 175 from $350 tp $399k 81 from $300 to $349k

There has even been a resurfacing of a few homes that have sold below $100k, something that hasn’t been seen since the early part of the decade. While in light of the rapid collapse of the market it may seem like prices are low, keep in mind that in 2001 the vast majority of homes in Rockland were being sold between $200 and $400k. GHVMLS reported that the rapid decline in the market has abated some and it is possible a bottom will be reached in the coming year. While some experts like Federal Reserve Chairman Ben Bernanke believe the economy will recover in the coming months, it is worth remembering Mr. Bernanke and most others did not accurately forecast the current recession in the first place. Hang on tight; we are sure to see a positive change in trends as long as we continue to persevere.

COUNTY SCHOOLS FACE $10-MILLION IN STATE CUTS

COUNTY SCHOOLS FACE $10-MILLION IN STATE CUTS

Rockland County school districts stand to lose more than $10,000,000 in state funding under Governor David Paterson’s proposed budget cuts. That’s according to Our Town newspaper in a report in today’s edition. Among those who’ll vote on the cutbacks is State Senator Thomas Morahan. He told us this morning he thinks there are ways to trim the budget without short-changing local school districts. But he said districts in Rockland and throughout the state should be looking for ways to keep their own spending down. State legislators are likely to be called back to Albany next week to vote on the budget cuts.

BAIL SET FOR WOMAN IN STOCK FRAUD CASE

BAIL SET FOR WOMAN IN STOCK FRAUD CASE

Bail has been set at $100,000 for a former New City woman accused in a multi-million-dollar stock fraud scheme with her husband. Sixty-two year-old Karen Lampert was arraigned yesterday in State Supreme Court here in Rockland. Her husband, 59-year-old Steven Lampert, is in jail in California. That’s where the couple has been living since leaving Rockland eight months ago. Police say the Lamperts left the county after selling friends and acquaintances more than $3,000,000 in bogus stocks. They’re both charged with grand larceny.

ORANGETOWN BUDGET SEES 4.5% TAX HIKE

ORANGETOWN BUDGET SEES 4.5% TAX HIKE

Orangetown residents will get a 4.5% tax increase if the town’s proposed 2010 budget is approved. Supervisor Thom Kleiner says the $2.9-million increase is necessary to meet contractual agreements with town police and civil service employees. Otherwise, Kleiner says, the budget aims for a zero-percent increase in discretionary spending. Kleiner won’t be in his current office when the budget takes effect. He’s stepping down as supervisor to make his bid for County Executive.

P-S-C GIVES O&R THE O.K. ON RATE-HIKE by Ken Mahoney

P-S-C GIVES O&R THE O.K. ON RATE-HIKE by Ken Mahoney

Orange and Rockland bills will rise an average of about three dollars a month, starting November first. The state Public Service Commission has approved the utility’s request for a rate increase on natural gas delivery. That three-dollar-a-month increase represents only the first year of the package. Two more annual increments will bring the overall increase to more than ten dollars a month for the average user by November of 2011.

COUNTY GETS MORE FLU VACCINE, SCHEDULES FRIDAY CLINIC by Ken Mahoney

COUNTY GETS MORE FLU VACCINE, SCHEDULES FRIDAY CLINIC by Ken Mahoney

A new shipment of seasonal flu vaccine has arrived in Rockland. And the County Health Department is re-opening its flu-shot PROGRAM, at least for a day. Officials say the shots will be available at the Yeager Health Center in Pomona tomorrow from 1 to 4 p.m. And they say MORE vaccine is on the way by early November. The shots are available free to seniors over 60, and for a $25 charge to all others. The county suspended much of its flu-shot schedule when the initial supply of vaccine all-but ran out last week.

CUOMO, IN ROCKLAND, TOUTS PENSION REFORM BILL by Ken Mahoney

CUOMO, IN ROCKLAND, TOUTS PENSION REFORM BILL by Ken Mahoney

New York’s Attorney General, Andrew Cuomo, came to Rockland yesterday to promote a state pension reform bill. Speaking to reporters at Ramapo Town Hall, Cuomo said the measure would protect both the dwindling pension fund and the state’s taxpayers. The bill would, among other things, increase the number of fund overseers from the current one trustee to a 13-member board of financial advisors. And it would ban political contributors to the State Comptroller from doing business with the Comptroller’s office. Cuomo is viewed as a potential front-runner among Democrats expected to seek the party’s nod for Governor next year

COUNTY EXEC CANDIDATES IN DEBATE TONIGHT

COUNTY EXEC CANDIDATES IN DEBATE TONIGHT

Rockland development and resulting environmental issues are the focus of debate tonight for the County Executive candidates. Incumbent Scott Vanderhoef and Orangetown Supervisor Thom Kleiner will square off at 8 p.m. at the Clarkstown Town Hall in New City. The debate is sponsored by the Rockland Coalition for Sustainable Water. One hot-button issue likely to come up: United Water’s proposed Hudson River Desalination plant.

COUNTY EXEC CANDIDATES TO DEBATE TODAY AND THURSDAY

COUNTY EXEC CANDIDATES TO DEBATE TODAY AND THURSDAY

The county executive candidates will debate the issues today in New City. The debate, between incumbent Scott Vanderhoef and Orangetown Supervisor Thom Kleiner, is set for 6:30 p.m. at Gracepoint Gospel Fellowship on New Hempstead Road. The two will meet again this week – Thursday night at Clarkstown Town Hall – to debate environmental issues facing Rockland County.

KNOW YOUR OPTIONS by Michael A. Starvaggi, Esq

KNOW YOUR OPTIONS Michael A. Starvaggi, Esq.

Recently, one of my clients asked me to draft a lease for a commercial building. He told me that, although his objective had been to sell the building, the proposed tenant did not have money for a down payment and did not want to commit to a purchase at the time. The solution, he said, was that they would enter into a five year lease “with an option.” When I asked him for more details he said that the tenant would have a “right of first refusal” during the lease term, using the phrase interchangeably with “option.”

This scenario highlights several pitfalls for parties who negotiate the terms of their leases carelessly or without legal counsel. Rights of first refusal (“ROFRs”) and options are very different devices and both should be approached with precision and caution. It is crucial that landlords and tenants understand the difference between the two.

In order to distinguish one from the other, we need look no further than the names of the two devices. A ROFR is just what it says, the right of a tenant to match an offer to purchase the property which is made by a third party. An option is a unilateral right of the tenant to purchase the property (with or without pre-determined terms such as price) that is exercisable by the tenant during a specified period.

An ROFR allows the landlord to keep the property on the market, with the caveat that any offers made by third parties may be matched by the tenant. This seems harmless enough until you consider the fact that bidders are loathe to go through the time and effort of investigating a property and negotiating a purchase price, when someone else has the legal right to step in at the end and take the property on the same terms. Failing to disclose the existence of the ROFR to the bidder is a dangerous and unethical practice that would expose the landlord to liability from the bidder and the tenant.

By contrast to the ROFR, an option is the singular right of the tenant to purchase the property to the exclusion of anyone and everyone else for a defined period of time. Furthermore, it is a “one way street” in that it gives the tenant an exercisable right but includes no corresponding right of the landlord to compel the tenant to buy. Thus, when there is an existing option on the premises, it should not be held out for sale because the landlord is not free to convey title to anyone other than the tenant during the option period.

Once the devices are understood, landlords and tenants must keep in mind that renting with an option or a ROFR is not a logical alternative to selling. In fact, under common practice, where the negotiated rent is at market value and the other lease terms are equitable between the parties, options and ROFRs are typically not given. This is because there is no extra consideration being given by the tenant to support the additional rights that an option or a ROFR entail. This is a key concept to grasp. Options and ROFRs are additional rights that benefit the tenant only. Thus, if there is no extra consideration paid by the tenant for one of these rights, there is no logical reason to include them just because it is contemplated that the tenant may one day wish to buy the building. The tenant, like anyone else, is always free to make an offer of purchase, and parties should avoid the temptation to “throw in” an option or a ROFR for the mere purpose of memorializing a discussion about the tenant buying the building some day.

In conclusion, remember that both the ROFR and the option are powerful legal devices that convey specific, and different, rights. If you truly intend to include one or the other in your lease negotiation, be clear about which one you intend. Once that decision is made, there are many drafting considerations to be addressed regarding exactly how either right can be exercised. The failure to clearly spell out these details is an invitation to litigation.

Leases are important instruments. And leases with options or ROFRs are all the more complex. You are encouraged to always seek the advice of counsel when negotiating and drafting a lease.

By: Michael A. Starvaggi, Esq. Starvaggi Law Offices, P.C. Phone: (845) 589-9456 mstarvaggi@starlawpc.com