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Aug 5, 2013 4:02 PMPublication: The East Hampton Press

Poxabogue Sale Passes A Hurdle

Aug 6, 2013 3:58 PM

The stroke of Governor Andrew M. Cuomo’s pen last week means East Hampton Town can finally unload its share of a Sagaponack golf course to the property’s co-owner, Southampton Town.

Mr. Cuomo signed legislation last Thursday, August 1, clarifying the boundaries of the Poxabogue Golf Center, a move needed to allow the transfer of ownership of the 39-acre property on Montauk Highway to proceed.

With this hurdle now passed, the closing on the property could take place in a matter of weeks, State Assemblyman Fred W. Thiele Jr. said on Friday: “From here on, it should be clear sailing, and the towns should be able to complete the transaction.”

East Hampton Town budget officer Len Bernard said on Monday that his town still expects to receive $2.2 million from the sale, plus 50 percent of what is in the golf center’s capital reserve fund. At last glance, that fund, which comes from the center’s revenues, was $400,000, meaning East Hampton could expect to get roughly $200,000 on top of the set price, for a total of $2.4 million overall from the sale, he said.

East Hampton Town Attorney John Jilnicki is trying to set up the closing date as soon as possible, Mr. Bernard said. “So, obviously, everything’s a go.”

Neither Mr. Jilnicki nor Southampton Town Attorney Tiffany Scarlato returned requests for comment.

Each town originally contributed $3.25 million toward the purchase of the Poxabogue Golf Center, which includes a nine-hole golf course, driving range, pro shop and restaurant. The sale of East Hampton’s share was stalled for more than a year because of an error in the way the property was described in documents provided to the State Legislature that authorized East Hampton Town to sell its portion to Southampton Town. It is actually two parcels of roughly equal size—one includes the golf course and eatery, the other includes the driving range and undeveloped land—but it was mistakenly classified as only one parcel, Mr. Thiele said. The legislature, therefore, had to amend the description to include the entire property.

The legislature is required by law to act any time a local government sells or transfers parkland, because “it’s part of the public trust doctrine that parkland is there for the public,” Mr. Thiele said.

The state approved the Poxabogue sale last year, but the error came to light afterward when Southampton Town asked Mr. Thiele if it could use Community Preservation Fund revenues to purchase the restaurant on the site, and he discovered the incorrect description upon reviewing the survey and description of the property. The sale was then expected to be finalized in the early part of this year.

The two towns had purchased the land in March 2004 for $6.5 million, partnering to keep it out of the hands of developers and to maintain it as a municipal golf facility. Southampton Town used CPF proceeds for its half, but East Hampton was unable to tap its CPF because the course is located outside of that town. East Hampton had to borrow to cover its share of the purchase.

The East Hampton Town Board authorized selling its share in October 2011, seeking to cut expenses. It makes about $250,000 per year in debt payments resulting from the Poxabogue purchase.

Under the terms of its borrowing, East Hampton Town is prohibited from paying off the bond that financed the town’s half until 2016, so the proceeds of the sale will be placed into a reserve account and used to make annual payments of about $220,000 for the next three years, Mr. Bernard said previously. In 2016, the remaining principal would be paid, saving several years of interest payments, or about $288,000. The bond was originally scheduled to be paid off in 2023.

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So what does this mean for the weekend golfer such as myself?
By johnj (1024), Westhampton on Aug 6, 13 11:59 AM
Article should be entitled "EH Loses $1,000,000 on land deal" - guess the taxpayers got taken for a bit of a ride.

EH Borrowed $3.25 million in 2004 and have been paying interest on the loan ever since.

Sell for $2.2 million + 200k in cash, but still have to make interest payments until 2016 while their reserve fund will probably gain essentially nothing in interest over the next 3+ years.

Total loss = $1,000,000+ (when you take into account hours spent working on ...more
By Nature (2966), Hampton Bays on Aug 6, 13 12:40 PM
Maybe yes; maybe no. That was my first impression but there is no indication if any profits have been earned in the last nine years or if previous disbursements have been taken from the reserve fund. The article is incomplete without this information.
By VOS (1241), WHB on Aug 6, 13 1:02 PM
even so - it's amazing that they are selling for $1,000,000 less than what they purchased it as given the location of the land. My guess is since the land is now in the public trust, the value dropped significantly since an act of the NYS Legislature would be required for SH to ever dump it.

The agreement repaying the bond sounds bad as well
By Nature (2966), Hampton Bays on Aug 6, 13 1:22 PM