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MCMAHON, KUBLICK & SMITH, P.C. ATTORNEYS & COUNSELORS ‘80 SOUTH SALINA STREET, THIRD FLOOR SYRACUSE, NEW YORK 13202 JAN 8. KUBLICK* JOSEPH F, DAVOLI (1941-1995) TIMOTHY J. McMAKON unite DANIEL G. MCMAHON (319) 4242105 DANIEL A. MCMAHON | ae FAX (315) 426-3793, ‘MICHAEL 4. PRICE 14180 ADMITTED TO FLA. BAR ‘TULLY OFFICE ‘OF COUNSEL 5 CLINTON STREET ‘TULEY, NEW YORK 13159 (318) 696-8315 September 28, 2018 Mayor Butler and Honorable City Counselors City of Watertown City Hall 245 Washington Street, Room 302A Watertown, NY 13601 RE: — Watertown Golf Club, Inc, Dear Mayor Butler and Honorable City Councilors I represent Prime L.L.C. and Ives Hill Country Club, Inc. (“Ives Hill), its tenant. Almost 12 years ago, I appeared before the Council on behalf ofthese clients to object to what my clients believed even then to be the City’s subsidies to Watertown Golf Club, Inc. In 2006, the Council was considering amending the 2000 Lease and, despite my appearance and arguments, the Council agreed to extend the 2000 Lease and modify it to be yet more favorable to Watertown Golf Club, Inc,, its tenant In the intervening 12 years, the City has continued to unfairly support the operations of Watertown Golf Club, inc. to the detriment of Ives Hill Country Club, Ine. and the City taxpayers. +The Lease was modified again in 2011 to facilitate Watertown Golf Club, Ine. borrowing $250,000.00 which was, according to the approving Council Resolution, to bbe used for capital improvements to the leased property, but was apparently not, as no change in tax assessment resulted; + Annual rent under the Lease is well below market, based on the very low land assessment set by the City; + Assessments on the nine holes owned by Watertown Golf Club, Inc., as well as the nine holes leased to the Club by the City, are approximately one half of thase on the eighteen holes owned by Ives Hill, + The Watertown Golf Club, Inc., as well as golf lessons at the Club, receive advertising, ‘on the City’s website, very likely free of charge; + Myclient’s estimate is that since 2006 Watertown Golf Club, Inc. has received at Jeast $600,000 in subsidies from the City in the form of unfairly low taxes and well under market rent, without regard to the presumably free advertising; Mayor and Honorable City Counselors 9-28-18 RE: Watertown Golf Cub, Inc, Page 2 * Last year, the City pursued purchasing Watertown Golf Club, Inc. by purchasing the nine holes privately owned by the Club, then leasing back the full eighteen holes, again at below market rent; * While the City approved the purchase, my clients complained of an apparent bailout, and it was subsequently withdrawn in the face of significant public concer. There is no doubt that since 2000 the City has been both subsidizing and supporting the operation of Watertown Golf Club, Inc, a for-profit business. In doing so, itis unfairly harming the competitive position of the other for-profit golf chub in the City. This favoritism by the City has harmed the prior owners of Ives Hill, and has and continues to harm my clients which own and operate it now, ‘The loss of revenue to the City coffers is also patently unfair to City taxpayers. In short, the City is favoring one for-profit making business in the City over another. The City should get out ofthe golf business altogether and allow Watertown Golf Club, Inc. to stand, or fall, on its own. Finally, I want to call the City’s attention to a case recently decided by the Second Circuit Court of Appeals in New York. The case, Lexjac, LLC. v Village of Muttontown, clarified several key provisions of Article 18 of the General Municipal Law, a law that applies to almost all New York cities, including the City of Watertown, Article 18 was passed in 1964 to ‘protect the public from municipal ‘The law renders null and void contracts between municipalities when the contract benefits an officer or employee who had the power, individually or as a member of a board, to negotiate, authorize, approve or prepare the contract, which was in fact the case in 2000. Under the holding in Lexjac, the Lease entered into in 2000, which was extended in 2006 before its expiration, could and likely would be held to be void and unenforceable, It's time that the City end the patently unfair favoritism it shows to Watertown Golf Club, Inc. It clearly puts my clients at an unfair disadvantage trying to operate a golf club in the City less than two niles away. Under the present arrangement between the City and the Club, the taxpayers are losing tens of thousands of dollars a year in taxes and rents. In light of the recent case cited above, my clients urge that the City declare the Lease null and void and end the unfair subsidy of Wetertown Golf Club, Inc. in the interest of fairness, transparency and good governance. Very truly yours, McMAHON, KUBLICK & SMITH, P.C. Jan 8. Kublick ISK/mbp