Cioni sale: Bids close, post-purchase rental terms not so

Paul Padalino. (Photo: Dan Barton)

Paul Padalino. (Photo: Dan Barton)

As details about the pair of bids received by the Kingston City School District for its Crown Street headquarters come into greater focus, it appears they may not have been as close as the dollar amount indicated.

The Cioni Building presently houses KCSD’s administration, tax office and a board room where the Board of Education holds the bulk of its meetings. The property was listed by Kingston-based Deegan Sanglyn realty at $650,000, and both bids surpassed that amount. But while the bids were separated by just $2,000, the sale terms seem considerably different.

Part of the potential discrepancy stems from the district’s desire to lease the building back from any prospective purchaser while it identifies and prepares a future home for its administrative HQ. A bid of $658,000 was received by Kingston-based Trends Research Institute owner Gerald Celente, while commercial real estate developer Paul Hakim bid $660,000. Hakim is a consultant for a group of investors hoping to turn the former Nevele resort into a new casino.

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The bid from Celente includes rent of $88,452 per year for the first two years, and $99,792 for the second two, assuming a four-year lease. Celente’s bid would also require the district to pay all property taxes, operating expenses, utilities and insurance for the length of its stay. Celente has also offered to pay the tax bill directly if the district pays an additional $39,000 for each year of the lease.

Hakim’s bid includes a rental rate of $5 per square foot for each year of the lease; the building was shown on the Deegan Sanglyn website to be 22,680 square feet on two separate tax ID parcels totaling roughly 1.25 acres, though the amount of square footage that would be used by the district is unclear.

KCSD Superintendent Paul Padalino said that while four years of a lease are being discussed, the goal would be to leave Cioni in two years.

“[It’s] a guaranteed two-year lease with four six-month options on that lease,” Padalino said of the terms being discussed with both bidders. “The most we would do is four, the least is two. And that’s all about moving, where will we go and how long will it take to get a property together? That was built in so the district would have flexibility. It doesn’t favor the bidder to have those terms. If someone wants to develop the property, I’m sure they want to develop it as quickly as possible.”

Net net net

Additionally, both bids include a “triple-net” lease, which would require the district to cover expenses while leasing the building back from its new owner. With members of the Board of Education last week expressing concern over the potential for sudden renovations that could not only erase any profit the district might generate from selling Cioni, but also wind up costing money, Padalino said more clarity was being sought.

“A ‘triple-net’ lease means we lease back from the owner and take on all the expense on the building, which makes sense and is pretty standard in commercial leasing,” Padalino said. “What the board wants to know is maintenance and repairs; who is responsible for that? They’re concerned. They want to know what the terms of the lease would be. So our attorneys are working with the attorneys of the bidders so they know what those terms would be, and whether or not that lease is something the board would be in favor of. If we’re looking at paying the lion’s share of any capital improvements on the building, that would eat up any of the money we would be gaining by selling the building. We want to minimize that, obviously.”

One of the questions Padalino said the district is working to answer is who decides what constitutes an expense.

“That’s exactly what we’re talking about with the bidders’ attorneys,” Padalino said. “Who would make that decision? And what will be the conditions for what the district would be responsible?”

Voters in the district gave school officials permission to sell Cioni two years ago, in part because it was estimated that it could cost $3 million to make necessary upgrades to the building. Last month, Padalino identified a new roof, and heating and ventilation among the issues the district would have to tackle if it kept the facility.

New sites

If the Cioni Building is sold, the administrative offices could find a new home in the former Frank L. Meagher Elementary School on Wynkoop Place in Midtown Kingston, which was closed two years ago as part of a comprehensive “rightsizing” plan spearheaded by the superintendent. Padalino said Meagher’s Midtown location would make it ideally suited for the new administrative focus on getting out of the office and into the classroom.

“[Trustees] are still open to considering other places, but I think I’ve been relatively clear on my preferences, what I think we should do,” Padalino said. “But I’m only one voice and I have nine bosses, so they will make that decision. One of my goals with the administrative restructuring was to make us more nimble. Do we need a homebase? Definitely, for taxpayers and board meetings and things like that. But as far as rows and rows of offices for district administrators, that’s not our goal. We want administrators to be out in the buildings helping our principals and teachers.”

While the discussion will remain current and ongoing, Padalino said that there is no clear timetable on when the district might make a decision on selling Cioni.

There are 2 comments

  1. Voice of Sanity

    Let me get this straight. The district now wants to sell one building that they say needs a tremendous amount of maintenance to just lease back the building AND pay all maintenance fees, taxes, and upkeep.

    The other option involves selling the Cioni building which the administration views as obsolete and beyond normal maintenance to move into the Meagher school which they closed for the same reasons.

    Epic fail.

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