Joe,

The right of first refusal is not an issue.  In fact, a buyer knowing same exists will often come in with their best offer up front knowing that the "right" exists.  That is to obviously make the person with the "right" pay the same amount they were willing to pay and/or to keep another competitor for the property honest. I can't see a sale in the next four years but the clause doesn't hurt us and in the unlikely event of a sale might increase the price.

As to the ability to fill the land in I hope Art is able to get that confirmed in writing. There are conflicting opinions on the ability to obtain a permit to fill in non-tidal wetlands. However, if we were able to do so I would favor filling the area in tomorrow to gain ground before the rules change again.  I would hope Art can definitively report back to the Board in the next ninety days.

As to fair market value who knows.  That is the one area in this lease where I agree that opinions differ. Using the first year of lease numbers on a $2,000,000 property back in August (using the agreement in place at that time) Moore was paying $30,000 in rent plus $33,000 in taxes (gross $63,000), if I recall the numbers previously posted correctly.  OPA was pocketing $30,000.  Under the new lease numbers on a $1,300,000 property Moore is paying $40,000 in rent and $15,000 in taxes (gross $55,000) if the tax number of 15K is correct. OPA is pocketing $40,000. So while the value of the property went down 35% our net income went up 25%.

However, as you pointed out this does not take into account what Mr. Moore was willing to pay.  We know he was willing to pay $63,000 under the old lease and assuming he was fully knowledgeable of the assessment changes at the time of negotiation only $55,000 under the new lease.  Of course one could argue the value of the property is only 65% of what it was in August and 65% of the gross old income would be $40,950 and he still retained all risk should property taxes go up during the five year term. On the other hand he does benefit from the use of the encroachments and that value is not easily defined. So I don't know what fair market value is for a little less than 50 parking spaces and the encroachments. Certainly we should look closely at the financial structure of the next agreement and if involved I will do so. I really don't know that I can add much beyond this to the subject.

As to the motives of previous administrations I don't know.  Why would we worry about assessed value being high since we didn't pay the taxes? Is it possible a verbal authorization for the encroachments was granted? Please note we inserted "without prior written consent of the Board of Directors" to address that possibility in the current lease.  

In looking at the rest of the lease were there any other areas that raised a red flag? Obviously, we can't easily change it today but I am interested in the future.   

Ted