Mary Beth Labate (Board Chair): We are waiting for Paul Maas from Jones, Lang, LaSalle. He’s just getting on the Tram. So we’re going to... We’d like him to make a presentation on the real-estate transactions, so I’d like to skip over to... we will not be... We’re pulling item 5, the authorization on the Tramway; there’s still some information that we are awaiting from... from Red Blomer. I will tell you, though, that it has always been our intention, as you know, in our capital plan, we forecasted the replacement of the cars. The Board had asked, with our success in the Octagon lawsuit and our ability to free up the $3 million that was held in escrow, whether there are any capital items that we felt we would want to move forward. This would seem to be the most... the best candidate in that category. It’s... We have been given every assurance imaginable that they are still very, very safe, but that obviously their useful life will come up upon us sooner rather than later, so we thought this would be the best time to... to make that replacement, but until we have all the data for you, we’re not going to go forward with it.

***

Labate: Paul Maas has arrived, so we’re going to back into the agenda and ask him to present item number 3, which is authorization to enter into a lease agreement for the U.S. Post Office, with the United States Postal Service.

David Kraut (resident Board member): May I just call to you attention [that] I expect to make a separate presentation on the project committee report. No, this is another report...

Paul Maas (Jones, Lang, LaSalle): Good morning. We have a lease proposal to...

Herb Berman (RIOC President): Paul, do me a favor, speak more closely into the mike.

Maas: We have a lease proposal to extend and do a new lease with the post office here on the Island. It will be a ten-year term, effective September 1^st, 2006. Total square footage that the post office occupies is 8,100 square feet. The rent is $30 for five years, and $33 for five years. The space will be taken as is. The landlord, as it typical, is responsible for any structural that is requied. Tehre has been some water damage occasionally there, so that will probably ahve to be addressed. And that represents a significant increase from the current rate of $5.75. The rate represents a blended rate of $35 a square foot for 6,570 square feet of the retail portion of the post office, and then there’s a 1,500 square foot loading dock area, which we have agreed to a rent of $9 per square foot. That’s how you end up with the blended rent of $33.

John Mannix (non-resident Board member): Paul, are you... seeing rents in the mid-30's, are you convinced in your own mind that that was a comparable market rent for the Island, even though comparables are difficult to get your arms around; number 2, is there any way for us to understand, now or in the future, how much money we’ll have to invest or reserve for the maintenance of the structure?

Maas: I have no knowledge about what the structural issues are with the parking structure. They do have some water damage. I don’t know if they’ve been calling it; there’s been additional complaints, about leaks, but I haven’t heard anything. I think it’s just what’s typical of a building like that... there should be nothing out of the ordinary.

Mannix: I guess typically in a private transaction, there would some reserve, a certain amount cents per square foot, however you might do it, in our balance sheet so that we have adequately covered the anticipated future expense. I think perhaps we should have a look at that and come up with an appropriate number.

Maas: As far as market rent, you’re right, it is tough to establish here. What we did was we looked around the City and tried to find something comparable, and what we focused in on was the Waterside project. I think most people are familiar with that. Mitchell-Lama project, much smaller, probably more isolated. It stands on its own in the East River; you have to cross over a footbridge over the FDR drive and any other retail is pretty distant from there because you’re by the hospital, and so forth, so you’ve really got to go all the way to Third Avenue, and they have retail space that you can’t see from the FDR side, but it’s tucked in, inside a plaza between buildings. And it’s there basically to service the community, and they’ve been asking $35 to $50 a square foot. And just in terms of what retail space goes for in the City, I mean, $35 is, we thought is almost like a suburban rate, and, you know, based on the population of the Island, we thought it could probably support suburban-type rents.

Mannix: That’s a very big increase, and I think it’s a good lease.

Labate: I would... There is... They’re in this space now, correct?

Maas: Yes.

Labate: Are they taking more space than they currently have?

Maas: No, we don’t have it.

Labate: OK, so we’re getting $24, getting $25 more a... almost $25 more a square foot from them.

Maas: And, you know, I should point out that it’s triple-A credit.

Labate: Right.

Maas: That’s also an issue with the retail business, so...

Labate: Just building on John’s point, I would suggest, I would ask that staff, as we go about leasing up our commercial space, I think that’s an excellent point, that we should understand what both the near-term capital requirements that RIOC might be responsible for are, and then, each of the buildings, set up a reserve fund, and with our reserves, we should be able to start that.

Maas: Also, so people understand. Retail space is traditionally rented as is. I mean, you know, the landlord doesn’t provide any work, unless there are structural issues. So, you know, we’ve tried to market it exactly the way retail space is marketed elsewhere.

Mannix: Included in that, Paul, do we have to maintain the HVAC system as well? I assume that we do not.

Maas: No, that’s all...

Mannix: It’s just roof and structure?

Maas: Yeah, the other aspect of retail space is you want to have the unit be as independent as possible from the building systems, so they’ll almost always have their own HVAC and heat, they’ll be in a self-contained unit, and not really drawing any services whatsoever from the building that it’s in.

Labate: OK. Deborah.

Deborah Beck (resident Board member): I believe the [Inaudible; off-mike; David Kraut reminds her to turn microphone on, says he’s not going to do it for her]

You’re not? Are we getting divorced? The structural issue referred to should be explored and as part of the engineering study that’s now being done of the Motorgate complex. I don’t know where we are in the engin... I was looking to see if Vinny [Kopicki, RIOC VP for Engineering] was here. Is the engineer in there doing his survey of the condition of the garage yet?

Berman: Parts of the garage are clearly under engineering survey – elevators, the stairs, etc. I will specifically relate to the post office site, and I’ll see if we can extend...

Beck: Yes, because there is a serious water problem visible on the fourth floor...

Berman: There is a water problem as a result of the shafts and the concrete surrounding the elevator. We’re checking out to see as to whether there are other difficulties, so that’s [inaudible; Beck speaking]...

Beck: But there are other problems which... I hope we’ll get the engineer to look at those because water damage gets worse geometrically.

Labate: And this transaction was brought before the real-estate subcommittee?

Mark Ponton (resident Board member, chair of the real-estate committee): It was not. We discussed in conceptually. We didn’t have the details. But there is nothing that I think we should object to at this point.

Labate: OK. And are there any other questions?

Michael Shinozaki (resident Board member): What type of contingencies are there on this, as far as, if we’re responsible for the structure, our doing construction in Motorgate, if the site becomes uninhabitable for a short period of time, if we have a severe water problem or something else. I’m just curious if there are any provisions for problems on the site.

Maas: Well, any landlord that has that problem has the risk of not collecting rent. I don’t think that the... I don’t know what the specific clauses are, but you would really have to have something disastrous for that to happen.

Shinozaki: I’m just concerned because it’s on the first floor of a building we’re going to be doing a lot of work on, if we flood them out by accident, you know what exposure do we have, because we’re looking at an expense reserve anyway. What type of [Inaudible; Maas answering]...

Maas: Well, I presume you have insurance, and that’s what it’s for. No one is doing it intentionally.

Shinozaki: Is that covered?

Yes. You know, I don’t think the postoffice wants to leave the Island. It’s actually quite a successful operation, so...

Shinozaki: OK. Thank you.

Labate: OK. Can I have a motion?

[Motion made and seconded.]

Nancy Reuss (of the State budget office, ex officio non-resident member of the RIOC Board): So moved.

Labate: Roll, please.

[Kenneth Leitner calls the roll; eight members vote in the affirmative.]

Labate: Item approved. Moving onward on to item 4, authorization to enter into a lease agreement with Movie Services, Inc. Mr. Maas.

 Maas: There is an agreement to rent MovieBank, 559 Main Street, 568 square feet, for a five-year term. The rent is $31.70 for years 1 and 2, and $33.70 for years 3 through 5. There’s six months of rent abatement. There’s no landlord work. They take the space in as-is condition, and one issue which needs to be finalized is security. We haven’t received their financials yet, but it’s customary to do that upon issuing the lease.

Labate: Is this... This is currently vacant space? And what will this total square foot... What will this bring in annually, Paul?

Maas: Oh, I didn’t do the math. I think it’s... It would be about $18,000 a year, I would say.

Labate: OK.

Kraut: May I? Paul, what effect do you anticipate this will have on the operating revenues of the hardware store, since a large percentage of their income is derived from their own video rentals.

Maas: It may have some. I... you know, the MovieBank primarily rents DVDs and video games, and whether they take this space or not, they’re coming to the Island, because their alternative is the Riverwalk space, so...

Kraut: I’m not sure I understand whether they’re coming to the Island... If they come to the Island, it’s easy to anticipate that they might very well put the hardware store out of business, which a raging capitalist such as myself considers to be perfectly fine, except that the cost of the... Their income, as derived from... I understand that their income derived from their video rentals actually underwrites the cost of maintaining the rest of the store, which has some certain number of items for sale in it which we need from time to time, and they provide that as a service for us.

Maas: No, I’m just... I had this conversation, I think, with Mark, because he asked the same question. And MovieBank is going to rent space either from us or from Riverwalk, so I don’t think that we have the ability to control artificially, you know, the market conditions. And so it seems that it would make sense for, you know, if that were to happen, and the hardware store couldn’t adapt, it might have to shrink, and maybe we can work something out there, that RIOC might as well get the benefit of their being here on the Island.

Beck: Paul, the implication of what you’re saying is that the Riverwalk retail is being handled separate from the RIOC retail, is that correct?

Maas: That’s correct. Early on, when I first got involved, I received a phone call from a resident who thought it would be great to get Starbucks here, and so we got them out to the Island, and Starbucks wasn’t renting but, at this time, it appears that they’re going to go to Riverwalk. So, you know, it’s a lost opportunity for us because I think we want to attract people from elsewhere on the Island to the Main Street core. And, you know, I’m... I would be very concerned about Riverwalk getting, you know, the best operations – [and] Main Street kind of getting hollowed out.

Mannix: One thing I would say is that if you... Understanding the way the retail business works, in particular, I would venture to say Related [co-developer of Southtown] probably has 50 Starbucks already in their portfolio, or more, so they have a lot of leverage, and the best tenants that they have leverage over are going to go into their buildings. There would be no way to get around that, and that is one of the weaknesses that RIOC faces. You know, we own a certain amount of retail space but... I recently came down from Vegas where the retail convention is... You know, this is an operating business where people who do have leverage are going to use it to package deals and so forth. You know, it is part of an overriding issue with our ownership of the retail stores. It’s going to be tough for us to attract retailers here at these kind of rents, you know, without that kind of leasing leverage that is a necessary component of the business.

Maas: Just a little background on MovieBank. I had contacted them when I read an article in Crain’s that they had opened up their first location in Soho. Apparently the way videos and videogames are rented in Europe is through ATM-type machines, of which this company has 15,000 of them in Europe, and, you know, my feeling was Roosevelt Island was probably never going to get Blockbuster, but that this might provide, you know, a better solution, and a better amenity for the Island. We then... I’ve been very involved with MovieBank, because we did have a series of meetings with the MTA about including these operations, these machines, throughout the transit and the commuter system. And that has been very slow because the MTA has been busy with other real-estate matters, bigger, but that’s also a potential option for them, is to go to the MTA subway station, which every retailer, you know, that I talk to on the island would like to be near the subway station.

Mannix: Well, I... The other thing in addressing David’s point, it’s always problematic as retail developers evolve, where, it’s one of a few businesses, about every five years, reinvents itself, and there’s a continuance of people who kind of get left in the wake of the evolution of the business, and we have to measure that impact because, at some point, for example, with the hardware store, he’s going to come three months after it’s open, might say, “I can’t pay the rent anymore.” That’s a possibility. They anticipate that. Again, it’s a necessary component of retail development. But with particular respect to the video business, the... kind of the old-school ofvideo operators, Blockbuster and those that operate general stores, are facing competition from many different sources, the on-line sources, Netflix, so there’s a lot of pressure on those businesses, and I, for one, my personal opinion is that the MovieBank is tested in Europe, untested here, and all they’re really trying to do is bring their costs down to a point where they compete with the other means of delivery of the games and the videos, and so on. You can’t have a kind of standard overhead store. You can’t have lots of people and lots of space and lots of rent like Blockbuster, which is losing money hand over fist at the moment, and eventually you’re going to see Blockbuster turn into Internet cafes or some such thing, so there’s a big evolution in the business; this is one of the directions that it’s gone, and it remains to be seen if they can compete at all with the on-line delivery.

Maas: They have a website, MovieBank USA, I think. Lot of information there. The company strategy here in New York is, they made a deal with Duane Reede to establish an immediate footprint, and put these machines in 200 locations, and you can actually go see a machine at one of the Duane Reedes in the area that have them; I think it’s listed on the website.

Beck: I think that this particular space has raised a question, because it had been the old credit union space, I believe, and while don’t have a credit union currently or any kind of bank presence on the Island, I think that one of the things, if the chair of the real-estate committee is prepared to take on the issue, we really should look at some of the uses that could be critical to the community’s proper functioning, so that we don’t lose basic functions as we go forward in the marketing of our retail space. We may want to identify certain uses that we may wish to recommend – I’m not speaking for the committee now, I’m just speaking for myself – be given some kind of “preferred rent” in order to provide the service to the community that they would have difficulty in finding otherwise, so I think that if the chair of the real-estate committee is willing to have such a discussion within the committee, I think we should soon so that Paul can benefit from whatever guidance we recommend to the Board and the Board approves.

Mannix: I’d like to address that. I mean, there has been some controversy, I guess, over the renting of this space, and with respect to a financial institution being on the Island, obviously, I thought, by the way... Did the bank close that was here?

Labate: The bank closed. It didn’t have enough...

Mannix: So that’s been the third bank since I’ve been here, because banks can’t make money here. I mean, there’s not a big enough depositor base, and that’s a simple fact of life. You could charge them no rent, you could pay them, but it’s not really an issue of rent. I mean, they simply don’t have enough of a depositor base to make it work. Now, that being said, there are, in the evolution of the banking business, you now have the Commerce Banks of the world, the Washington Mutual, North Fork, all growing very quickly with new formats, open on weekends, open at night, and so forth, and I suspect, you know, to the extent that we’re going to get a financial institution here that offers full service, including mortgages and depository services, they’re probably the more likely candidates, but again, I don’t think it’s a rent issue at all.

Beck: Well, actually, John, from what I understand, there was an interested credit union, but the rent that they were willing to pay was so substantially below the rent that we were asking for the space that they dropped the negotiations, or the negotiations ceased. I think that if the committee would make a recommendation to the Board that such a function is essential to the Island, because there are many people who live on the Island and don’t go too far off of it, so that it would be important to them to have that function. So I think that in the committee we ought to talk about that and make the recommendation to the Board, not necessarily regarding that, particularly, user, but any user of the type that might be essential to have on the Island.

Mannix: I think perhaps... I agree with you, Deborah, perhaps you should put that, at least to some degree, back to Paul Maas, to determine what kind of a transaction we would have to offer in order to attract a financial institution that would have staying power, and again, I don’t really think it’s a function of $1,500 a month or $1,100 a month, I mean, if that particular bank – credit union – couldn’t afford $1,500, it couldn’t afford $1,100 a month, I mean, it does make sense to me why banks tend to leave the Island. They’re losing money hand over fist. The rents, I mean the insignificant amount of overhead compared to everything else they need to do, we need to try to figure out a way to get a recommendation to Paul for some of the uses...

Beck: Well, if I...

Maas: Let me just, if I could, address some of those things. The... Our company does a lot of work for Bank of America and Wachovia and HSBC. They’re all aggressively expanding banks. And I actually received a call from a broker about a potential bank and, you know, I don’t know why, I checked with Ken, apparently the current bank on the Island has an exclusive, so it would, you know...

Labate: Did you say “the current bank on the Island?”

Maas: Right. Ken, I think I spoke to you...

Labate: There is a bank on the Island?

Maas: Right. That’s what I thought.

Labate: Well, what’s the issue?

Maas: No, the reason I asked is that I had heard that perhaps they were closing.

Margie Smith (Vice President, the Residents Association, speaking from the audience): We had one bank, one credit union; the credit union closed.

Labate: And it’s a full-service bank?

Unidentified voice, possibly Maas: Yes.

Mannix: I mean, I remember when we voted this bank in a couple of years ago. It was a big to-do. The President came...

Labate: I thought that was Montauk.

Mannix: No, interestingly enough... [portion obscured, Maas speaking] We had pictures...

Maas: I just want to, if I could, just make a point, because it’s not always, you know, it’s not always easy to focus on one thing and think that’s the only issue. So that created an issue with perhaps attracting another bank on the Island. I don’t know. There are probably ways to address that if, you know, we think we can find a bank that would improve services for people, and obviously the credit union would have been a great use. They’ve... Alfred Scipio [President of USAlliance Credit Union] is a very good guy, and, you know, when I spoke to him and showed him and his people the space on a couple of occaisons. You know, I was trying to encourage him to set up business here, but they gave us an offer here initially of $15 a foot, and, you know, our asking rent is $35, and, and, you know, in our business when somebody makes an offer that’s that much of a difference, you, you know, I told him, we just can’t respond to it, you’re going to have to come up, and they came up to $20, and we had the same conversation, and, you know, I informed him that there was other interest in the space, as well. That’s just, you know, kind of the day-to-day real-estate business, but there’s another factor here. If we wrote a deal at that price, with anybody, it would have cost RIOC over $800,000 in the post office lease, because part of postoffice process is, they will sign a lease based on market comps, and you have to divulge it, and so, you know, even if the Board wanted to do something, you know, that’s also a factor in the decision. The timing was such that, you know, until that lease is signed and put to bed, I don’t think you’ll have the flexibility to decide if you want to, you know, do below-market deals for certain kinds of uses.

Labate: Deborah, to that point on having a real-estate meeting, I invite you and encourage you to discuss whatever you’d like, but I do think that defining what is essential to the Island becomes a very provocative question, particularly when we’re one... one subway stop away from Manhattan, so I’d be interested to see how we determine what really is essential for the well-being of a majority of the Islanders. And I think you risk kind of going down a slippery slope, that what’s essential for one may be completely irrelevant to the next.

Beck: Well, also, I think that the point Paul just made, in terms of the impact...

Labate: On everything else.

Beck: ... that such a preferred rent might have on lease negotiations is worth taking into consideration, but I still think that, as David mentioned in talking about the hardware store, that it is worth our looking at functions that may even exist on the Island now that are below market rate that are functions we want to continue to have, and talk about what might be our options in terms of those functions, and I think Paul should be part of that discussion.

Patrick Stewart (resident Board member): In the past, we have lost more than a few businesses here. Restaurants, shoe store, etc., which brings the question of whether in fact we have a fix on the potential purchasers or renters of these and do, in fact, they have a reason for being. In other words, if you’re a shoe guy and there are not many people having their shoes repaired here, then there’s not, you don’t have a reason for being. If, on the other hand, you had a restaurant come that probably did have a reason for being but for whatever other reason – bad management, low... low profit, whatever – having had discussion with you, I assume that these... we ought to know if these things are being taken into account, but this, as you probably know better than I, theirs is a... not your average retail market here, and because we have a limited population, admittedly increasing at a fair rate, but we have to be very careful about saying to ourselves, through you, “does this... Does this product, if you will – restaurant, shoe store – have a potential for staying here?”

Maas: Well, I think you have to find businesses that can operate successfully at those rent levels. You listen to what John said about Related, and that’s the way the retail business works, is that prospective owners in that space have longstanding relationships with retailers and... multiple locations, and they will tell a retailer, if you want my A location somewhere else, you’ll have to come to my B location. And that’s why Related can make the deals they can, and I understand they’re asking $50 a foot, so the businesses that are there, if that’s indeed what they are getting, are obviously profitable at $50 a foot. So, you know, I think a lot of it’s the approach, in understanding that the retail business is not just putting a sign on a vacant space, and, hoping someone calls and rents it. There’s a process to it, and that’s why leverage is created through relationships where professional owners are taking advantage of the relationships they have with retailers. But they’re, you know, they’re national chains with good local operators. They understand that business, they understand who’s good, they know how to check people out, and, you know, you know, I think RIOC’s at a disadvantage there because they’re not in the retail business.

Mannix: Well, I’d just like to expand on that a bit. I mean, the disadvantage that Roosevelt Island faces in retail space is not unique. I mean, a good analogy would be to go to Anywhereville, USA, to the downtowns that are half-vacant because the WallMart factor, three miles out on the interchange, you know, changed the entire dynamic. And those cities and towns are spread all over the country. I’ve seen a lot of them myself. Roosevelt Island has a similar set of facts going on. You’ve got Manhattan one stop away, so you’ve got an enormous array of retail uses, just across the river, so it puts Roosevelt Island at a major disadvantage, not unlike there being a WallMart right across the river. People can get in the subway or Tram and go one stop and they can get anything they want. So it’s a particularly challenging market here. It’s not as though we have a community of 10,000 or 15,000 in kind of an isolated rural area where this is the only place people can shop, in which case, this would be a pretty vibrant retail situation, in my view. The real problem is that the wash-off into other markets – Queens and Brooklyn – and the big box retail uses, it’s going to be very, very tough for this Island to have a vibrant retail corridor. It’s going to take a lot of work. It is very complex. You’re right, and one further point, which is that if Starbucks is going down to Riverwalk at $50 a foot and they lose money, they don’t care because they’ve got 40 other locations with Related where they make money. That’s part of the leverage. That’s part of the way it works. And they will be able, without a doubt, attract people at high rents, and they’re going to want there to be high rents there, and they’ll subsidize them someplace else. That’s the business. That’s the essence of the business.

Maas: The other thing, you know, that I’ve noticed that we haven’t been able to capitalize on is the Tram attraction that’s a tourist attraction. You know, I see so many people, when I come over, take a Tram ride over, and they cross the platform and they go back. I mean, there’s really nothing... I occasionally see people wandering the Island exploring, but if we could develop some destinations that people could make part of an experience of visiting the Island, beyond the Tram, you do have, I mean, that does drive traffic here.

Ponton: I’d like to go back to a couple of words you’ve used before – process and professionalism. They both have a lot of appeal, I think, for a lot of us. And where I’d like to get, to a point where, where real estate is concerned, at least, where we are regarded as a place that’s easy to do business with. By that I don’t mean by that that we are giving stuff away, or that we’re charging ten times market price. I mean that we treat everybody professionally, and have a process in place that makes trust almost unnecessary. And we have a record of documentation of what went on, so that if somebody says, “I wasn’t treated fairly,” we just say, “Look at this.” In light of the recent – I guess I’m going to call it controversy – I’d like to get everybody to not throw rocks and call names for the next minute or so, did we or did we not get a best and final offer, in writing, from the credit union and from MovieBank?

Maas: We have a best and final offer from MovieBank. The credit union never increased its offer from the $20 level, and the difference between $20 and $35 is substantial enough in my world that it doesn’t merit a response.

Ponton: OK, now...

Maas: We fully discussed; Herb and I had fully discussed it and Herb said, “What do you recommend?” and I said, “At that price level, we’ve got a big... a big gap.”

Ponton: Well, I’d just like to get us out of deciding that something doesn’t merit a response. If I asked you right now to send an e-mail to the credit union saying, “Give us your best and final,” would you do that?

Maas: My recommendation would be no, because in a sense you essentially have a handshake with someone. It was as fully disclosed a process as occurs in the real-estate business, where you’re telling someone, “Look, there’s someone else looking, and our rent is $35. We will negotiate off of that, but you’ve got to get in the neighborhood,” and that didn’t even deal with the work that they wanted RIOC to do, which we hadn’t even quantified... So that’s the first part. The second part is that, you know, the use itself is going to go down to Riverwalk, and it’s the kind of thing where, you know, Main Street could benefit, if there were reasons for people from Southtown to come here.

Ponton: I understand that’s your recommendation, but I’m not asking for your recommendation, though I respect it. I’m asking you, if I said to you, “Please send an e-mail to the credit union saying, ‘give us your best and final?’” would you do it?

Maas: You’re the Board. I’d have to do it.

Ponton: Then I’m asking you right now, please do it.

Beck: May I ask a question? It seems to me that we have hired Paul for his professional expertise and for the manner in which he conducts his business, and I presume that what has transpired with the credit union is typical business practice, and that if a space is in contention with two different offers, that the offer that makes the best sense for our purposes is the offer that’s’s taken, and you don’t go back to the other party and try to broker a deal, particularly when there’s such a spread. I think what you’re asking for is some sort of written confirmation that what transpired is what transpired, am I correct?

Ponton: Sure.

Labate: Mark, I’d like to say to... I fully agree with your, one of your premises that you want to have a place that’s easier to do business with, I think we’re bringing on the team that is allowing that’s to happen, particularly with Paul, our development counsel working with Ken and Herb. I think what you’re recommending would run very counter to that. We have an agreement, a handshake agreement, with the movie company, I think that would bring back all the old specters of Roosevelt Island now to try to revisit that, nor do I think it is incumbent upon us to pursue... to chase someone for a deal. I have full confidence that Paul approached them in a professional manner and according to normal real-estate norms. I don’t think that... If this Board decides that it’s important to ahve another financial institution on the Island, then I would say, let’s decide that, and let’s go out with a much broader scope. I don’t think we need to decide that now, but certainly I don’t think we should pursuing any one particular candidate, and I think that’s what we’re asking here. And I just have to throw this in, on the concept of making it easier to do business on the Island, obviously, we all we know what lawsuits do to pique people’s interest in the Island, so...

Ponton: I appreciate your views. What I’m asking is if Jones, Lang, LaSalle could send an e-mail to these guys saying, “Give us your best and final.”

Maas: If that’s what I’m instructed to do, that’s what I will do.

Labate: Well, is that the sense... I’ll take a sentiment of the Board.

Beck: But that would suggest it’s still open. I mean, it’s just, if we have an agreement for the space with another vendor, to send such an e-mail now might subject us to litigation.

Labate: I don’t...

Maas: You won’t... You won’t be subject to litigation. You’re not going to be subject to litigation.

Mannix: Paul, the last time I checked we had some vacant space. I’m trying to understand why this has become such a, you know, an issue. You know, if we believe the credit union is a tenant that is a worthwhile tenant, which I believe it is, why won’t they go somewhere else? You know, we’ve got tons of vacant space. Why is there a fight over the credit union? I’m missing much of the essence of this debate.

Labate: Nor do I think we have to focus solely on this particular credit union.

Kraut: May I ask, I wasn’t clear about something you said, Paul. If, in fact, we go with this agreement that you recommend, it means we’re putting a single savings and loan organization out of whatever deal they were trying to make, but it doesn’t preclude the fact that a savings and loan company, if there’s a profit to be made here, would be willing to move into some space at some future time.

Maas: We had discussed that there’s open space. I understand why they want the credit union space. It’s ideally set up for their use, so it would minimize the cost. Look, I understood early on that there were residents who were behind this, and so I treated them as well as we would treat anybody, and I really take offense at anyone mischaracterizing that. Alfred Scipio lives in the next town from me. I probably could run into him on the street. And, you know, I don’t want to be in that situation either with him or with the residents. It’s a small world.

Ponton: Well, this is very easy to fix, because right now, we have three members of the real-estate committee here. I want you to send a letter. John, do you want to or not?

Mannix: I think it’s a bad idea.

Ponton: Deborah?

Beck: [Partly off-mike.] I also think it’s a bad idea. This raises the issue...

Ponton: OK, done. I’m overruled. We don’t have to go any further.

Beck: ...the question of looking for a tenant who is a credit union, whether it be this one or another one. This is clearly a need of the community.

Maas: Are there any issues of the bank exclusive with that? I just learned about the bank exclusive last week, in...

Labate: I’m sorry, you just learned...?

Maas: The bank exclusive. The bank has an exclusive for banking operations here on Roosevelt Island. It...

Berman: [Portions off-mike.] You want to check this, whether or not there’s...

Maas: It does mention the previous credit union.

Berman: Well, we’ll check [remainder inaudible; Maas speaking]...

Maas: But I don’t know whether their exclusive would apply to another credit union coming on the Island.

Berman: We’ll check the lease.

Labate: Deborah Beck, I think it’s certainly... It’s certainly not a bad idea for the Board to evaluate what is essential to this Island. I don’t think you can get there so easily, to hear from a few people who want a credit union.

Mannix: What’s wrong with the existing bank? Why do we have a bank that we would need another bank? Is there’s something...

Labate: [Portions apparently inaudible; others speaking] LendingTree.com.

Beck: A credit union provides a service, particularly to people of modest income, who might not rise to the level of either credit or whatever else with a banking institution. And what a credit union allows them to do is develop a credit history. It’s a cooperative effort, and it has a different purpose. It’s often used by small entrepreneurs who are doing start... who are starting up businesses and the like, because they can’t get credit in...

Labate: Do we know where the nearest credit union is?

Beck: I have no idea.

Mannix: Well, it was my understanding that the bank that came in was going to do just that. They were urban-oriented, middle income oriented bank. I remember there was a lot of fanfare...

Beck: This goes under that income level. Having been in an institution that had a credit union, it was utilized by, basically by individual entrepreneurs, taxi drivers, owners of small retail operations and the like, as well as, you know, households that were on limited incomes, and the like, and I think that it does provide something that a bank would not.

Labate: I don’t know that this is the day that...

Beck: I think we have to keep an open mind about this, and look at what are these uses, and whether they are, indeed, of significant importance to the residents of the Island.

Mannix: I’d also like to suggest, and this would be for your agenda, Mark, that, in our next meeting, why don’t we set aside some time to discuss our merchandise mix. It’s a common, you know, when you build a shopping center, it’s the first thing you do, who do we want and where are we going to put them. Why don’t have that discussion and why don’t we give some guidance to Paul, as to where we think he should be focusing some efforts, perhaps bringing necessary uses to the Island.

Ponton: That’s fine. I sent an e-mail to that effect this morning. Paul, based on that I will withdraw my request that we contact the credit union. Thank you.

Labate: OK. Very good. Can I have a motion on the MovieBank lease?

[Moved and seconded; Leitner calls the roll.]

Labate, aye.

Reuss, aye.

Beck, aye.

Kraut, nay.

Mannix, aye.

Ponton, nay.

Shinozaki, nay.

Stewart, nay.

Labate: Is he saying nay or yea? [Pause] Did it pass? [Pause] OK.

Kraut: So that means it did not pass?

Labate: It did not pass.

Kraut: Bring it up again when you have the full...

Ponton: I’d also like to suggest some place we can spend some of the $3,000,000. How about on a sound system?

Stewart: I think we’ve been through that before.

Labate: I thought you were looking into one. Mark, weren’t you looking into one?

Ponton: What’s that, please?

Labate: Weren’t you looking into one?

Ponton: Oh, yeah, that’s a story that belongs on a soap opera, but I would like to reopen it again, and I will.

Labate: Uh, moving on, is this on the agenda, the Eastwood... Can I see it? I must have the old agenda. OK. Right. Moving on... Authorization of negotiation with Eastwood for the reinstatement of the terms of the ground lease, and I would ask Mr. Leitner to make a presentation, please.

Leitner: Yes. Eastwood – the owners of Eastwood and the housing management company – have recently approached RIOC to start a negotiation to extend and restate the terms of the ground lease so that they can withdraw their project... they're looking to withdraw their project from the Mitchell-Lama program, and this resolution would just establish a negotiating team to go and commence those discussions with the owners of the housing management company. It's essentially the same form as the resolution that was proposed for the Westview and Island House negotiations, with the exception that, uh, we're adding the president to that negotiating team. And we made one change, which is why you got a substituted proposed resolution which is in addition to negotiating the proposed transaction, which is the restatement extension also of matters thereto, uh, we've also added ...that including the discussion about the expansion of community space for the Youth Center in the Eastwood [UNINT]...

Voice: (is that) in the third whereas?

Stewart: Would the real-estate negotiating team have predispositions or expected outcomes going into these negotiations?

Labate: I believe as we did with Westview and Island House when we empowered and asked Deborah and John to lend their expertise, we outlined, more or less, in a very public way, we outlined what our goals were and what our approach was going to be and unless you guys disagree on them, I think it'll be something similarly transparent.

Mannix: Transparency obviously is a key issue, and I would also say that we intend to treat, I think, Deborah and I and Mark, we're going to treat everyone the same. We're going to take the same, market data we have developed and paid for in respect for appraisals and comparables, so it's a natural add-on to what we've been doing, so we don't have to create a new wheel in order to come up with an appropriate structure, in our view, for Eastwood. I understand Eastwood wants to move quickly. The other negotiations are far more complex involving many, many different stakeholders. I think this one may be an easier one and may in fact be finished relatively quickly. And I would like to note that it seems to me that the resolution – and I agree with the way the resolution is worded – is looking for a recommendation from the real-estate committee on this transaction, I suspect the other ones before it comes before the full Board, which is fine with me so I guess the way it's set up is that Deborah and I are doing some talking, we'll then meet in the context of the real-estate committee meeting, which has been you know, been going on fairly regularly now. We'll hit our agenda at the right time and we'll all be prepared to make a recommendation to the Board.

Stewart: I have a concern, it's an ongoing concern that – I don't really know that this is in the purview of RIOC – but I do know that there is considerable misunderstanding on the Island considering all these transactions or negotiations. I would bet you that 75% of the people on this Island have no idea of what is going on, no matter what building you live in. I attended a meeting of my own building the other night. Two hundred and some odd people were there and it was... it boggled one's mind that the group that put out incredible information but was too complicated.

Labate: Who was providing the information?

Stewart: The Island House Tenants Association. And it was so complicated that it would take Paul to understand this stuff. And so, perhaps, but as I say I suspect that this does not fall under the RIOC purview, I suspect it probably does not, but that somehow or other we be able to,we, maybe [WIRE managing editor] Dick Lutz could do this, put it in a one, two, three sort of situation. Here's what we're faced with, here are the possibilities, here are the decisions that are gonna have to be made. In the case of the Island House people in here the other night, a majority of the people did not understand what was at hand. This is serious stuff. The... is not to denigrate what the Island House Tenant Association did, but the consequence of all this is that four other groups that formed up and to even more complicate the issue as is the wont of Roosevelt Islanders to do. As a result of that there was roughly a four-hour meeting that if you were to take it to the Community Board it would have lasted forty minutes. Because the reason for that is the members of the Community Board would have had the appropriate information. Again this probably has nothing to do with RIOC. But the members of the Community Board would have the appropriate information, the appropriate documents, the appropriate recommendations from the committee in writing and so that the members of the Board can make that kind of a decision.

Labate: I think, I think you make a good point, Patrick, and I think what we need is to talk internally about how to insure, that, what's the most efficient way of insuring what RIOC is doing, and there are a lot of different issues out there, and it's very complicated, but I think it's important that people understand from us, what RIOC's role is and RIOC's position is on certain issues are, because I can certainly tell you that some of the information I've seen is based on misinformation and it's not an accurate representation of our approach towards this. We need to talk internally about the best way to get our message out.

Stewart: That's my understanding, misinformation.

Beck: I think also, uh, there has been, I saw a letter that came to me under my door just a day or so ago, where the Island House Tenants Association would like to have a meeting with the real-estate committee. And I think that one of the problems we are dealing with is there's an owner we're dealing with who is not the Roosevelt Island Tenants Association, and so, in a sense, what we could do in such a meeting is tell them what our goals might be in a general way much as we did uh, with the Westview Tenants Association, which was to really try to ensure that our negotiations – which just relate to the ground rent – that the occupants of the buildings who were at income levels that might make it hard for them to meet market a rate would be in some way protected in the course to the extent that we have the power to do so. John and I would want to craft a similar communication at some point for...

Labate: Let me ask, I referred a gentleman to John and I got John's permission, I don't know if I'd gotten yours, um I gave him John's name and phone number because he wanted to sit down and talk to me and I instructed him that it'd be a much more productive meeting speaking to you.

Beck: That's what stimulated my comment but we haven't had any calls to set up such a meeting, I just got a copy of an old letter...

Labate: Catherine, the gentleman's name who was calling on behalf of the Island House Tenants Association, is that correct? His name?

Catherine Johnson (RIOC Vice President of Operations): Mario Naves.

Labate: OK. We have made on several occasions, he has, as I said, has made several requests to meet with me. I thought it would be more productive for him to meet with the negotiating team... the ball's in his court. I actually e-mailed him several times because I have heard suggestions that we're unwilling to meet with him, so I've kind of gone out of my way to let him know that we'd be more than happy to meet with him and we'll continue to reach out and that's certainly one way of doing it...

Mannix: And I think the real-estate committee is a good forum for that and we did meet with the Westview Tenants Association – several of their representatives and I think it was an informative meeting because we don't own the buildings. It's very easy to point the finger at RIOC, [but] we actually have a very limited role in these proposed conversions or withdrawals of Mitchell-Lama. It's very limited, and we can only do what we can do, and we have the problem that Deborah has brought up [that] we don't own the buildings so conducting negotiations with tenants puts us in a very tight squeeze legally. We're not the owners of the buildings. So we can't negotiate with tenants. We have no privity to tenants. We only have privity with the people who have ground leases with us. I mean, that being said, I think, the Board has been as clear as I think we could be in putting out to the public that we intend to preserve affordable housing for people that need affordable housing. And we have a variety of ideas and ways we think we can do that in, I think, negotiations and certainly from my perspective, on Westview is going along well. There may be some difference of opinion with the developer of those building but we think we're doing fine and sticking to principles we laid out almost a year ago. It's going to be very important, and one of the things I've suggested to the real-estate committee meeting is that we consider as falls on Paul Maas or his assistant's lap establish a web blog or blogsite, where we can on a continual basis not only provide information to update people so if someone wants to see what's going on, just go to some link on the Roosevelt Island website. We should have... this should be ongoing process not just through the conversions... we have a very concerted effort to improve our real-estate management now, and I think that people, it should be transparent... I have no problem, someone's going to have to do the actual work of updating such a medium for communication.

Kraut: John, with all respect, I think there's... I guess I have two questions or responses or arguments perhaps to some of the things you just said. First, yes, we have very little that we can do pro or con about an owner taking a building out of Mitchell-Lama, this has to be understood, but we do have final say-so on the terms, because they must be approved by this Board. Therefore, I believe it possible to leverage that final say-so and approval in such a way to insure that the protections you mentioned are in fact instilled in the proposal to convert the building. Lacking a strong statement or indication that we are willing to stop or at least slow-down a conversion until the needs of the community are satisfied, sends, I think, a message to owners of buildings that they can do what they want.

Labate: David I think we've sent a very strong message that we are negotiating a deal that is aimed towards protecting those who need the protection and we've defined, I believe, in the MOU [memorandum of understanding], we've defined that as, I believe, it's right in the MOU, it's 150% of AMI or below. And I can assure you that that is known throughout all elements of the negotiations. How we get there is the tricky part but I think we have an effective way of getting there. So if people decide, I don't think it's for lack of our communicating it. People might want to hear what they want to hear, but this Board, right from the start set out very clear guidelines and we're going to...

Kraut: Let me say, Marybeth, first of all I accept your assurances unequivocally. Except that your assurances are only assurances and no guarantee of what the future will bode as things move forward. For instance, the whole proposition on the Eastwood conversion is that there will be Section 8 subsidies for the large majority of people needing those protections, except that there is no guarantee that Section 8 subsidies will exist one year, or three years, or ten years down the road. So it's all very well to say, yes we can go ahead with this conversion because Section 8 subidies will protect residents, but there's no guarantee that that protection will exist beyond this presidential administration, beyond next week, or next month or next year, and this has to be, as we move forward this has to be part of our thinking.

Stewart: I think that what both you, Deborah and you, John, have said makes good sense and is a good thing to do in terms of having information, perhaps it's nothing more than informational meetings with these people. I don't know who is responsible for... uh, I'm responsible, I believe, for reading the communications I get, and the burden is on me. We are responsible for making sure that the information goes to the affected parties. Now does that mean RIOC has to put out a document to every apartment on Roosevelt Island? I think not. But I think having meetings with tenants associations and stuff so that they can get back to their constituency, in my case Island House, makes good sense. Being a resident here for a long time, perhaps too long, but, if you walk the streets, you will meet people who, I don't think because of their own negligence but who have a belief or have been given a belief that they're... they are in jeopardy – they are worried about whether they are going to have a roof over their head tomorrow. Now that's not right, and it seems to me that there needs be a way to not dispel those thoughts but to have people understand that RIOC is doing what we are doing and understand what we are saying. I don't think the average Roosevelt Island citizen knows that. Whose fault it is, I don't know.

Labate: Ok.

Mannix: I would just want to add one more thing. I fully agree, David, with you, that this Board has ultimate leverage on these transactions because all we can do is fold our arms and not extend the ground leases and then the deals won't go forward. Well, we're well versed in negotiating tactics and leverage, I think. One of the issues to that, for example, kind of a counter-argument to that, is, to the extent, for example on Westview, if we don't extend the ground lease, then no one can buy. And part of what we're trying to balance is not just affordable rental housing but affordable home ownership and I think that is something that have debated at some length. So we're trying to find a middle road by enabling that particular instance of converting that building to tenant ownership to go forward on a basis that does provide protection for everyone that needs protection. I would say there are people that will not qualify for protection and I don't see any reason why RIOC should provide subsidies for those people who don't qualify. Let the free market work there. But I think it's a balancing act, but I do agree in the end that this is a democracy. We just voted down a lease. That's fine. The Board has a right to vote. We will bring to the Board at the right time both by way of discussion and ultimately we hope a resolution that will receive a favorable vote. And I think everyone's input is going to be important and I think we understand fully the importance of what our role is in these negotiations.

Labate: Yes.

Kraut: I should make clear, in all fairness to my fellow Board members, that I intend to vote for the resolution. My reason is that we have, the process is going to occur. And I'm not going to stand in the way of it, because if we voted against it, they'd just sue us and eventually they'd win anyway, because of what you said, they have a right to do it and we can't stand in their way, which means I have to trust the real-estate committee negotiators, that you all are charged with that protection you have alluded to, and the future of this Island is going to be dependent on what you can bring forward.

Ponton: I'd like to make a slight correction to that, David. It's not the real-estate committee, it's two-thirds of the real-estate committee. Absent me. I ain't in there.

Labate: Well, the intent here, was not to have the real-estate committee be the negotiator. If you look at the...the intent was to, when Deborah and John, I think, very graciously agreed to step up to the plate on Westview and Island House, when Herb had to recuse himself. They know that that model has worked well. Herb [Berman, President of RIOC] can now include himself because there are no issues on Eastwood. So the intent was never that the real-estate committee, in fact, if you read this, it's that the negotiators who happen to be on real-estate committee will then report back to the real-estate committee as a whole who will then report to the Board. So...

Ponton: That's nuts, that's...

Labate: ... uh, I think it's a conflict for the real-estate committee as a whole to negotiate something and then bring it to itself for a...

Ponton: This says that these two, Deborah and John, are going to negotiate something and then report back to me and then we report to you? What kind of wacko thing is that?

Labate: Right. Right.

Ponton: I think I'm either in it or out of it. And right now I'm out of it. That's OK with me. I just want to make the record clear. If you want me in, put me in, right now I'm out.

Labate: John and Deborah are in not by virtue of their membership on the real-estate committee but by virtue of their expertise in real estate.

Stewart: One last thought, if I may. I'm not saying this will happen but as we sit here there are right now either in construction or already constructed, six apartment buildings on the Upper East Side of New York for affordable housing. So if a person on Roosevelt Island were to say, "Oh, my God, here are all these neat buildings over there, why don't I move to Manhattan?" It's just a thought. I'm not saying we are or ever will be in competition with Manhattan, but there you are, that's a fact.

Labate: Just one more thing on this resolution, because I want the Board to fully understand what we're being asked to vote on. I did ask Ken to include a special provision that I'd want the negotiators to specifically negotiate the possibility of space for the Youth Center in Eastwood, and I want to thank Deborah for taking the initiative and speaking to Jerry Belson who, I understand, is quite receptive to the idea.

Beck: [MIKE OFF]

Kraut: [MIKE OFF]

Beck: ... act together. The owners as well as management of Eastwood are very philanthropic in their lives and I think they look at retaining the current Eastwood population and wanting to provide those supports that they now provide within the building. Of course, they are also real-estate professionals and it will be a tough negotiation, but I think at least what is on the table is their interest in retaining the Youth Center in Eastwood.

Berman: They expressed, very explicitly, indicated a favorable willingness to do that.

Labate: So with that, do I have do we have any more questions about ...

Mannix: I would just like to address Mark's point. I have no problem incorporating this, I think it should be incorporated into the real-estate committee. So how we do that, Mark, it's fine with me, either way. I think it needs to come through the real-estate committee with recommendation, yay or nay, to the Board, so that's how I interpreted the resolution. If that's not the way it's going to work then we may need ought to talk about it further. I have no problem, in any way, shape, or form having the real-estate committee, you know, serve as the sieve for this, that's fine, in fact that was my intention. So how we want to do that or if (there) isn't sufficient language, it's fine with me to change it. I have no problem.

Kraut: Well if that's the case then let's make a motion to change Section 1.

Labate: Here's what I did not envision, with all due respect to all my... I do not envision Paul Maas, John Mannix, Deborah Beck, and Mark Ponton sitting around a table with Jerry Belson. I don't know if that's the most effective way of getting a deal.

Mannix: Well, let's be clear. The way... the way that we intend to do this is we have one of the top Mitchell-Lama lawyers in the City, Jay Neviloff. We have one of the top real-estate consultants. They're gonna do the work. I mean, I don't want to go to more than a meeting or two with these owners, [UNINT] limited direct negotiation. That's we have these two very competent advisors who understand the business, and Jay Neviloff has been involved in every major conversion on one side or the other, in the City right now. We have very, very competent people. We should let them carry the ball, so to speak, and we'll be a decision, the real-estate committee is the decision-making body, not necessarily a face-to-face negotiator.

Labate: OK. Then we should just... That's fine then. We should just reword the resolution to say the real-estate committee, which is really part and parcel of its function, and they'll advise the full Board.

Mannix: Sure.

Labate: We'll change it to that the real-estate committee where we say that John Mannix and Deborah Beck it will be that the real-estate committee... sub-committee of the Board, and RIOC's President/Chief Executive Officer, or any successor to them designated by the Board, be authorized and thereby... And then, instead of the reporting going back from the negotiators to the real-estate committee of the Board, the reporting will go back from the negotiators to the Board itself. Which, ultimately, everything comes back to the Board as a whole. So any concerns anyone has about anything you obviously have an opportunity to...

Mannix: I just add, for what it's worth, the real-estate committee is functioning very well. We don't always agree on things, but we're having very productive, concise professional meetings, so I think it's a very good forum. Well set up, a lot of different perspectives come to the table, I think it's an effective sieve for the Board.

Labate: Can I just add that I'm comfortable with it as well, assuming that everyone understands that we let Paul do his job and give us his best advice, for the real-estate committee to filter that advice and then to bring it to the Board. I can appreciate that no one wants to be sitting at the negotiating table for a long time...

Mannix: I would also want to add one other thing. There will be floating back through the various channels of communication that RIOC's being tough and we are gonna be tough in exercising our fiduciary obligations for the Corporation and in the case of these conversions for the residents. We are gonna be very tough and I'm sure we're going to probably get criticism of unjust or otherwise, that comes through, that's OK. I've been prepared to face that, but there are going to be very tough negotiations and I can tell you for what it's worth there have been very sharp words between us and the developer on Westview and, you know, he's attempting through various other, you know, means to put pressure on us and we're going to act in the best interest of the Corporation and the residents. I don't really care what criticism or pressure comes from, you know, from any source.

Beck: I would just like to reinforce what John just said. Our goal is to act in the best interest of RIOC and the residents of Roosevelt Island. That is our mission and we hope it will be reflected in the outcome.

Mannix: The people we care the least about are our counterparts. We don't really care if the developer has a great deal or makes a lot of money. In fact, we don't care, that doesn't matter to us. They are the enemy, so to speak.

Labate: Ok. Can I have a motion on the authorization?

Leitner: [UNINT]

Labate: What do I need to do with respect to amending this?

Leitner: [UNINT, OFF-MIKE] Let's clarify the changes and then we're going to vote the resolution.

Beck: Can't hear.

Kraut: Can';t hear.

Leitner: [UNINT] ...the changes are to instead of defining the negotiators as limited to the President, Mannix and Beck it shall be the real-estate development advisory committee. All the other terms, as necessary with regards to that shall remain throughout the agreement including that the real-estate committee will report back to the full Board as opposed to reporting back to itself.

Labate: Right.

Leitner: I think that's the nature of the changes here.

Labate: Right

Leitner: They'll require...

Mannix: [UNINT]

Leitner: I'm sorry?

Mannix: ...Whatever the file... [UNINT]

Leitner: Sure.

Shinozaki: ...in the process of the administrative changes.

Labate: Right. In that case, can I have a motion on the amended resolution? Second?

Labate/Leitner: [side conversation]

Man: He's not here.

Labate: I know, that's OK. Keep it in. Yes.

Kraut: Second.

Leitner: Labate:       aye

Beck:              aye

Reuss:            aye

Kraut:            aye

Mannix:          aye

Ponton:           aye

Shinozaki:       aye

Stewart:          aye

Labate: Motion approved or item approved. Thank you very much.

Labate: Moving on. We did Public Purpose funds, I guess, the next item on the Agenda is the discussion item. A discussion of providing space to the Youth Center and I will open it up to the Board. I think everyone knows the issue, there have been various e-mails bandied back and forth. One option we have on the table is to see how far we can go in keeping them in their current and perhaps expanding space in Eastwood. There have been other suggestions that we give them a 30-year lease on the Blackwell house [sic; means Blackwell Minischool] which is currently vacant but which is in our marketing plan, so I open it up to the Board for discussion.

Mannix: Could I ask this one question? This issue of 30 years has never really been clear to me and there have been some back-channel communications that the 30-year lease is not necessary. Does anyone have the exact... is there a fact on this or is it still [UNINT]?

Ponton: [UNINT] facts [UNINT]

Labate: Let me just... If Carla will speak on that, and then I'll ask you to speak. We've (they've?) done some research on that.

Carla Van De Walle (RIOC Chief Financial Officer):

Yes, Herb and I had a conversation with OMB [State Office of Management and Budget] and the person in charge of the grant capital program. They said they would not have such a requirement for improvements that wouldn't even have a lifespan of 30 years, so it's a door, they don't really calculate it on a 30-year basis. So they kind of have a common-sense approach. All you need to do is supply the proposed changes to OMB and they'll evaluate it.

Ponton: I can tell you what I...

Shinozaki: Do we have any guideline for a lease grant? Do we have any idea what the guidelines are? Is it ten years, twenty years?

Van De Walle: They said ten to fifteen, it's in the ballpark. They just can't... like a roof is not supposed to last 30 years, and putting on a roof they wouldn't have that kind of requirement.

Mannix: So it's kind of a depreciation issue? Or an amortization issue...

Van De Walle: Yes, exactly.

Ponton: Here's what the guy in the department of design and construction told me. The guy's name is Desmond Spillane, and he's the guy to whom all this stuff goes to. He told me the following: On a deal this big they would typically look for 30 years, however they wouldn't dig in their heels and insist on thirty years, but with anything less than 30 we were essentially making thing a little more difficult. So because they'd be more comfortable with 30 than 20, more comfortable with 20 than with ten. I think that's a fair representation. He also said we need, the first thing we need is a lease agreement. He said without a lease agreement, nobody would even talk to us. Then he said the next thing we need are plans, and I said we have architectural drawings and he said yes, but they're not plans, and those of us in the business kinda know what plans are: concrete this and steel that, etc. Then he said you need a thing called a restricted covenant which means that if something went wrong here and the people who are supposed to be running it couldn't run it, that the City could move in and run it themselves. And the reason they do that is to prevent it being taken over and made into a residential building or hotel or something like that. Understandably they're giving us the thing for money. Then they said need a license agreement so that they would have permission to come in and do whatever work they wanted to do, presumably what they were funding, like the roof, they'd want to do it. I'm not a hundred percent sure on it, but that's what he said. And if we need additional information, he said, "I welcome your calls." H was a very accommodating, very knowledgeable guy. I asked him how he felt about the money disappearing over time because, as you guys know from reading my stuff I wake up every morning fearing that the money has gone and go to sleep every night fearing it will go away. His answer was, "I'm not a politician, so I don't know how they do that. But I know this, that my experience shows that every day you guys delay in taking the money increases the likelihood that it won't be there. That's what I know."

Labate: (aside: sure) We talked about it, that the thirty-year lease is not essential.

Berman: OK. My conversation with the head of capital projects at OMB, and I believe Carla may have repeated it, is that he doesn't understand why the City would require a 30-year lease on anything other than on a Class A building construction, which this does not appear to be in connection with. He asked for a copy of the details of the proposed construction. Now, Carla, did we ever get it?

Van De Walle [OFF-MIKE]: It has not been filed with OMB. It has not been filed in 2005 dollars.

Berman: OK. And also Charlie [deFino, President of the Roosevelt Island Youth Program] originally came to us and indicated that he needed the Blackwell School because, to the best of my recollection, his words were, he needs a 30-year lease, which may or may not be the case, I don't know. But, in fact, the reality is that he can get a 20-year lease from Eastwood. Deborah and I, having met with Jerry Belson, preliminarily, he indicated that the direction that everything is going, "I'll give you a 30-year lease." So, the original concerns seem to be negated and to be obviated. I no longer understand what the problem or the urgency is, if in fact the potential for this 30-year lease is a reality.

Mannix: It seems that we've just heard that the 30-year lease is negotiable.

Berman: It's something that we have to give them the details in 2005 dollars, etc., and they want to take a look at it but [the] head of capital projects said he doesn't understand why there would have been a demand for a 30-year lease.

Labate: Do we have updated, I believe the numbers that we saw for construction were for 2001 dollars.

Berman: Yes.

Labate: Do we have updated numbers? It was gonna cost $1.7 million to do preliminary estimates of what needed to be done. Do we have those in 2005 dollars? I think it was going to be another $250,000 to retrofit the various rooms and various amenities? Do we have any updated numbers on that?

Beck: I think that actually if we're going to look at whether space in Eastwood is a viable alternative as part of the deliberations with the owners in Eastwood, and that will happen very quickly because of their filing to come out of Mitchell-Lama at the end of August. And they're very eager to come to closure on a variety of things so RIOC has quite a bit of leverage. We don't have any designs. But my expectation is that the leadership of the Youth Center would want to prepare something should it turn out that that was the space allocation that made the most sense. So I think that's where we really are. And I think that what Mark was asking about and had – while you were out of the room we, and excuse me for speaking for you, that the concern was that the money that had been put into the City Council budget for this purpose might slip away and he had spoken to somebody in the design and construction that it should be encumbered sooner rather than later.

Berman: Well, firstly, if I might say that it's OMB, Office of Management and Budget that dictates the process. The Department of Design and Construction, which I drew the legislation to create [while on the City Council], is the implementative arm of the City's construction, so they don't create policy, they perform the function. That's number one. Number Two, Tony has already advised me that Pete Grannis has renewed the $200K, $125K. (conversation from audience – T. Morenzi)

Tony Morenzi (from audience): $125,000.

Berman: $125,000?

Morenzi (Assemblyman Pete Grannis' District Office Manager/Chief of Staff, NYC ): It was $125K in capital funds that was allocated to the Youth Center about four years ago, so they could leverage other dollars for the capital project, whether it be The Blackwell school, the...

Berman: But that's been renewed, right?

Morenzi: That has nothing to do with the budget, that's a capital project.

Labate: It's a community enhancement facility, right

Morenzi: Community enhancement, right.

Berman: That money's still available?

Morenzi: That money is still available.

Labate: It's still available, it's going nowhere.

Morenzi: I get a call from the Ways and Means staff on a fairly, every couple of months, saying is the Youth Center doing anything yet and I said, they're still negotiating, and that's when he had the $125K and he was able to go to Gifford Miller to ask for money, and Gifford... So out of the $125K, and over – Amos [Buhai, an aide to City Council Speaker Gifford Miller] could give you the exact numbers – but it was over a couple of years and the money built up at the City Council... and the City Council money is what's possibly, could be lost because that's... That's an...

Berman: But I called up Gifford Mill... I think they're adopting a budget today. But I called up Gifford Miller's office. My last discussion was that they fully intended to renew it, and...

Amos Buhai: The money should, sorry, my name is Amos Buhai, I work for Speaker Miller. It's nice to see you all. The money is there right now. As far as when the new Council comes in January, there's no assurancethat...

Berman: Well, it's good to next May, or uh, June 30. It's in there for the fiscal year unless there is a specific modification that would remove it. I've not seen that happen with capital dollars because that's money that's bonded and that's a much more complex process. So it's likely that we can assume that the money's in there till next June 30. Thank you for that advice. I didn't get an answer yet... We have until next June 30.

Labate: Go ahead, David.

Kraut: I need to say a couple of things. I need to preface my remarks. Through the years there's been no one on this Board or in this Corporation that has – and I think long-term members will agree with me – who's been more emphatically in defense of the Youth Center and its current administration. This goes back to the time when I was on the Youth Center Board of Directors and cast the deciding vote to bring, uh, Mr. De Fino into the job as President. And he was the second president we went through at a time of huge change and stress. I saw a statement recently that the Youth Center has always had its stuff together. This is not a true, not an accurate statement. In fact there was a period of time in the late 80's when the original founders of the Youth Center lost their energy. It was stuck down in the basement with rat holes, no certificate of occupancy, no reporting, no income tax was being paid, no danger of reports being filed, etc., etc., etc. Not me, but the Board, working steadily for three years changed all that. And once Charlie was elected to the job of Director, things changed and have been changing for the better ever since. Now I've defended Charlie against the Lerman administration, and the Blue administration, and the Ryan administration, up to the point where I realized that Rob (Ryan) and Charlie shared a certain street-wise way of communicating that made it no longer necessary for me to be fighting on his behalf. Having said that, it seems to me that this one issue can be narrowed down. The fact that we're going to be negotiating with Mr. Belson for the space they have now is very important but it's not the question before us, because they're in that space now and the Youth Center needs to expand. The question is how much they need to expand, and that has to be based on demographic projections as much as anything else, and what kind of lease they're going to need, and how much space they need, and these are the questions that are facing us. And I think we need to keep the discussion narrowed to these terms. How much space do they need and how much space are we going to grant them? Or if we ant to grant them a lease at all. And that's a decision this Board has to make. And I don't see any other decisions facing this Board at this point.

Labate: Well, I think the, I haven't seen, I don't know, I haven't seen the answers to those questions of how much space they need – the data of that would compel the Board to reach a decision one way or another. I have heard they want, I presume, a full 12,000 square feet but I certainly have not seen any data that would suggest they need that; usage, student usage or usage by the youth. I've seen various numbers. It's hard for me to discern whether that's... they're all in there at the same time or whether the programs are in modules where you see a handful of kids at the same time... And you're right, and at its most basic, the issue Mark wanted to present to the Board today is, are we prepared to give the Blackwell School to the Youth Center. I have proposed a different option. We may in the end decide it doesn't work. I think it's an option that is worth looking at and as I said we may come back and say it's not enough but I think we come back and say it's not enough, it deserves to be played out and, as it's being played out, we need to really get some hard data on all the other issues, on all the other questions I think we should be asking in order to fulfill our fiduciary responsibilities. It's not an easy issue we're being asked to take on, to hand over a very, what could be valuable piece real estate, to hand it over to one particular organization. That's not something we should do lightly just like it's not something we should hand over any of our real estate lightly. So I would argue... I would suggest that we should clearly define the types of information that this Board needs in order to make a decision. We should insist and I'm sure we can secure from the Youth Center the answers to those questions. And at the same time we should see how far we go on Eastwood and whether Eastwood can actually meet the need out there.

Beck: [PORTION OFF-MIKE, INAUDIBLE] Since Charlie's here, I wonder if I might have the privilege of asking him a few questions? Charlie, could you join us for a minute? It's my understanding that about not quite half of the budget is for the Beacon School Project, is that correct?

Charles de Fino (Director, RI Youth Center): Uh, yeah $400K to $450K plus funding we add to it.

Beck: Uh,huh. And that takes place in the school, is that correct?

de Fino: Yes it does.

Beck: And that's part of the Beacon School Program, is it not?

de Fino: That is the Beacon School Program.

Beck: That is the Beacon, it is in the school. So what the space is needed for is for everything else the Youth Center is doing in its activities, is that correct?

de Fino: An extension.

Beck: An expansion and I think that if we were to look with your help and the help of your Board at the proposal you had put together two years ago, some of those issues for expansion as well as extending the current needs would be very clear from a space-use point of view, would they not? Or has your program planning been...

de Fino: I think we've discussed this over thirteen years.

Beck: Yeah, so you're in pretty good shape as to what space needs would be prospectively?

de Fino: I would hope that the Board would understands my space needs, we've spoken about this for thirteen years...

Beck: (laughing) OK... Well, I...

de Fino: This was a prior agreement, was made with Rosina Abrams. David Kraut, at the time, was the RIRA president and Frank Brosino was an Island resident and they would not have made the deal... they were too intelligent to make the deal if the deal wasn't space for space. We traded basic...

Beck: Uh, huh, well...

de Fino: Basically,

Beck: Charlie...

de Fino: You asked me a question and I want to fully answer it. The deal was made between RIOC and the Roosevelt Island Youth Program to trade for the Roosevelt Island Main Street Theater and the synagogue and in return we would get a school building. That was the major deal. We got dumped on Doryne Isley, at the time she wasn't [yet] the general manager. We got dumped in a building that was basically rat-infested, roach-infested and we cleaned it up. And we've been there for the last ten to eleven years, waiting for the move. To say today that you need additional information, you don't know if we need the space, just proves you don't know the topic. The topic is that we do need the space to build out a Youth Center for the future that would service the Island.

Labate: You do need to educate us on the topic. It's not that... I will admit I don't know but I will acknowledge, I will tell you straight out I won't... I certainly won't support something unless I see the details.

de Fino: Ms. Labate, you have not been in support of this project from the beginning.

Labate: That's not true. I, I want to make an informed decision about it.

de Fino: I can go back to a meeting where we had with Ms. Reuss, I'm not sure if I'm saying your name right, where she made a positive statement about my plans...

Labate: I just want to...

de Fino: ...and you basically yelled at her to stop talking on my behalf.

Labate: I never yell...

De Fino: Well, you made it very clear that she should shut up.

Beck: May I suggest, Charlie, that we continue the conversation at another time? I don't think the direction it's going in...

de Fino: But the conversation... the conversation...

Beck: I think the conversation's over. Thank you very much.

de Fino: Thirteen years of the conversation, Ms. Beck. It's been thirteen years and you're playing with money that's...

Kraut: Charlie, you have to face reality. Which is that you're asking for a certain amount of space and you're convinced that you need that much space, but this Board has to be convinced that you need that space – and the fact that things are perfectly clear to you... I have to say over and over again that the most difficult thing for an intelligent person to understand is that another person equally intelligent, presented with the same facts, can draw different conclusions. And we've seen your facts but we have to draw the conclusions, and that's what our discussion is about. And... I have total sympathy and remember I have a copy of the letter you see that you get that space. But this Board as constituted now will make the decision and will make it based on this Board's best judgment, and you can't worry about what's in the past, because the past is the past. Golly, if we could change the whole Island around in terms of who owns it and that's the kind of stuff we're voting on today and you're telling us you have to have the space, maybe you do, but you have to convince people, and just repeating it over and over isn't going to get the job done. And I'm sorry to speak to you like a Dutch uncle, I know I'm a bit of a jerk sometimes, but it happens. Stuff comes out of my mouth and I wish it hadn't. But this had to be said.

de Fino: If I haven't convinced you over the thirteen years, David, I'm not going to convince you over the next thirteen months.

Labate: Can I suggest that the real-estate subcommittee pursue the Belson case? I believe at the same time the Board needs to get whatever data they feel they need to get in order to discuss the space for whatever period of time, giving the Blackwell space to the Youth Center. So, if the Board would be so kind as to think that through, get back to me as to what kinds of data you think you would need to help frame the debate and make the decision. We'll sit down with Charlie. Frankly, Charlie, I have not seen, I've seen very little, and I haven't requested it from you directly. But if the Board feels it needs to see certain elements, data elements then we will secure those. We're... I think Herb's gonna raise it, for those who have read the papers, lately, the Legislature, before they went out of town just passed a major Public Authority Reform bill and in that a big focus of that was the disposition of property. I think the whole focus there is to insure that the Board carries out its fiduciary responsibility with respect to the disposition of property. For me that's all this is about. I have no doubt and I have no question that a Youth Center is a vital component of any community and it's actually unfair to suggest that if everyone isn't willing to vote on it on the spot, that we are somehow against the youth of the Island. I do think, though, that we have a fiduciary responsibility to insure that in doing, we don't rush to judgment on an issue and abandon our fiduciary responsibility for another goal which is equally as laudable, but...

Ponton: Can I make a few comments on that?

Beck: I'd like to ask a question of Mr. Miller's representative Mr. Buford (sic). Could you tell us exactly how much money is currently in the budget which hopefully will be carried into the next fiscal year as of today?

Buhai: I'm not sure. It's whatever it's been for... I think it's $1.64 million.

Beck: One-six-four?

Buhai: I believe so.

Beck: Would you mind holding it for us? (laughing)

Buhai: It hasn't changed. The money hasn't changed. As again we've seen in the past, is when a Councilman has funds that are unused after he's term-limited, sometimes the Mayor will scratch those funds.

Beck: Well, let's hope he doesn't. Thank you.

Ponton: Any risk of that happening, recently? That the mayor has scratched funds?

Buhai: I'm not familiar with it, as I've been focusing on Speaker Miller's office, but as you know Speaker Miller's term does end January 1st.

Ponton: Let me put it this way: Can you give us the advantages of waiting?

Buhai: The advantages? Excuse me?

Ponton: To not picking up the money right now?

Buhai: The advantages of... I can say the money is there now. Will it be there later on? I don't know.

Ponton: And later on could be when, this afternoon?

AB: Later on conceivably, I would say, think it would be you know, after the new term. Gifford is very passionate about keeping the money in but his term limit ends January 1st.

Beck: [UNINT] [LAUGHING] I would like to thank Mr. Kraut for flipping the switch [on my mocrophone]. I would like to personally state, as a member of the real-estate committee and of this Board, that it is my intention to do everything in my power to insure this issue comes to closure and the Youth Center can go forward utilizing these funds well before the end of December. It seems to me that we have the opportunity with the deadline on the Eastwood owners to review that option and either accept or reject it, or accept it and possibly expand upon it to meet the Youth Center's needs in a very timely way. So I gather from what you're saying is that we're 99% safe through the end of December?

Buhai: I would say that it's still... everyday it's just adding on...

Beck: Ok, you'll call us if there's any, if it looks like the money's in trouble?

Buhai: Right now the money is there.

Beck: Ok, may we have your commitment to call the RIOC offices, Mr. Berman's office, if you ever begin to get at all nervous about the security of those funds? Would you do that for us?

Buhai: I would say that there is...

Beck: Yes or no is all I need.

Buhai: Yes, right now they're... [UNINT AS LABATE BEGINS SPEAKING]

Labate: Are there any other questions?

Ponton: I don't have questions. I have comments. I would like to comment on the guidance you that gave the Board. One of the things I think we ought to be counseling the Board on is... or not me, but it's the responsibility of the Chair, what is the downside if we do something wrong? Like for instance: if we give the Youth Center 50% more space than they need, will the world end? Will the kids be in the Youth Center saying, gee, this is like an echo chamber, I don't know what to do next? I doubt it. Will it be damaging our income stream? Right now, if we assume $35 a square foot, which we have not yet gotten from anybody, and we plastered that across the 12,000 square feet of Lilies School, right now that amounts to less than 3% of our total revenue. And as the [new] building's come on line, that 3%, and that's a conservative number, will diminish to the point untraceable, and if we had to make an error wouldn't we want to make an error in favor of a Youth Center that is better than it might otherwise be, as opposed to having one that's inadequate? And I would also ask one more thing: Is there anything we're asking of the Youth Center that we've never asked of any other organization on this Island? For instance: Are we on the Board of the Synagogue telling them what prayers they can say? Do we manage the art center telling them what kind of art they can hang up? Are we asking for guarantees from The Main Street Theatre that they're gonna be in business in the next five minutes, let alone in the next five years? It just seems to me that one of the things we need to evaluate as a Board is are we trying to make things easy, or are we trying to make things hard? I yield to the chair.

Beck: Uh, Mark, it's my understanding, and I would like to be corrected, if I don't understand this, uh, that the spaces you mentioned as being similar type programs, do not have any leases. They're there, really, at the...

Shinozaki: ...tenants at will.

Beck: Thank you, Mark – Michael. So what's happening here is a slightly different situation because of the lease requirement, whatever that might end up being, 30 years, 20 years, 15 years, who knows. But I think it's a different circumstance, and also, it's a building RIOC owns as opposed to the Eastwood spaces which are owned by another owner and therefore, that owner is responsible for insuring that the heat is there, the lights go on, the roof is fixed, the windows, if they leak, get replaced. Um, it... all of those burdens would fall to the Youth Center if they had complete occupancy. So I think there are a lot of things to consider. I don't think any of us have the intention of not trying to provide the best possible space for the current program as well as the expansion that's projected. But I think the issue before us is that there may be other options we have to consider, and we have a short time-frame in which to determine whether those other options are available and at that juncture we will have I'm sure we will have come to the point where we will make a decision that makes sense both in terms of the Youth Center and RIOC and its responsibility in terms of its fiduciary duties.

Labate: Mark, I don't think any member of the Board needs to make an apology for insisting that proper due diligence be done before, because, make no mistake, and it could very well be the decision we make in the long run but a decision to put the Youth Center in the Blackwell School will be a significant new cost both in terms of lost revenues and in terms of maintenance and upkeep for the corporation, and it's might be very, we might decide that's a very legitimate, we want to spend our money on that, just like we want to spend it on new buses or anything else. But we should understand going in that there is a very good likelihood that there will be, certainly there will be forgone revenues, and my best guess is there will be operating costs on top that we will be asked to pick up...

Ponton: Except that...

Labate: So I make no apologies for wanting appropriate due diligence before we take that step.

Ponton: I got that. I'm all set on that. The numbers dispute what you say...

Labate: Well I don't want... You and I have shared a few e-mails but that's not how I make a definitive conclusion on data.

Ponton: The numbers dispute what you say. The numbers...

Labate: Well that's what I'm saying. I haven't had time to digest your numbers and I think as we're looking at the Belson option, it's a good time to digest those numbers.

Ponton: Let me suggest this by way of the guy who does this everyday said: If you want to increase the complexity of the deal, get two different landlords involved. He said you will add exponentially to the length of time and right now he told me if we started today it would be three years before a completed plan. I'm just telling you this, and, by the way, don't anybody get their hopes up that I'm gonna resign, it'll never happen. Uh, I don't want to be the guy who approved two new Tram cabins with zero facts, while at the same time turning down two million bucks that someone's insisting they're trying to give me and I keep saying no. I don't want to be that guy, because I think that's stupid.

Mannix: Could we, I mean in my view this has gone on far enough. When are we gonna have all the information and when are we gonna vote on this? September, August, when are we gonna do it?

Labate: Well, uh, I would not want to see a vote either way until we see how things come on the Belson deal.

Berman: You know, I think this whole thing is dependent on what happens with the Belson negotiation. I again want to stress the fact that when Charlie de Fino first came to me, he said he can't get a 30-year lease at Eastwood and that's why he wants to look at the Blackwell School. Well, now you have the availability or the possibility of the negotiability of a 30-year lease, if necessary, with Eastwood. Why not play that out? Why not see if that can happen? I am at a total loss to understand where the world will come tumbling down if we spend some time negotiating with Belson, who very clearly told Deborah and me that he is quite willing to make that part of the transaction.

Ponton:

And you don't think there's anything he's doing here in order to just sort of aggrandize himself?

Berman: Well, of course. He wants to make his deal. And he's basically telling us that what you guys need, we're willing to consider. There's nothing wrong with that.

Ponton:

And if you were going to build a Youth Center today and you had two choices: One is build it adjacent here and isolate it sonically from the building and the other is to put it in residential building, you'd choose to put it inside a residential building? Please.

Labate: John, I think...

Berman: I choose to do what is best for the community and the Corporation and the ability of the corporation to continue to perform its function for the people on Roosevelt Island, number one. Number two, let's understand that when Charlie de Fino came to me I discussed the possibility of keeping Eastwood and taking one floor at the Blackwell School, which would give him ample space, more than enough space, considering the fact that probably half of his operating budget deals with the Beacon School which is operated in the public-school system. I think that we have an obligation to look at what's happening, what's going on, and why it's actually needed. (Labate talking over this last bit).

Labate: I would suggest there are three data elements I would like to see. I would then feel comfortable with the Board knew this information then we could make a decision. One, when all is said and done if we go to the Blackwell School what will be the cost to our budget? The second, I believe, is the need. Can we get some firm documentation? If the Youth Center were coming in as a rent-paying customer, I would care less because you're paying us, it's empty all the time, that fine. If we're being asked to give you 12,000 square feet, we have the right to understand the extent to which that space is going to be used. And I think the third issue for me is the capacity of the current organization to carry out the functions that it pledges will be done in that building. When we... I think those are all legitimate issues for the Board to consider. If the Board is happy with those answers at the end of the day, if in fact, the Belson option doesn't work out, we take it to a vote and see where it goes.

de Fino [OFF-MIKE, FROM AUDIENCE]: ...the Main Street Theater... It wasn't. We're held to a higher standard every time.

Labate: Does anyone disagree that we should have that information? If people want to take a vote on that right now, we certainly can, but...

Beck: I think it's in the Youth Center's best interest that we be as fully informed of their current uses and desires for expansion and if those aren't explicit in proposed plans that were... Then I would ask CD to make any mid-course corrections programmatically and let us know that. I don't think that is an inappropriate request. I think the uh, the sad thing here is that there is a definite need for this program, there is this opportunity to improve and enhance their physical plant. I think all of us at least who have discussed it on the Board want to avail the Youth Center the opportunity of using those funds and I think President Berman has done his utmost to ensure that, while we have been dealing with this issue, those funds remain available. We now have this option in the negotiations with Eastwood to look at what can be done in that space and adjacent space whether it's in the Lilies School or in Eastwood, to see if the expansion needs can be met and we can do it in a fairly tight time-frame given the pressures on the Eastwood owners to come to closure with us. So I'm optimistic that we will come to a resolution in this and be able to encumber the funds prior to Mr. Miller going on to greater things, whatever those things may be.

Mannix: So that the data that the Chair has asked for, two of them appear to be in our court and one of them appears to be in the Youth Center's court. Their documentation of their needs, would have to come from them.

Labate [IN PART OFF-MIKE]: Their documentation of needs, I think, by capacity. I think we need to understand... because that's am argument can be made, OK we need a Youth Center. But are we, do we have an obligation to seek out the provider of that Youth Center? I think we need to understand that they have the capacity, that they are fully sanctioned to do this, they have the appropriate audits and controls in place of whatever organization oversees them requires of them and I wouldn't ask any more of them than is already required of every other youth center. And I presume that they meet all these already, I just haven't seen any of that documentation to confirm that.

Ponton: What happened to your letter to me saying, "Here's what I want?" And then I chased it for you and you came back and said, here, and I gave you the stuff. What happened to that? Now this is all new?

Labate: No.

Ponton: It is new.

Labate: No. I got some cost numbers a few days ago which I have some serious questions about. I got some information that said they service x number of kids a day. I want to do a due diligence, that's all. The same thing you expect and demand and we should expect and demand with Southtown, Octagon, and every developer we do business with. We're going to do a due diligence.

Shinozaki: As a resident and a parent, my kids enjoy the program. And I think it's a wonderful need the community has. As a director of the State and the fact that each one of serves in this role for a short period of time, we have to have a documentation trail that says here is the proposal, here is the documentation. We voted yea or nay based upon this information. Being one of the newest members of the Board, I hear people in the community talking in the street. I see some e-mails floating around between members of the Board. I hear people talking about it. What I haven't seen as a director is here is exactly what they want, here is why they want it. I've heard 30 years. Why 30 years? What is the program all about? The Board is being asked to commit a resource, potentially for 30 years. None of us is going to be here. Charlie's not going to be here. But the future flow of children will be here. The future community will still be here. So that's what we really have to meet. But the question comes for a vote, how does the next Board member, looking back at the decision, say: How was the decision made? Was it made properly? All we really need is the correct paper trail, the correct justification for a vote. And so say can they walk up with a nicer proposal and say we want this space, for this duration of time, for these purposes, here's the community it's serving, yes or no, let's vote.

Mannix: I agree with Michael. The one thing that I sense a lot of frustration from the YouthCenter people that we can't keep moving the finish line. So, I think what we need to do and do this in a way that is timely because the discussion has been going on since I came on the Board, so it's been going on for years, is, and I'm sure years before that, we should as a Board, take the responsibility to end the endless debate. And provide to both the RIOC staff and to the Youth Center management exactly what we want, not kind of what we want, not we want this but we'll ask for something later, and set a date that it has to be here and if it's there on that date then we commit to a vote after a reasonable period of review. I think it's incumbent upon us at this point to do that. From a personal perspective, I think having a highest quality Youth Center in a marquee location is, I would like to do that. So I'm... I think the Blackwell House is an appropriate location but the other one may be appropriate as well. But we need to get the information and make a decision on this and get this off our agenda. It's really a benefit for the kids. [PORTIONS UNINT] And Michael, I saw your extensive e-mail... due diligence...

Labate: Ok. I will certainly flesh out the elements that I think are important. Michael I think we have a sense from your e-mail, and I think we can bring that together. If there are other informational items that Board members feel that they would want to see before making a decision, you need to... I would ask that everything go to Kathy Johnson.

Ponton: When do we think we'll have a vote?

Labate: Well, where are we now? We're in July. If people can get us what information they would want to see within the next two weeks, the Youth Center, I think that most of it will be cost elements... [UNINT]

Mannix: I think that someone should take responsibility for producing that list, whoever that may be and circulate it. And we can add on any comments and we should do it as soon as we can. In my view there should be no reason we shouldn't be able to vote on this in the September meeting; that gives us two or three more months of time. In fact that's more time than really need.

Labate: OK.

Beck: I think that's an excellent suggestion. I think the September Board meeting we will then know where we are with the Eastwood option, if there turns out to be one, and therefore we'll have all the facts before us and if the Youth Center provides us with sufficient information so that we know what their current usages are and what their prospective expansion plan is then we will know enough at that point to go ahead and vote. And everybody will hopefully be well enough informed to answer that.

Ponton: And nobody is worried about the money going away, except me?

Shinozaki: Everyone is worried about the money going away.

Mannix: Mark, there is no question that every day we wait there may be more risk. We just heard from the Speaker's office that in his view barring some dramatic event, we are OK through January 1. That gives us adequate time to do due diligence. I think... this is not... people build major buildings in less time it takes us to debate the Youth Center...

Beck: And as far as the threat goes of the Mayor overriding this line item in the budget, I would say this is an election year for the Mayor and it would be hardly likely that he'd want to offend the voters of Roosevelt Island by doing such a dastardly thing. So I appreciate the gift from Mr. Miller and not worry about the specter of the Mayor doing a red line through it.