By Dan Hust
LAKE HUNTINGTON — September 28, 2010 — After vigorous debate, Sullivan West’s school board voted 6-1 Thursday night to not hold on to the oil, gas and other mineral rights when it comes time to sell the closed Delaware Valley and Narrowsburg campuses.
This was after a 7-1 vote the week before to retain those rights in case gas drilling comes to the area.
Superintendent Ken Hilton said the district’s real estate attorney, Kevin Pole of the Syracuse firm of Bond, Schoeneck and King, had advised the board not to keep those rights.
“If I were a prospective purchaser, I would not want to purchase a property (that I may be intending to develop for residential use) that had such a restriction,” Pole wrote to Hilton last week.
Indeed, he said one potential buyer, NYC developer Ilwon Kang, had already raised this issue with SW.
“Even if the language were revised to prohibit any surface activities on the sold properties (reserving just subsurface rights), this is a clear signal to a purchaser that there might be drilling operations occurring just over their property line,” Pole continued.
“Buyers may also have a concern about the effect extraction operations may have on the water for the DV property.”
Pole added that the “bulk” of potential wealth from oil and gas mining will come from the acreage the district has not put up for sale (63 at DV, 14 at N).
“My recommendation is to exclude the added provision,” Pole concluded. “... If a buyer does not feel strongly about this, it can always be negotiated down the road.”
While the lone dissenter on the original vote to retain the rights was John Reggero, Noel van Swol took that role in the vote to not retain the rights.
“This is big-time stuff,” van Swol told his colleagues Thursday. “So what I’m saying is, let’s keep control of the mineral rights.”
Van Swol, who is leading an effort to lease gas drilling rights on 70,000 privately-owned acres in Sullivan and Delaware counties, dismissed Pole’s recommendation as being unfamiliar with the intense interest gas companies have in the area.
He argued that the tens of thousands of dollars that could potentially come from drilling leases and associated royalties at both campuses would be irresponsible to pass up.
“Failure to retain those mineral rights, knowing what we now know, could very well be construed as misfeasance, malfeasance or nonfeasance in office,” he wrote in an e-mail to Hilton.
Van Swol found no support from fellow board members, who all felt the campuses would be more attractive with their mineral rights available.
“I think right now the issue is to get these properties sold,” remarked Board President Mary Scheutzow.
Rose Crotty worried that the pool of bidders might be lessened by the retention of those rights, leading to lower high bids.
And Angela Daley agreed with Pole that the rights could be negotiated at the time of the sale, if the board desired.
Van Swol, knowing that the board is unlikely to negotiate such at the last minute, said he would not be happy with the resolution to sell unless those rights were retained “up front.”
“I say we respect his [Pole’s] professional recommendation,” Reggero replied.
Richard Tegnander urged van Swol to “tone back” his support of drilling at board meetings, considering his outside interests and the board’s desire not to send a pro-drilling message unless it cohesively decides to do so.
In the end, the board majority (minus an absent Ken Cohen) voted to not retain those rights as part of the conditions of sale – meaning that a buyer or buyers may get those rights and could theoretically secure drilling leases for those properties.
DV may be leased – twice over
In other business Thursday, the board voted unanimously to put both the DV building and surrounding acreage up for lease.
The 63 not-for-sale acres are desired by the Pleasant Valley Rod and Gun Club, said Hilton, for hunting use, while the building itself and the five acres for sale with it are being eyed by a film crew.
Since the hunting club has an exclusive membership and the film crew is a for-profit enterprise, the two separate leases must be put up for bid, even though they’re tailored to the respective interested parties. Bids will be opened this Friday, said Hilton.
The forested property has long been used as hunting land, indicated board members, especially trespassers and poachers. Hilton said it’s probably not even posted.
But a lease to a hunting club may solve that problem, especially since the lease would run for the next 12 months (October 2010-September 2011).
As for the film crew, it seeks to shoot what Hilton said is a “teenage angst movie” called “The Art of Love” for two weeks inside DV.
After some snickering at the title by the board and audience, Hilton confirmed it’s not a “dirty” movie, but he didn’t know anything more about it, saying Partnership for Economic Development President Tim McCausland had put them in touch with SW.
McCausland said that, “It’s going to be a PG-rated movie and will feature and Oscar-winning actress.”
He could not provide more details.
Officials said the crew’s plan is to rent and use the whole building for filming, but the lease will likely require them not to mention the shooting location – in case the film is not something SW wants to be known for, said board members.
There is no minimum bid required, said Hilton, but the state requires the district to get at least fair market value.