Just three weeks before Playland amusement park in Rye is set to open, Westchester County has notified Standard Amusements’ legal counsel that the county has elected to terminate its agreement with Standard Amusements to operate the park.
This decision comes after an extended review and discussion of the provisions of the agreement made by the prior administration three years ago, and more recently, after extended negotiations between counsel for the county and Standard Amusements.
“We are unhappy with the way this has all turned out; we never wanted this kind of conflict,” said Westchester County Executive George Latimer. “However, we are simply not satisfied with what we have been seeing… We wanted to see the energy, excitement and drive in Standard Amusements’ vision for Playland – we didn’t want just a real estate deal. This administration believes in Playland and its future; we are not looking to liquidate the park as a liability, as some feel. We want what is best for Playland – to see it succeed and thrive. At the heart of that assessment is whether this arrangement developed three years ago, under different decision makers and that ends county management of the park, will somehow deliver that energy and excitement. After 16 months, we believe this arrangement will not deliver a better tomorrow for Playland.
“The county has been negotiating with Standard Amusements in good faith, seeking to recast our arrangement into a different focus, one where Standard’s professed commitment to the park’s future would be manifest by its ability to help shape a management and marketing commitment, not primarily a capital commitment, followed by management of the park,” continued Latimer.
“We are unhappy that instead, we have seen leaks of false information to the press, the hiring of a high-priced public relations firm, and the hiring of a legal firm committed to defending the company’s corporate interests rather than spending those resources delivering a detailed marketing plan. The energy spent by Standard to influence lawmakers to defend their original agreement could have been better spent in a more wide-ranging effort to win over those in the community that did not want to see a corporate entity take over a public park facility.
“But, at the core of the county’s election to terminate isn’t emotion – it is the fact that Standard Amusements is in material breach of our contract,” concluded the county executive. “Standard Amusements has improperly claimed that it invested money in Playland, when in reality that money was not spent on purposes allowed under the agreement. Standard Amusements is wasting taxpayer dollars at the end of the day.”
While the county has been negotiating in good faith to restructure the agreement, Standard Amusements has been operating with an agenda that led the county to conclude Standard Amusements was not interested in renegotiating the terms of their relationship in a way that makes sense for the county, according to Latimer. The election to terminate is based on Standard Amusements’ failure to cure its various material defaults under the contract that were laid out in the county’s letter to Standard Amusements on Dec. 7, say lawmakers. Those defaults include:
Manager’s Investment
Standard Amusements has improperly claimed millions of dollars as part of its contractually defined manager’s investment obligation, which is supposed to represent capital improvements at Playland.
At the time of the county’s letter to Standard Amusement, the company had claimed it invested more than $5.7 million in the park, but an audit had proven otherwise. Instead, this money was spent on salaries, meals, travel, advertisements, marketing, consulting fees and legal fees (including fees to raise investment capital it claimed to have at the time it negotiated the agreement with the county). Since receiving the December letter, Standard Amusements has continued to claim expenses that do not qualify as part of the manager’s investment (including its legal expenses related to negotiations), for a total of $7.7 million, according to its last monthly report.
Audit
The county is entitled to an annual audit of Standard Amusements’ books and records under the agreement; however, Standard Amusements has prevented the county from completing the audit and has refused to provide necessary documentation.
“This agreement has Westchester taxpayers on the hook for $125 million with Standard committed for $27.5 million,” said Latimer. “My job is to make sure Westchester taxpayers come first. The county’s relationship with Standard Amusements must come to a close. We cannot have confidence in Standard Amusements based on its actions. The company has not proven it has been serious about Playland succeeding.”
While there have been claims by Standard Amusements that the county has been in breach of the contract, the reality is the county has performed under the agreement and done everything it reasonably could. As the county has explained to Standard Amusements, the company’s interference in the design process and underestimation of the costs of capital improvements, upon which the county relied, directly caused the county not to timely meet its required level of capital investment. Furthermore, the county has never indicated to Standard Amusements that it intended not to meet its obligations under the contract.
As required under the agreement, the county is giving Standard Amusements 30 days’ written notice. May 28, 2019 has been selected as the date the agreement will terminate in all respects.
Republican county legislators do not agree with the decision. “I am disappointed but not surprised that the administration has taken this ill-advised action. For months, the County Administration has said that they would negotiate in good faith with Standard Amusements to address the issues they had with the existing contract. It seems the opposite was true. The public and the County Legislature, who crafted and approved the existing contract, were kept in the dark; ncluding about an additional $5 million offer from Standard just 2 weeks ago. I am very troubled by the administration’s great efforts to avoid transparency and cooperation with the legislature in their plan to break the contract with Standard Amusements. Along with returning to past practice of having complete financial burden for Playland Park, Westchester taxpayers face a very expensive and long litigation process that will end up costing Westchester millions, ” said Minority Leader John G. Testa.
“As a practicing attorney for the past 33 years, I am extremely concerned over the financial exposure that the Westchester County taxpayer may face if this contract dispute goes to litigation. With the exception of vague statements deriding the agreement, the Board of Legislators has been kept in the dark about what the administrations concerns are or what if any plans the administration has for Playland moving forward. Many of my legislative colleagues in the Democratic majority worked very hard to negotiate the terms of the agreement with Standard Amusements and subsequently voted in favor of the agreement. I ask all Legislators to join me in demanding the County Executive provide the Legislative body with the reasons for his seeking to unilaterally void the existing contract and what directions he seeks to move Playland in the near future,”said Minority Whip Gordon Burrows.
“My concern is that to terminate the existing contract without a concrete plan of action presented to the public, taxpayers, as well as the board of legislators before terminating an approved contract is troubling,” said Legislator Margaret Cunzio
