On January 30, 2008, Gosnold, Inc. executed a lease with Barnstable County for “the premises located at 875 County Road, Pocasset”. The property is part of the former Barnstable County Hospital complex.
The twenty-five year lease, which commenced on July 1, 2008, calls for rent at a rate of $1 per year. The lease grants the tenant the right to extend the lease for an additional 25 years on the same terms, so long as they notify the County on or before June 30, 2031. (The full five-page lease appears in the photo gallery at the end of this article.)
This lease agreement is one of those criticized in the State Auditor’s report that was released last week. The audit states that the County did not follow proper procedure in executing leases for surplus county real estate. Some or all of the leases in the County’s portfolio may be able to be terminated due to the improper way in which the State Auditor reports they were consummated.
The Gosnold lease is part of a packet of information concerning the Pocasset campus that was provided to Cape Cod Today Monday morning. We note that the current county administration and commissioners have been absolutely cooperative and transparent in releasing public records information concerning the state audit. It is also important to note that the state audit was initiated at the request of the County at the time current County Administrator Jack Yunits, Jr. came on board.
Conflict of Interest?
The January 30, 2008 lease between Gosnold, Inc. is signed for Barnstable County by the three then-sitting County Commissioners: Lance Lambros, Mary LeClair and William Doherty.
A check of the Secretary of State’s corporate records for Gosnold, Inc. indicates that Commissioner Mary LeClair served as “chairperson” of the directors of Gosnold, Inc. at the time she executed the lease as a County Commissioner.
Corporate filings for Gosnold, Inc. from 2001 to 2013 show Ms. LeClair as chairing Gosnold’s board.
According to State Ethics Commission’s website on the conflict of interest law, Ms. LeClair’s participation in the lease with Gosnold, Inc. would have created a conflict due to financial interest. The non-profit with which Commissioner LeClair served as volunteer board chair no doubt received a significant financial benefit by way of a $1 a year, 25 year lease with Barnstable County.
Whether or not Ms. LeClair violated state ethics law, the transaction occurred beyond the State Ethics Commission’s six-year statute of limitations.
What Should Have Happened?
In an ideal world, Ms. LeClair ought to have recused herself from any deliberation or proceeding related to her non-profit’s leasing of property from the County Commissioners.
Additionally, beginning in 2009, state officials were required to undergo training in the state ethics laws. If she was previously unaware of a potential conflict, upon receiving the training, Ms. LeClair could have sought assistance from the State Ethics Commission on how to resolve her mistake.
Commissioner LeClair’s participation aside, the State Auditor’s report is clear on how the property transaction should have been handled.
The proper procedure to lease the surplus space in the first place would have been to offer it first to the Commonwealth and then to the town where the property is located. If neither the state nor town was interested then the next step would be to ascertain the fair market value (as a benchmark) and put the rental out to competitive bid.
Where does this leave Gosnold?
Does Gosnold, Inc. hold a valid lease with Barnstable County?
It seems that County officials did not follow state law in consummating the lease with Gosnold. However, said lease contains a warranty from the “Landlord” that “represents and warrants to Tenant that Landlord has the lawful right and authority to enter into this Lease for the entire term hereof…”
Gosnold relied on that warranty. It has acted as steward of the property for nearly a decade, keeping the promises it made in the lease it signed.
If the County moves to terminate or alter the lease with Gosnold, we imagine the non-profit will move to defend itself.
Unfortunately, Gosnold “chairperson” and County Commissioner Mary LeClair’s failure to recuse herself from the lease transaction may leave Gosnold coming to court with the apperance of “dirty hands” even though the non-profit itself did nothing wrong.
At the time Gosnold Inc. leased the Pocasset property, it was facing some financial challenges. In the fiscal year July 1, 2008 to June 30, 2009, Gosnold had income of $17,598.432 with an operating loss of $403,768. No doubt the County lease helped the non-profit stabilize its finances.
In its most recent public filings (2014), Gosnold had gross revenue of $23,442,382 and a net profit of $668,223. Gosnold Inc.’s FY2014 IRS Form 990 reports Gosnold paying total occupancy costs of $1,333,674 for its various facilities.
A “King Solomon Moment” for our County Commissioners
We note once again, virtually nobody that was involved in this leasing process is currently with the county. Everyone in the current county administration appears concerned about the situation and acting in earnest.
With the county facing financial challenges, reasonable rental income from these many properties might help stabilize the county budget.
On the other hand, many of the county’s tenants are hard-working non-profits that have done nothing wrong. They kept their promises, maintain the property and are all-around good tenants. All face potential damage – or devastation – if the County adopts too aggressive a position.
Gosnold, Inc. is the very first lease we examined. If the others are as compromised as the Gosnold lease, our County Commissioners will be playing King Solomon for some time to come.