FULTON & MONTGOMERY COUNTIES – The U.S. Attorney’s Office for the Northern District of New York has filed notice with Fulton County Supreme Court indicating it will be participating in the upcoming court proceedings over the matter of the potential sale of three F-MCC dormitory halls owned by the nonprofit Fulmont College Association.
The court filing indicated Assistant U.S. Attorney John D. Hoggan Jr. will be appearing in the case on behalf of the U.S. Dept. of Agriculture. The USDA in 2010 loaned the Fulmont College Association $11.3 million for the purpose of purchasing and renovating the 1980s-vintage Fulton Hall and Montgomery Hall dorm buildings for $4 million and then building in 2012 the 144-bed, co-ed Raider Hall dorm for $7.1 million.
Fulton-Montgomery Community College President Gregory Truckenmiller, who is also the chairman of the FCA board of directors, on Monday said it is not surprising that the U.S. Department of Justice would send a lawyer to Fulton County for the dorm sale.
“There’s nothing to read into that. It’s because the USDA is an interested party in the transaction,” Truckenmiller said.
On April 16, the FCA filed a petition in Fulton County Supreme Court for permission to sell the three dorms located on a two-acre parcel at 588 County Highway 142 for $1.1 million to Dan Vann Properties LLC, owned by former Amsterdam Common Council member Dan Roth.
The FCA needs permission from the court to sell the dorm buildings because it is a nonprofit entity that must comply with New York state’s laws for nonprofit corporations. The FCA was created to perform functions for F-MCC — like owning dorms and providing cafeteria services — which the college is prohibited from directly doing by itself by the school’s state charter. The ownership and control of the FCA also includes the college’s students, faculty and administrators.
Fourth Judicial District Supreme Court Judge Rebecca Slezak has been assigned to the case. Slezak on April 20 issued a court order “to Show Cause” why the property sale should not be allowed. Court filings indicate the USDA is one of the entities notified by the court order. The other entities notified include: Dan Vann Properties, F-MCC, Fulton County and Montgomery County, the New York State Education Department and the State University of New York.
So far, court filings indicate only the state Education Department has notified Fulton County Supreme Court that it does not object to the sale of the properties, and only the U.S. Attorney’s Office on behalf of the USDA has indicated it will participate in a court conference over the matter. The other entities have until 1 p.m. Friday to indicate whether they object to the sale.
According to the FCA’s petition for permission to sell the dorms, the USDA had already given the entity permission to sell the properties and had agreed to forgive approximately $10 million in outstanding debt still owed on the dorms in exchange for the $1.1 million sale price, minus the 7% real estate broker commission paid to Pyramid Brokerage Company of Albany, which includes real estate broker Michael Sampone, a former F-MCC Board of Trustee Chairman and current Foundation of FMCC board member.
A motion objecting to the sale of the buildings was filed April 23 by Teresa Monroe, of the Monroe Law firm in Albany, on behalf of her clients Bianca Alicea of Amsterdam, a nursing student at F-MCC since 2017, and William Petrosino of Amsterdam, a longtime operator of rental units.
The motion alleges the FCA’s petition to sell the properties is fatally flawed for a number of reasons, including that it did not disclose to the court or its board of directors that Sampone is the sole real estate broker for the deal, representing both the buyer and the seller, and that Sampone’s company did not do its due diligence in trying to sell the property, resulting in a sales price lower than the appraised value for the three buildings, $1.8 million.
Monroe alleges that an affidavit from Peter Struzzi, a broker at Pyramid Brokerage Company, indidates Sampone listed the property through the Fulton County Multiple Listing Service, “but there is no evidence that a Fulton County MLS actually exists.”
“No advertising was done, nor does it appear that the broker ever posted the Property on Pyramid’s own website,” reads Monroe’s motion. “A search of the GlobalMLS listing history reveals that the property was not listed there, nor was the property listed on CIREB, the site for Commercial and Industrial Real Estate Brokers of Upstate New York, serving the Greater Capital Region. In fact, aside from Pyramid’s assertion that the property was listed with the elusive and seemingly non-existent “Fulton County MLS”, there is no evidence the Property was actually posted for sale on any active multiple listing service.”
Monroe also alleges the FCA Board of Directors did not have a proper quorum to authorize the sale and doesn’t have the required number of 14 board members to operate by its own bylaws. She also said the FCA’s sales contract with Pyramid indicates the broker will be paid a $77,000 fee irrespective of whether the court approves the sale to Dan Vann Properties raising “grave concerns about Fulmont’s due diligence in dealing with the broker.”
Truckenmiller said the FCA disputes the number of board directors needed to authorize the sale. He also said Monroe has wrongly interpreted the sales contract with Sampone and Pyramid.
“There is nothing about that, you know, ‘They get paid whether or not the sale is consumated,'” he said. “They get paid if the sale is consumated.”
The FCA’s contract with Pyramid was included in its court petition as “Exhibit J” which includes this language:
“The Owner shall pay the Commission to Pyramid Brokerage Company at the closing of the sale of the Property, or if subsequent to the signing of a contract of sale with a buyer, the closing of the Property sale does not occur due to no fault of such buyer, then within ten days after demand by Pyramid Brokerage Company for such payment.”
Truckenmiller said the FCA has had no choice but to sell the three dorm halls because it has been in default of its loan from the USDA for more than 12 months, and currently owes more than $800,000 in overdue debt service payments. He said the FCA has “less than $100,000” in reserves, and will likely be forced to go into bankruptcy if the court does not approve the sale. He said the FCA explored the option of whether there was any coronavirus pandemic relief aid that would help the entity, but determined there was none due to it being in default of its USDA loan.
In its petition to the court, the FCA indicated it has had zero occupants in the 288 beds available at the three dorms since the start of the pandemic.
Truckenmiller said the FCA started negotiating with the USDA in August 2019 for permission to sell the properties in exchange for a debt write-off. He said the occupancy in the dorms had begun to drop in 2017 when President Trump’s administration began to clamp down on foreign student visas, resulting in foreign students at F-MCC dropping from a high of 160 down to about 47 for the current school year, costing the college millions of dollars in tuition revenue and the loss of more than 100 of the students occupying the dorms.
Truckenmiller said if the sale is not approved by the court, the FCA will likely need to seek some kind of loan in order to obtain the capital necessary to reopen the dorms for the fall of 2021.