Opinion ID: 1537924
Heading Depth: 1
Heading Rank: 2

Heading: The Reception Center Lease Agreements

Text: In 1972, notwithstanding the Legislature's directive limiting the Arts Center to existing facilities or activities, the Authority converted the Celebrity House into a full-service banquet and reception facility. 1988 Senate Hearing, supra, at 36-39. The Celebrity House was available to the general public as well as non-profit, corporate, and private entities. Id. at 37. At that time, the Celebrity House had a maximum capacity of seventy people, including service personnel. Ibid. In 1984, the Authority announced the construction of a larger reception center that would accommodate 350 people for sit-down receptions and 500 people for stand-up receptions. Id. at 39-41, 44. The final cost of the new reception center, now known as the Robert B. Meyner Reception Center, was approximately $6.4 million. Id. at 52. Concerned that the Authority had blatantly disregarded the intent of the 1968 Amendments and that the reception center would result in toll increases, the Senate convened the special New Jersey Highway Authority Investigation Committee. Senate Resolution No. 122 of 1987; see 1988 Senate Hearing, supra, at 1 (discussing purpose of Senate Committee). The Committee concluded that the construction of [a] $6.4 million facility violated state law which was specially amended in 1968 to limit the Authority's ability to engage in projects which are not related to the operation of the highway. Second Interim Report of Senate Special New Jersey Highway Authority Investigation Committee 30 (Oct. 1989). The Committee also found that the Authority conducted no research regarding the reception center's economic feasibility, id. at 32, engaged in inappropriate bid solicitation, id. at 42-44, and that the reception center was an ill-executed project that would not be profitable, id. at 33. No corrective legislation ensued, however, and in 1989, when the reception center was completed, the Authority leased it to 116 Park Caterers (Park). Under the terms of the Park agreement, the reception center would operate as a first-class, high quality, catering, banquet, and conference facility. The initial agreement expired in 1993 but was subject to two-year renewal periods. It was renewed twice before it was replaced in 1996 by a similar agreement with Bott, Inc. (Bott). The terms of that agreement were identical to the Park agreement except that Bott's annual payments were greater than Park's. Bott currently operates the reception center under the terms of the 1996 agreement. Under both the Bott and Park agreements, the lessee was responsible for the reception center's day-to-day operation. The lessees were permitted to use the reception center for banquets, meetings, conferences, seminars, luncheons, dinners, weddings and other similar activities. The Bott and Park agreements required the lessee to use its best efforts to manage the reception center profitably. Accordingly, both Park and Bott operated the reception center as a for-profit catering facility available to the general public. Both lessees were required to make minimum annual payments to the Authority. Those minimum payments were credited towards a percentage of gross receipts that the Authority was entitled to receive, which ranged from 10% to 25%. No minimum was required for 1989, but $150,000 was required for 1990, $250,000 for 1991, and $350,000 for 1992. The Bott agreement imposed a $300,000 minimum payment per year.