The Malibu Beach Club is in Lido Beach.

The Malibu Beach Club is in Lido Beach. Credit: Howard Schnapp

Hempstead Town Board members Tuesday approved a $1.2 million settlement with a beach club caterer for back rent payments and also awarded the company a 15-year contract to continue operating the Malibu Beach Club in Lido Beach.

Town board members voted 5-0, with Town Supervisor Don Clavin and Councilman Anthony D’Esposito abstaining, to approve the settlement and the contract with Dover Gourmet Corp.

The settlement ends a lawsuit filed by Dover chief executive Butch Yamali against the town, asking a Nassau County Supreme Court judge to deem his previous contract legal, after Dover had failed to pay rent on the beach club for nearly a year.

Some residents at the town board meeting questioned the approval of a settlement without opening the contract up to competitive bidding and also criticized the town's procurement policy. Town spokesperson Greg Blower said the contract was not open for bidding because the extension was part of the settlement.

Clavin said he abstained from the vote because the contract dispute occurred before he joined the town board in January.

"I did not serve on the Town Board during this time period, nor was I involved in any aspect of the review of the contract dispute," Clavin said in a statement.

D’Esposito declined to comment. Yamali could not be reached for comment.

The town’s outside counsel, Donald Chesworth, said the settlement includes payment in full for money Dover owes from 2018 and 2019. The town may also arbitrate payments owed in 2020 because of the COVID-19 pandemic, Chesworth said.

Dover would have until April 2022 to repay Hempstead Town, which also approved $2.4 million in credits for Dover for prior capital improvements at Malibu.

Under the new contract, Dover would be charged an annual $560,000 license fee to operate Malibu. Under a previous contract extension, Dover was to pay the town around $534,000 a year.

The U.S. Attorney's Office issued subpoenas to the town last year investigating Dover's contracts with the town.

"It’s in the best interest of the taxpayers of the town and resolves questions over the last couple years and we think it would bring litigation to a close and is the economic wise thing to do at this point," Chesworth told board members Tuesday.

The agreement also specifies that Dover will commit to $300,000 in annual payments for improvements for the life of the contract, totaling $4.5 million.

Attorneys for the town said the settlement includes new safeguards, such as requiring all changes and amendments to the contract be approved by the town board.

The board's Democratic minority counsel, Steve Lester, said the settlement "solves some of the problems that gave rise to this dispute." The town board is 6-1 Republican.

"One of the most important things we established was a set of internal controls so the issues that caused this issue to arise in the first place will not occur again," Lester said.

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