The operator of Hempstead's popular Malibu Beach Park has not paid the town rent on the property for nearly a year, accumulating a balance of $531,400, records show.
Dover Gourmet Corp. had already gone seven months without paying rent on the town-owned Lido Beach complex when Hempstead’s comptroller and parks commissioner in April extended the company's contract to run the facility for another five years, according to the records, which Hempstead provided Newsday following a Freedom of Information request.
But Butch Yamali, the chief executive of the Freeport-based company, said he has not paid because the townowes him for more than $2 million for capital improvements he has carried out at the park, which features beachfront cabanas, tennis courts, a restaurant and other amenities.
Yamali said Hempstead Comptroller Kevin Conroy, Parks Commissioner Daniel Lino and Town Attorney Joe Ra instructed him not to make the rental payments until the two sides came to terms regarding the improvement costs.
"They said do not pay until we come up with an offset," Yamali said. "The town owes me money."
The license agreement is not the only local government contract held by Yamali, of Merrick, who also runs the town-owned Sands Catering Hall and concessions stands in Hempstead and Nassau County parks. But Yamali said Malibu is among the most profitable, as the beachside facility can attract thousands of weekend visitors in the summer, with some families paying up to $6,000 per summer to rent one of Malibu's more than 600 cabanas, which have a roughly eight-year wait list.
The contract, for which Dover is to pay Hempstead around $560,300 in rent annually, states the company would perform up to $10 million in capital improvements. Yamali said he has spent more than $12 million, replacing roofs, installing retaining walls and pouring "miles of concrete."
The contract does not say the town will cover capital improvement costs beyond $10 million. But Yamali said town officials had agreed to do so verbally.
Ra disputed parts of Yamali's account.
"He's absolutely wrong. I never had a conversation with him about rent," Ra said.
Lino said in a statement that if Dover exceeded its "contractually mandated capital improvement obligation, those excess monies would offset the rental and PILOT payments due," Lino said.
Dover's balance consists of $504,700 in rent and $26,700 in PILOT fees, the records show. PILOT stands for "payment in lieu of taxes."
Town spokeswoman Susie Trenkle-Pokalsky said Conroy was not available to comment.
A town memo written by Conroy in August 2017 provided by Ra states that Dover had already spent $10.6 million on capital improvements by then.
Hempstead Supervisor Laura Gillen called Yamali's outstanding rent and PILOT payments "greatly concerning."
Gillen criticized the contract extension after Newsday reported on it earlier this month, calling it a secretly negotiated "sweetheart deal" that reduced the amount Dover pays the town by $169,000 annually.
Yamali has disputed Gillen's figures.
Councilwoman Erin King Sweeney, whose district includes Malibu Beach Park, said the town should "fully investigate" Yamali's unpaid rent.
The records obtained by Newsday include letters from the town related to the Malibu contract that are addressed to Joseph Cairo.
Cairo is the chairman of the Nassau County Republican Committee. Yamali said Cairo had previously represented Dover in his capacity as a private attorney, including when the town first awarded Dover the Malibu contract in 2009.
Yamali also said Cairo's son has occasionally worked for Dover as a project manager.
Cairo said in a statement that he was not involved in either the “current financial dealings” between Dover and the town or the contract extension.
The records also show that in 2013 and 2014, Dover did not pay the town $674,600 in fees, including for rent at Malibu.
Yamali said he did not pay then to offset insurance money the town had received through Dover's insurance policy to cover the company's expenses repairing damage at Malibu from superstorm Sandy in 2012.
Dover also previously operated a coffee and gift shop at the Nassau University Medical Center in East Meadow. Newsday reported in April that NuHealth, the public benefit corporation that runs the hospital, said Dover had not paid $400,000 in fees, which Yamali disputed. The two sides are in litigation, he said.