CAPE ELIZABETH – The Town Council Monday terminated the lease of a tenant subletting part of a building in Fort Williams Park, after the council said the tenant appeared to be “profiteering” through the deal by turning a tidy profit.
Behavioral Health Resources of Portland rents a 3,000 square foot portion of Building #326, a brick building in an area called Officer’s Row at Fort Williams Park, a town recreation area on Shore Road. The lease was renewed in April 2017, and expires May 31, 2020.
The town charges Behavioral Health Resources $2,000 a month, which includes utilities. Behavioral Health Resources, in turn, sublets space to Rachel Walls, who operates an art gallery in the building. Walls said she leases space on the first and second floors for $3,600 a month, while the primary tenant has been using the basement for storage, according to Town Manager Matthew Sturgis.
According to the lease, Constance Jordan is the president and is the person Walls referred to as her landlord. Jordan is also listed as the director and a psychiatric mental health nurse practitioner on the company’s website.
According to its website, the office for Behavioral Health Resources of Maine is in Portland, where it serves the psychiatric, mental health, and substance dependence treatment needs of people in southern and central Maine.
Behavioral Health Resources is listed in Secretary of State records as a business corporation; Behavioral Health Resources of Maine is listed as a separate business corporation by the Secretary of State.
A message sent on the business’ website to Jordan generated a reply from her attorney, Jeffrey Bennett, who confirmed that the two were separate companies, but he did not say how they differed.
Sturgis said the original rental agreement between the town and Behavioral Health Resources was signed several years ago, but did not know the exact date. Over time, there have been multiple sub-tenants, he said.
“We inherited a bad deal. I think there’s no question about that,” said Town Councilor James Garvin. “When I first found out that Behavioral Health was engaging on profiteering on our asset, I, like most of you, was completely astonished, and there’s probably no citizen in this town that thinks that is something that we should allow to happen.”
Councilor Christopher Straw noted that the original lease was drawn up under a prior town manager, before the town had a finance director.
“You might see why we brought in a finance director now,” he said.
According to Sturgis, Behavioral Health Resources and Walls are in litigation regarding the sublease, and Walls has been making lease payments to an escrow fund. The town is not involved in this litigation, Sturgis said.
Because it has not received rent from the sublet, Behavioral Health Resources has not paid the town its rent in several months, with the last payment received in May, according to Sturgis.
In November, the town gave Behavioral Health Resources a 15-day notice to pay back rent, and, when it failed to do so, issued a termination of the lease, said Sturgis, who has since been in negotiations with Jordan. He suggested the council reinstate the lease if Jordan waives her right to renew it in May. That would give the court time to resolve the issue between Behavioral Health Resources and Walls and also give Jordan more time to pay the town.
Councilors instead opted to end the lease, but will continue pursuing Jordan to get the money the town is owed.
The council weighed different options regarding the lease, which included allowing Walls to become a co-tenant and rent the space directly from the town through May, which town attorney Michael Hill advised against, saying it could cause complications.
“I’ve tried to keep the town out of getting involved in the dispute with the tenant and co-tenant,” Hill said.
Sturgis said if Behavioral Health Resources wins the case, the town will get the money it’s owed. Sturgis said Walls has promised if she wins that she will pay the back rent, though he believes she would likely want the space beyond May.
The council plans to discuss what it wants to do with the space after it’s vacated by Behavioral Health Resources.
Sturgis suggested using the building as offices for park staff, but got some pushback from the town council.
“I don’t know if I’ve just been sleeping, but I didn’t know anything about kicking tenants out at the fort and moving park rangers in, because there goes a whole revenue stream,” said Councilor Caitlin Jordan, who said she is not related to Constance Jordan.
She said the town needs to discuss the matter further before deciding which direction to take.
Sturgis said in a phone interview Wednesday that the town rents out other space in Building #326, as well as other buildings in town. He said when the lease was originally drawn up with Behavioral Health Resources, the town was having a difficult time renting out space at Fort Williams, which can’t be accessed when the park closes at dusk. Sturgis said the town is taking measures to avoid sub-leasing agreements moving forward as it draws up new leases for the properties it rents out.
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