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HomeMy WebLinkAbout611 - MINUTES - City Commission MINUTES OF WORKSHOP MEETING DANIA BEACH CITY COMMISSION PIER RESTAURANT MONDAY, AUGUST 23, 2004 - 6:00 P.M. 1. Call to Order Vice-Mayor Mikes called the workshop to order at 6:06 p.m. 2. Roll Call Present: Vice-Mayor: Bob Mikes Commissioners: Bob Anton Robert Chunn—arrived at 6:32 p.m. Pat Flury City Manager: Ivan Pato City Attorney: Tom Ansbro City Clerk: Louise Stilson Absent: Mayor: C.K. McElyea 3. Discussion on Pier Restaurant (City Manager Pato) City Manager Pato advised that at the August 13, 2004 Commission meeting, staff informed of additional construction costs of$350,000 for the restaurant. The reasons for the higher cost are because the original figure is several years old, and it is a significantly different building than the original design. We are here today to ask for direction on the project to move toward completion or in whatever direction the Commission desires. He asked Ken Koch to explain the State's position on replacement of the trailer currently located on the pier. He advised the tenants, architects, building official, and staff were present to answer questions. Vice-Mayor Mikes asked how much was budgeted for the project. Patty Varney, Director of Finance, responded $519,000 was available from the $650,000 we borrowed. If the additional $350,000 is used, we will defer the Beach Improvement Projects that were funded for next fiscal year in the amount of $185,155 from the General Fund. We also have $44,000 in Interest Earnings in our Capital Projects Fund, which can be appropriated to the project. The remaining $120,000 would be taken from Fund Balance, which would still leave a balance of$5.6M in the Fund Balance. Vice-Mayor Mikes asked where we stood with the $500,000 airport reserve. Minutes of Workshop Meeting I Dania Beach City Commission Pier Restaurant Monday, August 23,2004—6:00 p.m. Finance Director Varney responded we would still have $300,000 left. Commissioner Anton asked if Beach Re-nourishment would be deferred. Finance Director Varney responded the hot top, restrooms, and headquarter would be deferred, not the re-nourishment. The deferred funds would need to be replaced in the future. Commissioner Flury asked how much additional funds were needed above the $650,000. Vice-Mayor Mikes asked the architects to address the issue. Jaime Borrelli, Principal Architect, advised they estimated the cost of the project to be $745,000+. The primary reason is due to an increase in construction costs. In the last 6 months, concrete has risen 40%, and steel has risen 60%, primarily due to material shortage from construction in the Far East. Vice-Mayor Mikes asked if they knew what the expected labor and machinery costs would be. Mr. Borrelli explained they have an estimate that was provided to the City. They do not have a detailed quantity take-off, but they do have an estimate that breaks down the costs by the different categories. • Commissioner Flury asked for the difference in cost between what we have and what we need. City Manager Pato responded we have $520,000 available, we anticipate the total cost to be $745,000, and we included a 10% contingency fund. Finance Director Varney remarked that $300,000 was needed with a contingency of$75,000. Vice-Mayor Mikes asked if a contingency was included in the original figure. City Manager Pato remarked that we looked through our records for details as to the original $650,000 cost, but could not find any information on how it was derived. Vice-Mayor Mikes asked if a 10% contingency would be sufficient. Mr. Borrelli responded that they were pretty comfortable with the current estimate. They do not know how the $650,000 was calculated. He can only advise that construction costs have increased substantially in the past 6 months. This is out of their control, and is not just in Florida. He stated they discovered the floor slab on the pier needed to be reinforced because it was not originally designed for the weight load proposed with the building. Vice-Mayor Mikes asked if there were potential modifications that could save the City money. Minutes of Workshop Meeting 2 Dania Beach City Commission Pier Restaurant Monday,August 23,2004—6:00 p.m. • Mr. Borrelli responded that they have minimized the building to a smaller footprint; added the ADA requirements; designed a smaller elevator; and reduced space to the minimum in order to function properly. Ken Koch, Building Official, remarked when the pier was constructed, it met all ADA requirements, and still does. The railing is deteriorating and needs replacement. The construction design for the restaurant is as basic as we can get, and we are down to the minimum method of construction that can be built. It is a concrete and steel structure; has an upgraded roof, and the elevator ($50,000) is a requirement for several reasons. Typically, two elevators are required, but we have reduced it to one in order to lower costs. Stuart Grant, Project Architect for Borrelli & Associates, advised they planned on using additive alternates in the final drawings. Working with staff, they have identified items that can reduce costs to the City. They feel that their estimate is right on target, but cannot predict what the future will bring. Vice-Mayor Mikes remarked the Commission had passed an Ordinance where contractors doing certain types of work in the City, had to meet certain prevailing wage requirements. He asked if this would increase the cost of the project or if we would receive less bids on the project because of this requirement. Mr. Borrelli responded that this is a unique project; it is not the standard construction project • where you have complete access. There is only one point of entry and only one point of access. With respect to wages, they have used those recommended in the manuals they use. He was unaware of the City's requirement on wages. Vice-Mayor Mikes explained that several years ago, the requirements were put in place that costs could not be added to projects. Mr. Borrelli remarked they have factored in a degree of difficulty in the cost. This is a specialty project and it is very likely that we will not receive many bids. Commissioner Anton asked Ken Koch the status of permitting with the State. Mr. Koch responded the current trailer used for the Bait Shop cannot be replaced with another trailer. The State will not allow us to replace it with another trailer because it was placed there seven years ago on a temporary basis. They are concerned we will not move forward with a permanent structure. The State will call us in the near future, and ask us to remove the trailer and replace it with a solid permanent structure. The trailer needs repairs and we need to do something with it soon. Vice-Mayor Mikes asked the proposed operators of the restaurant to address the Commission. Commissioner Chunn arrived at 6:32 p.m. • Sven Jutz and Ute Stork, operators of the restaurant, came to the podium. Minutes of Workshop Meeting 3 Dania Beach City Commission Pier Restaurant Monday,August 23,2004—6:00 p.m. • Vice-Mayor Mikes asked the operators what they expected to invest in the operation. Ms. Stork responded they hired a Kitchen Engineer to design the project. They provided a list of equipment they would purchase to the City months ago. She advised the proposed hours of operation are 9:00 a.m.-12:00 a.m., but they will monitor the hours to see what is more feasible. They would still like to have the 4:00 a.m. license, similar to the restaurant they operate in Cooper City. Their operation is 60-70% food, and 30-40% drinks, including non-alcoholic drinks. She advised they do not require an elevator because the suppliers bring the food and drinks. She remarked it is not a good idea to have supplies and people in the same elevator. Commissioner Anton asked if the menu would be similar to the one in Cooper City. Ms. Stork responded they will lower the number of pasta items; increase the sandwich menu; and have a strong seafood menu. Vice-Mayor Mikes asked about the Whiskey Creek Dock. He remarked the dock was built with grant funds and he did not think it could be leased out and obtain revenue. Bonnie Temchuk, Assistant to the City Manager, responded the improvements were obtained through BBIP funds. If a fee is to be charged, it is the fee for everyone, no preference may be given to anyone. • Ms. Stork remarked they understood they could not restrict access to the dock. City Attorney Ansbro advised they do not lease or have exclusive control of the Whiskey Creek Docks. Section 2 b. of the lease, states they have non-exclusive license for ingress and egress from the premises. Commissioner Flury remarked they operated a wonderful restaurant in Ft. Lauderdale. She asked if they sold that restaurant and if one of them was a master chef. Ms. Stork responded that she is a master chef and that last year they sold the restaurant in Ft. Lauderdale because they thought the City would be ready with the Pier Restaurant. She indicated the 4:00 license should not be an issue because they are restaurant operators, and they like to go home at night. Vice-Mayor Mikes remarked the beach is currently a daytime operation, and the proposed night operation could possibly require added Public Safety services. Ms. Stork responded that they have never called emergency services in the last seven years of operating a restaurant. She advised they plan to charge higher drink costs in order not to attract the drinking crowd. Vice-Mayor Mikes remarked we still have a potential problem with FAU. Minutes of Workshop Meeting 4 Dania Beach City Commission Pier Restaurant Monday,August 23,2004—6:00 p.m. • City Manager Pato indicated he was working very hard to close that deal, but would need more time. Vice-Mayor Mikes invited the audience to make comments. Mimi Donly asked if there was any reason not to proceed. Vice-Mayor Mikes responded the public has been promised a lot of things in this City. The issue is an additional $350,000. Ms. Donly remarked tonight they discussed the funding, and asked Vice-Mayor Mikes what his feeling was. Vice-Mayor Mikes responded he would let her know tomorrow. Danny Kreske, 4854 SE llt" Terrace, Dania Beach, commented he has been watching the progress of the Pier project for a couple of years. He may have expressed his opinions to some of the Commission, but he finds it difficult to understand why a City would put money into a high risk project. He asked how much income is derived from the restaurant. City Manager Pato responded the yearly revenues, which cover the debt service, are $96,000 per year, $8,000 per month, or 8% of the gross revenues, whichever is greater, for ten years. There • is nothing paid up-front, it is a monthly lease. Mr. Kreske asked what if they go out of business in a year and a half. City Manager Pato responded we find another tenant. Mr. Kreske remarked so now you are in the rental business. He commented that this project should be supported by, and entirely funded by, the entrepreneur, not the City of Dania Beach. Vice-Mayor Mikes remarked we tried, but previous City Managers wanted a fancy restaurant. There is a proposal in Deerfield Beach where 90% of project is paid by the developer. Mr. Kreske remarked if this high risk venture goes belly-up, the City will be left holding the bag. Vice-Mayor Mikes stated we are committed with a lease agreement. Commissioner Flury remarked this is the first time Mr. Kreske appears before the Commission. This project was approved two years ago, and we signed the lease one year ago. She stated these are highly regarded business people, and if it fails, we still have a great asset on the pier and someone else can pick up the operation. Mr. Kreske remarked, historically speaking, restaurants don't create better restaurants as each one goes out of business. Usually when they go out, they stay out. Minutes of Workshop Meeting 5 Dania Beach City Commission Pier Restaurant Monday,August 23,2004—6:00 p.m. • Commissioner Flury stated that she owned three restaurants for twelve years, and if you have good food, and she believes these people have good food, you will survive. She remarked we will not let someone operate the restaurant that does not have a good reputation. This is not the point; the point is that the City has a lot of money invested in this project. Mr. Kreske remarked that the building has not begun construction, and what happens if it does not succeed. In a restaurant you have no guarantees, no assurances that it will succeed. These are things you should think about. M.P. Malone, remarked she has spent most of her life on the beaches of South Florida. Comments have been made that the type of crowd a beach attracts may be less than worthy of this type of restaurant. She does not know where this is coming from, but having lived on a beach all her life, she has seldom seen troublemakers except in High School. Beaches in South Florida have always attracted family people. She commented that most beaches have nice seafood restaurants. People will not go to the beach to get drunk; they can do that in the middle of town at Paulo's. She thinks we have held these people up long enough. George Jason remarked that he came into the City of Dania Beach during the last annexation. He fought to get into Dania Beach because he felt we were moving in the right direction. He was encouraged by the thought of putting a restaurant on the pier because it was a unique situation. He advised he is responsible for organizing reunions in South Florida every year and he looks for restaurants on the water. He has been looking forward to us having a restaurant on the water. • He remarked if you have a good location, they will come; and he thinks this is a good location. Tom Zannucci, current operator of the Fishing Pier, remarked he met the proposed operators of the restaurant and realizes there is a problem with money. He stated, if need be, he would like to enter into a contract with the City, or the restaurant operators, to possibly build a Bait Shop. He realizes we are in a contract, but would be willing to take up some of it, if we are willing. Vice-Mayor Mikes thanked him. He stated he appreciates the tenants and architects coming here tonight to discuss the situation. He commented that his personal feeling is that it wasn't a unanimous vote to approve the lease. He thought a family restaurant would be more appropriate, but we are committed to a twenty year lease. The original intent was to build a shell and the operator would be content with a short term lease. He remarked that he disagrees with this Commission agreeing to twenty years and committing most of the funds. He remarked we will decide tomorrow night, when we have a full Commission, where this is going because we have to recommit funds. At this point in time, he does not know where he is going on this. It is $lM in public funds, and there are a lot of places in this City where we could spend $1M without competing with the private sector in a restaurant. 4. Adjournment Vice-Mayor Mikes adjourned the workshop at 7:00 p.m. • Minutes of Workshop Meeting 6 Dania Beach City Commission Pier Restaurant Monday,August 23,2004—6:00 p.m. CITY OF DANIA BEACH -ATTEST: IK. 1VI E X A MAYOR-COMMISSIONER LOUISE STILSON CITY CLERK Approved: September 14, 2004. • • Minutes of Workshop Meeting 7 Dania Beach City Commission Pier Restaurant Monday,August 23,2004—6:00 p.m.