Loading...
HomeMy WebLinkAbout2000-09-28 Workshop Meeting - Discussion of lease agreement with Whiskey Creek Food & Tackle City Commission Meeting Minutes MINUTES DANIA BEACH CITY COMMISSION WORKSHOP MEETING SEPTEMBER 28, 2000 1. CALL TO ORDER Mayor McElyea called the meeting to order at 8:13 p.m. 2. ROLL CALL Present: Mayor: C.K. McElyea Vice-Mayor: John Bertino Commissioners: Jim Cali John Etling City Attorney: Tom Ansbro City Manager: Mike Smith Deputy City Clerk: Charlene Johnson Absent: Commissioner: Bob Mikes • 3. Discussion of lease agreement with Whiskey Creek Food & Tackle, Inc. David Murray, Attorney representing Whiskey Creek Food & Tackle, explained that several meetings have taken place relating to the lease for the Pier Restaurant and that the term of lease seems to be the biggest concern. Mayor McElyea agreed with providing a 20-year lease term with the possibility of an option for renewal based on the tenant's performance. Attorney Murray explained that his clients are concerned with providing a substantial capital investment and with spending years building the restaurant business up without any guarantee of retaining the business at the end of the lease. The City is protected up front because they gain 4% of gross. As a compromise, he suggested a 20-year lease with options. The options would start from scratch and the City could get appraisals at the end of 20 years. Another consideration would be to extend the lease for 25 years without any options. Or, a Right of First Refusal where the lease ends in 20 years and the City decides to operate the business. Commissioner Bertino mentioned that Commissioner Mikes is not present tonight and he seemed concerned with the lands that are included in the lease. City Manager Smith stated that Commissioner Mikes was concerned with the lease including the control over the entire pier and operation of the bait and tackle shop. Attorney Murray clarified that Whiskey Creek Food & MINUTES 1 SEPTEMBER 28, 2000 WORKSHOP MEETING Tackle does not necessarily desire to operate the bait and tackle shop, but, rather, it is an • obligation in the lease. City Manager Smith explained that the Whiskey Creek Food & Tackle proposal provides the City With 4% of the gross revenues, including revenues from the fishing pier, because they are investing some $1.4 to $1.6 million in capital expenditures. Because of the capital investment Whiskey Creek Food & Tackle is expected to invest, they desire control over the pier environment instead of securing a second tenant for the pier. They are also providing five kiosks on the beach side, which would also provide revenues for the City. In comparison, the Pier Pointe proposal was structured on a net basis that included some management fees. Don Streeter and Thomas Zannucci, current bait &tackle shop tenants, pay the City some $90,000 a year and the City doesn't receive anything from sales. The City seemed only concerned with receiving 50% of the admission revenues. Commissioner Bertino expressed concern that the City needs some idea on what the gross amount figure would be with the Whiskey Creek Food & Tackle proposal as it would take millions for the City to receive $90,000 a year based on 4% of the gross revenues. City Attorney Ansbro explained that the City would receive a minimum $48,000 base rent ($98,000 minus $56,000 for the first eight years) plus 50% of the pier revenues (estimated at $45,268 per year), which covers admissions. Mr. Murray pointed out that Whiskey Creek gains the other 50% revenues as they are operating the pier for the City. If sales from the restaurant and bait shop do well, the City stands to receive even more as they get 4% of the gross revenues. Mayor McElyea requested an understanding of how the City's investment of$400,000 would be handled. City Attorney Ansbro explained that Whiskey Creek would draw down from the City's funds to complete the construction at the time the structure is ready to go up. Certificates of Completion would be provided at each step of construction and Ken Koch, Building Official, would monitor each draw down. Whiskey Creek would be investing $1.4 or $1.6 million to build the structure and if they default, the structure would belong to the City as there is no lender involved. It was noted that Don Streeter & Tom Zannucci, the current Pier Bait & Tackle tenants, bring in approximately $92,000 a year and that the City receives 50% of that amount and the tenants have no capital investment as they operate out of a trailer on the pier. Mr. Smith pointed out that Whiskey Creek Food & Tackle would build a restaurant structure, shade shelters and restrooms on the pier and the City gains more in revenues than the current tenant just as a minimum. In addition, City Manager Smith advised that Whiskey Creek Food & Tackle are going to construct a gravel illuminated walk-way path from the pier ramp to the Whiskey Creek boat docks for several kiosks to be erected and operational during the day for selling beach items such as chair rentals, sun tan lotion, etc. of which the City gains revenues. City Manager Smith clarified that the boat ramps would remain under the City's control. Mr. Murray stated that his clients felt a need to provide family style activities in addition to the restaurant to bring people to the location. Mr. Murray confirmed for Vice-Mayor Bertino that all special events have to be coordinated with the City and that they must adhere to the City's requests.for continued special events from non-profit organizations. It was noted that the special event requirements were covered on Page 12, Section 5, and Subsection d of the lease. MINUTES 2 SEPTEMBER 28, 2000 WORKSHOP MEETING • City Attorney Ansbro clarified that in the Definition section of the lease "parcel" means the whole 26.5 acre beach front park that is owned by the City and "premises" includes the pad for the restaurant building and the kiosks. He clarified that Whiskey Creek Food & Tackle would not be leasing the actual pier or the Whiskey Creek docks. The Charter provides for a lease not exceeding 20 years to be approved by Ordinance. For leases exceeding 20 years, a 4/5 vote of the City Commission is required and the lessee has to agree to make a substantial capital investment within 2 '/Z years after the lease begins on the premises. Beyond this, to encourage a lessee to make capital expenditures of a continuing nature, the City could include a provision that the lessee has no vested or absolute right of renewal. However, the City could provide a Right of First Refusal in case the City wanted to run the operation at the end of the 20-year lease. Attorney Ansbro stated that the City is not obligated to provide the Right of First Refusal in the lease but it would give the City and Whiskey Creek Food & Tackle a good negotiating position. Attorney Ansbro reminded the City Commission that these people operate restaurants and they do a good job of it. In regards to the term of the lease, City Attorney Ansbro stated that at the pre-bid conference for the Design Build Operate RFP all bidders were advised that the lease might not exceed 20 years. Mayor McElyea stressed his opinion that the City cannot grant more than 20 years because this is not what was represented to Pier Pointe. Commissioner Cali reminded the City Commission that this is a substantial capital investment for Whiskey Creek and that the City should provide some concessions to balance the vendor's investment. • Attorney Murray stated that a 20-year lease with a Right of First Refusal is no more than a 20 year lease as it is not a 21 year lease. The Right of First Refusal only allows Whiskey Creek Food & Tackle an opportunity to match what some other vendor may offer the City if the City chose to lease the operation. Tim Patrillo clarified with Mayor McElyea that the City expects them to invest $1.6 million to construct the building and build the business up for 20 years in accordance with the City's standards, and, after 20 years, Whiskey Creek Food & Tackle could lose the business. Mayor McElyea agreed with Mr. Patrillo's comments. Attorney Murray advised that they would agree to a straight 25 years as a compromise and he mentioned that the deal would be different if the restaurant building existed at this time. City Attorney Ansbro agreed that the lease should begin 20 years from receipt of the Certificate of Occupancy and after all agency permits are received. Discussion followed on insurance requirements in the lease. For the record, Commissioner Cali stated that this is a good deal for the City as well as a good deal for Whiskey Creek Food & Tackle and that this vendor has track record for operating restaurants. Mayor McElyea restated his opposition to going over 20 years on the term of the lease. Vice-Mayor Bertino advised that he would agree to a Right of First Refusal. MINUTES 3 SEPTEMBER 28, 2000 WORKSHOP MEETING Attorney Murray advised that the Right of First Refusal would be the minimum that they could accept and it would be more of a benefit to the City. Vice-Mayor Bertino mentioned that the City is not doing a very good job of maintaining the pier. Commissioner Cali suggested structuring an Enterprise Fund to provide a revenue stream with enough capital to maintain the pier, parking lot, boat docks, etc. City Attorney Ansbro advised that the Ordinance would be placed on the October 10 regular meeting for second reading and he recommended a 4/5 vote should the Right of First Refusal be considered. Attorney Murray mentioned that there were a few more lose ends in the lease relating to condemnation, drug-free workplace and transfer of stock provisions that he would discuss with Attorney Ansbro prior to the meeting. Commissioner Cali stressed the importance of the term of lease excluding the construction phase and Attorney Ansbro agreed that the lease term would commence as of the issuance of the Occupational License. The construction phase was estimated for eight (8) months. Commissioner Etling requested that Attorney Ansbro provide the lease to the City Commission prior to the agenda distribution for the October 10th meeting. Attorney Ansbro agreed to provide a synopsis of the changes that are discussed with Attorney Murray as he felt they would be minor at this point. 4. ADJOURNMENT • This meeting adjourned at 9:15 p.m. MAYOR-COMMISSIONER ACTING CITY C E K Approved: August 14, 2001 MINUTES 4 SEPTEMBER 28, 2000 WORKSHOP MEETING