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Flagler Beach and Willing Investor Still Not Moored to New Pier Restaurant Lease

| February 3, 2011

flagler beach pier restaurant

Once a signature, now hardly noticed anymore. (© FlaglerLive)

The future of Flagler Beach’s Pier Restaurant is still half-baked.

The Flagler Beach City Commission and Ormond Beach restaurateur Raymond Barshay, who put forth the best concrete proposal to take over and reinvent the run-down restaurant, were at it again Thursday, logging another tortuous half-day negotiating session by going over a 17-page lease line by line. They got hung up over several issues, just as they had in another session three days before Christmas. While Barshay on several occasions looked ready to give up out of frustration, there was no deal-breaker just yet, and both sides agreed to soldier on.

The city owns the restaurant, the pier, the bait and tackle shop and the bathrooms there. The package has been leased to Katalin Meyer since 1988. She wants to sell. Barshay wants to buy. But the city must approve—and renegotiate what potentially would be a 25-year lease. Barshay is ready to assume the lease, but he doesn’t want to be the city’s savior. He wants to make money. The city is desperate to return its signature landmark back to respectability: the restaurant for now is poorly received, and leaves more than a metaphorical bad taste in the mouths of those who visit. Or walk by.

Barshay’s qualifications as a restaurateur are not in question. He owns River Grille on the Tomoka, a popular, modern American cuisine restaurant in Ormond Beach. He plans to invest several hundred thousand dollars in remaking the Pier Restaurant. But serious disagreements have emerged between Barshay and the city. And impatience is spilling out of the commission chambers.

“Let’s find a way to make this happen. This is only for the good of Flagler Beach, and let’s not drag it out anymore than we have to,” Carol Fisher, owner of the BeachHouse Beanery across the street from city hall, and a frequent advocate for the city’s merchants, said half-way through the meeting, after she’d left it for a meeting of her own at the Beanery. “I think having a recognizable place that’s going to be a draw for people from St. Augustine, Daytona Beach, the Hammock, Palm Coast and Ormond Beach is only going to be good for all of us. It’s going to mean more people. Now, there are some people who don’t want it here for just that reason–that there’s going to be more people here.” That, Fisher said, is no reason to oppose Barshay. “Plus, he knows how to run a restaurant. It’ll be more successful, and we need success here.”

The biggest disagreement between Barshay and the city is over the bait and tackle shop. The city was negotiating the new lease from the perspective that the restaurant was part of a package deal. Whoever takes it also assumes the responsibility for the bait and tackle shop, the ticket-selling for the pier, and the upkeep of the bathrooms at the pier. Barshay doesn’t see it that way. He thinks the bait and tackle shop is not a money-maker. He doesn’t want to lose money on it. Rather than assume the whole responsibility, he proposes that the city pay half the cost of its staffing, which Acting City Manager Bruce Campbell puts at $59,000. The city isn’t happy with that arrangement. Talks got tense when the two sides had deep disagreement over the interpretation of the lease, with the city insisting that it assumed Barshay was at the table knowing that the lease was a package deal, and Barshay insisting just as much that he’d never agreed to any such package deal.

“I’m very, very, very, very frustrated. I never took on this position that I want to take over the bait and tackle shop,” Barshay said, his demeanor still characteristically even-tempered but his forehead finding the palm of his hands more and more. “I think we’re going backward and I’m disheartened by it.” He added, “I started off with the theory that I was going to run a restaurant. That’s still where I am.” But then he said: “I’m on your side. I’m not sure you’re on my side.” Of course, the city isn’t on his side: it’s on the side of its own fiscal responsibilities and its responsibilities to taxpayers, though there’s general agreement among merchants that the restaurant can use a boost like Barshay.

Commissioners proposed replacing staffers who sell and take tickets for the pier with ticket-taking machines that would, over time, save money. But they proposed the idea as a way for Barshay to lower his costs. They still didn’t like the idea of paying him to defray the costs of the bait and tackle shop. Commissioners and Barshay were under the impression that the city was currently paying between $70,000 and $100,000 a year to keep the operation going. It was an indication of the tension in the room that when Campbell produced the actual figure of $59,000, which lowered everyone’s projected costs considerably, Barshay said he had no documentation of such a number.

“We looked at that the other day Ray, if you remember,” Campbell said, speaking to Barshay from his desk. Barshay sat at the other, across the commission room.

“You showed me a piece of paper and I took it at face value, yes,” Barshay said.

Campbell attempted to break the logjam by suggesting that he would explore ticket-taking machines, and that the commission should consider—as a few commissioners were beginning to suggest—not having a bait and tackle shop there at all, or perhaps lease it to someone else entirely (Campbell said he’d had two inquiries), or even turn it into a stairwell for an eventual guard tower.

The negotiations with Barshay have had the unintended, if useful, consequence of showing Campbell in full managerial mode—Campbell essentially auditioning for the permanent manager’s job. He spoke directly, proposed alternatives and compromises, and seemed unafraid to go toe-to-toe with Barshay, though as the session wore on, whatever inhibitions and reserve may have lingered in the room had vanished: even John Feind, the commission chairman, clicked with a few verbal brass knuckles from time to time, sounding almost like Commissioner Steve Settle.

“How do we resolve this? What’s the answer?” Feind said, not budging. “This is probably the thing that decides whether we can work it out or not.” In the end, however, they all budged enough to agree to continue talking and let the disagreement stand for now.

Earlier in the negotiations, Barshay had won a huge concession: not paying a dime’s rent until 30 days after he’d receive his certificate of occupation. That’s unusual. But these days, landlords are making all sorts of concessions to get tenants, including providing free rent.

There was also the matter of rent credits. The city had agreed to give him $9,000 in credits—the equivalent of his first and last month’s rent plus a month’s security—but only by tacking the credits toward the end of his lease, before its first renewal, more than a decade down the line. Barshay got the city to move up the credits to the beginning of the agreement. But he did not get a concession out of the city on its planned lifeguard tower, which, as currently designed, would block the restaurant’s southerly view. And there’s still confusion over who would build the outdoors deck for the restaurant, and with what benefits to whom.

One major financial issue the two sides did not agree on: profit sharing after the first $1 million. The city wants 3 percent of profits on sales beyond $1 million. Barshay is ready to pay 2 percent. It’s not the most staggering difference. Assuming the restaurant realizes $1.2 million in sales over a year, the city’s share would, at 2 percent, be $4,000. At 3 percent: $6,000. Put another way, Barshay’s take (before expenses) would be $1,194,000 instead of $1,196,000. The two sides agreed to let that one hang for now.

The meeting began at 1 p.m., with several people in the audience, including Fisher and two candidates for the Flagler Beach City Commission—Phil Busch and Marshall Shupe. By 5:30 p.m., Shupe alone was left as an audience of one, outnumbered by two reporters, and Feind declared he was done: “Tonight is my wife’s birthday and we do have time-certain plans,” he said. “I’m pretty fried myself,” Commissioner Ron Vath said.

The lease is back in lawyers’ hands, and will likely again return to commissioners for more negotiating.

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3 Responses for “Flagler Beach and Willing Investor Still Not Moored to New Pier Restaurant Lease”

  1. DLF says:

    I was shocked to see that Flagler Live wants someone to make money. Most of the time they are against the greedy owners who take advvantage of the worker, maybe there is hope.Maybe the News Journal will follow in Flagler Live footsteps?

  2. Bill Hazz says:

    Does the city want to operate this themselves . . . offhand, I would say, NO. They obviously do not understand business operations, especially that of a restaurant. Restaurants depend on disposable income. How much of that is still hanging around Flagler Beach?

    I can’t believe the amount of time (and money) that this group of commissioners can waste. We are “LUCKY” to have someone who knows the restaurant trade, operates a very good restaurant already, still hanging on with an interest in leasing this place. You only have to look to Daytona Beach to see a similar fiasco that happened there.

    I guess the City is afraid of someone actually making money and succeeding here. It might make others want to try!

    Sign this deal already. Just the restaurant space only. Give him 5 years without making him pay the City anything, it is his risk after all. Then you will have 5 years worth of financials that you negotiate with. Put a clause in the original lease what will happen after the first 5 years of a 10 year lease. Sales of 1.2 million will be a 2.5% return to the City. Sales of 1.5 million will return 3%, etc. Negotiate in GOOD FAITH, commissioners. Get out of the way and let good things happen here.

    What a cluster . . . .

  3. lawabidingcitizen says:

    Lease the pier and the bait shop separately to someone who knows what they’re doing. FB’s commissioners again demonstrate their incompetence. Why inflict managing a bait shop and pier onto a guy who wants to operate a restaurant.

    If the restaurant is successful, parking will raise its ugly head again.

    The real jewel of Flagler Beach which brings people from all over the county is the farmer’s market – formerly a delightful experience. Unfortunately, it’s also the red-headed stepchild of city’s ruling elite. For the first time in the 20 years we’ve been here, there are empty spaces. Months/years of torn up streets, the crazy jog on the corner of 2nd & Central making turning west awkward, the switch from diagonal to horizontal parking and the decreased the number of parking spaces, make coming to the farmer’s market a less pleasant experience for shoppers.

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