A year into the negotiations, relations between the Palm Coast city administration and the Green Lion Café at the city-owned Palm Harbor Golf Club have again broken down on the eve of a scheduled City Council vote on a proposed five-year agreement with the popular restaurant.
Chris Marlow, who runs the Green Lion, calls the latest proposal “a joke.” Mayor David Alfin is more optimistic. “I have every hope that we will move forward after tomorrow’s meeting, and we’ll be able to offer the community a great amenity.” But he concedes, as he has stated previously–that “if it’s not a good deal for both parties, it will not hold up.”
Alfin happens to think that it is a good deal, and that differences are over details, not deal-breaking substance.
But Marlow is not inventing the claim that there’s new wording in the proposed contract that was either never discussed before or not fleshed out as it has been.
“This saga continues. It’s absolutely unbelievable,” Marlow said. “We’re at our wits’ end, and tomorrow we’re going to draw the line.” Marlow said that as the proposal stands now, “we’re not signing that agreement,” and foresaw a tense meeting ahead.
Jason DeLorenzo, the city’s development director who’s been the point man on the contract–and whose measured patience is one of the city’s assets–declined to speak beyond noting that the invitation went out on June 1, and that the city has not heard back since. Marlow said the Green Lion received the latest city version of the proposed contract four weeks ago. The Green Lion had issues with it. It sent back notes about it three weeks ago, and didn’t hear back.
Each side says the other is not communicating, though the Green Lion acknowledges that it got an invitation for talks with DeLorenzo. But Marlow says he doesn’t see the point. “I’ve already done that four or five times, it’s gotten us absolutely nowhere,” he said today.
The city and Green Lion entered into an agreement in 2017. Green Lion got the first few months rent-free, then started paying rent below $600 a month, with small adjustments each year. It is now paying $600 a year. The city administration has wanted to renegotiate the deal for a while, and was doing so ahead of the expiration of the first five-year agreement. Under the 2017 agreement, the city was paying for water and sewer, electricity, propane and solid waste, essentially subsidizing the Green Lion at taxpayers’ expense.
The Green Lion was willing to renegotiate and bring its costs in line with fair market value. There was some ugliness along the way. But it was worked out, not least because council members were confronted with a swell of outrage from Green Lion supporters when the city briefly opted to end the lease. In March, the restaurant, in an open and long negotiating session with the council, agreed that the city should break even or make a small profit within 24 months of the new agreement. However lengthy that meeting, everything that was said was said almost on the fly, leaving room for interpretation once it was time to spell out the terms of the new agreement.
That’s where the two sides have clashed again. Marlow is referring specifically to four changes in the latest proposal, the first one relatively minor.
According to the new draft presented by the city–the agreement the city sent the Green Lion four weeks ago–the city breaks even starting Sept. 1, 2021, actually making a small profit of $575, and makes a profit of $1,312 the following year. To the Green Lion, that’s jumping the gun by one year, since the agreement was that the break even point would be reached within 24 months. But it’s not the sticking point.
The new proposal also calls for the Green Lion to pay electricity, propane, telecommunications and internet costs. Based on the March session with council, Marlow said, electricity was not part of the pass-through costs. “Where did that come from?” he asked. Alfin says it’s a result of the way the city is calculating the square footage cost.
The city would still be fronting $24,000 a year in costs, according to the calculations being presented to the council Tuesday–the cost of water and wastewater. But rent would increase 3 percent a year, from $1,988 a month starting this September to $2,238 a month by September 2026, when the city would be clearing nearly $3,000 from the restaurant. But that’s assuming water and wastewater costs are constant. And the figures do not reflect other types of maintenance the city would be responsible for as the landlord, in what amounts to a repair-prone double-wide trailer.
A third change: the existing contract doesn’t include a clause about Green Lion employees who break the law. Those clauses are becoming standard in newer contracts. The new proposal states that “conviction of any principal, manager, officer or director of Tenant for any felony or second or third degree misdemeanor shall be violations of this Agreement if the Tenant fails to remove such persons from the Leased Premises.”
That clause is inaccurately written to start with: it isn’t second or third degree misdemeanors that it means to include, but first degree misdemeanors, otherwise the restaurant would have to fire anyone who’s been convicted of not having a valid driver’s license, of trespassing, of disorderly conduct or of stealing something of lesser value than $500 (all second-degree misdemeanors). And there’s no such thing as third-degree misdemeanor under Florida law.
A first-degree misdemeanor, however, can be a battery (as was the case with the recent conviction and sentencing of the Palm Coast man who beat up a Lyft driver, and who is serving three months in jail), or a drunk driving conviction. Marlow did not raise questions about the poor wording, but about a new clause that had not appeared in previous versions of the proposal: “if the Tenant fails to remove
such persons from the Leased Premises,” then the Green Lion would be in reach of its lease. That means Marlow would have to fire any top officer of the company who could have even a misdemeanor conviction.
Finally, what took Marlow aback was a new clause in the agreement that had never been discussed before, neither in that open session with the council nor, he says, with city staff: a clause that requires the Green Lion to pay property taxes.
The wording is unequivocal: “Tenant must pay all personal property taxes assessed on, or any portion of such taxes attributable to, the Leased Premise,” the proposed agreement reads–in underlined red, to signify an addition to the draft. “City may, but is not obligated to, pay the taxes and increase future installments of rent by the amount of taxes paid by City on Tenant’s behalf.”
“We’re the tenant in a shared space. We don’t own the property,” Marlow said.
The clause seems strange. But it is no fault of the city administration’s. Rather, it is the result of a court decision in Florida that the First District Court of Appeal handed down just two days before the council and the Green Lion had that open-meeting session on March 4. No one in the room yet knew of the decision, which surprised the legal community and could have broad ramifications. (See: “Court Says City-Owned Golf Course Managed By a Private Company Can Be Required to Pay Property Taxes.”)
The city administration could not ignore it. It had to make provisions for it.
On March 2, the First District ruled that a city could require a private company running a city-owned golf course to pay property taxes, even though the company doesn’t itself owns the grounds. The reason: the moment a company extracts profits from the grounds, then the city itself is no longer using those grounds exclusively for a municipal or public purpose, the judges found–and the property appraiser could deny the city an exemption from property taxes.
It isn’t clear to what extent that decision will or may be applied across Florida, or whether the Supreme Court will hear it. Last week Gulf Breeze, where the case originated, asked the high court to take up the case. That doesn’t mean it will.
“Personally I don’t believe it’s ever going to happen, so I haven’t give it that much weight,” Alfin said of the property tax ruling getting upheld. Alfin says Marlow is misinterpreting the clause in the contract. But the clause is pretty explicit and written without qualifiers, giving Marlow cause for worry, not unreasonably so. “They keep changing the deal,” he said.
The city has declined to ask for the restaurant’s profit-and-loss statements to better gauge its own position or consider a profit-sharing approach, though that’s a standard practice with, say, Flagler Beach’s lease with the Funky Pelican, which generates $140,000 a year for the city annually (including rent), as it had been with Flagler Beach’s own golf course managers, though that relationship is now in litigation.
It isn’t an exaggeration when Alfin says he estimates that the city and the Green Lion Cafe have spent so much time and money negotiating a new lease agreement–with both sides’ attorneys’ running up the bill–that it now “far exceeds” the value of the lease. The year-old negotiations could end on Tuesday. They should end on Tuesday. But it may take another tour de force for that to happen.
The council meets at 9 a.m. at City Hall.