When the Palm Coast City Council last touched on its intentions with the Green Lion restaurant at Palm Harbor Golf Club last week it was a final, take-it-or-leave-it decision: sign the new lease, pay roughly $3,000 a month, or the lease is over–Green Lion would have six months to clear out–and Palm Coast seeks a new vendor. The deadline is Friday.
The meeting was not friendly. The council limited Chris Marlow, who runs the restaurant, and Tony Marlow, who owns it, to three minutes, as if they were like any other member of the public rather than the principals of an agenda item that has been a focus of city business for months. That triggered them both to lash out from the podium or near the back of the room, including sharply hostile words from Tony against city staff and the council. The impression they left behind as they left the room was that there was nothing much left to salvage as far as they were concerned.
On Tuesday, however, the Green Lion’s attorney suggested in a three-page letter to city council members, the city manager and the city attorney, that they still very much want to be in the game–or the ring, as the case may be: punches are still not being pulled, but by still punching, they’re still dealing, or hoping to.
They may be disappointed: last week’s unanimous vote by the council is as immutable as Friday’s deadline.
Palm Coast Mayor David Alfin and Chris Marlow had been scheduled for a joint radio appearance on a WNDB talk show Friday, which could have provoked uncomfortable if not inappropriate circumstances, placing Alfin in a situation where the conversation could have been steered toward on-the-spot negotiations. Alfin has now ruled that out. He said he had not had a chance to thoroughly review the letter with the city attorney and was booked until Friday, so would not have that chance. “It would be prudent for me to postpone that interview,” he said.
Ferguson’s letter is a textbook case of good-cop, bad-cop lawyering all in one: he is proposing a compromise on behalf of his clients–and threatening to sue if the city follows through with its own pledge to sever the lease agreement. “Please note,” Ferguson writes in bold letters, “that the Green Lion reserves any and all rights to legally challenge the City’s attempt to terminate the Existing Contract” using a provision he specifies in the contract currently in effect.
Ferguson is referring to the contract’s section 6.C. which states that either the city or the Green Lion may terminate the agreement with 180 days’ notice. The city would have to then reimburse the Green Lion the previous 12 months’ rent, or $7,200, if it terminated. Ferguson calls it a provision “that the city admits was intended only if the City had to close the golf course.”
That may be the case. But it’s not in the contract. The wording allowing the city to terminate is. To any textualist judge–as Flagler County’s judges tend to be, especially Circuit Judge Terence Perkins, who would likely judge the issue if it ended on his docket–that’s where it would end: with the words in the contract.
So the threat may just be a bluff unlikely to sit well with the council. Or, borrowing a page from Captain’s BBQ ongoing lawsuit against the county, it would be an attempt to impress upon the city that it would face a lawsuit with attendant costs that would dwarf whatever possible extra few thousand dollars the city is seeking to extract from the restaurant with its latest proposal–which had not even been the administration’s agreed-upon proposal.
The council added an extra $1,000-a-month cost for the Green Lion after deciding that it should share the water and sewer bill at the trailer the restaurant shares with the city. The city does not get billed, but it estimates water and sewer costs at roughly $24,000 a year.
As negotiated between the Green Lion and the city–Development Director Jason DeLorenzo is the lead negotiator–at least until the Green Lion stopped negotiating two to three weeks before the last council meeting, the Green Lion would have paid the city nearly $24,000 in annual rent starting in September, plus electricity, propane, internet and phone lines. Rent would then increase annually by 3 percent. The Green Lion was challenging the electricity portion of those costs before last week’s meeting. But it had not expected that the council would add the $1,000-a-month water and sewer charge on top of them, raising the annual cost to $34,000–or $43,000, including electricity costs, estimated to be $9,000 a year.
In previous negotiations the city council had been willing to wait two years before its arrangement with the Green Lion allowed the city to break even. Last week’s amendment has the city making a profit from the start, albeit a modest one of less than $200.
In the good-cop portion of Ferguson’s letter, he says the Green Lion is willing to enable just that: immediate profitability of over $3,000 next year, according to his calculations. The restaurant would pay $25,184 in annual rent the first year, pay for internet, phone and propane. But that would be it. The city would continue to pay for electricity, water, sewer and garbage pick-up.
In sum, a difference of $18,000 between the two sides’ proposals, or $1,500 a month, based on agreement the city council approved last week and the agreement the restaurant is willing to sign on to.
That’s setting aside another point of contention Ferguson stresses: that the city arbitrarily altered a “concession” agreement into a lease agreement. “A concessionaire does not pay electricity, propane, water, for [point of sale] systems, property tax, etc.,” he writes. (There is a pending case in court that could open the way for property appraisers to remove a city’s tax exemption on city owned properties leased to private entities, if those entities draw a profit from their operation. But the outcome of that case is unlikely to change the status quo.)
In that regard, Ferguson’s argument is on stronger ground, if the case went to court: the 2017 agreement was a “concession agreement.” Somewhere along the way, the city changed it to a “lease concession agreement.” A textualist judge would not let that slip by without closer examination, especially since the Green Lion does not agree with the change. (But by agreeing to pay at least some of the items not usually included in a concession agreement, it opens the door to weakening its own case: if propane, why not water and sewer?) The 2017 request for proposal, however, referred to the arrangement as a “lease agreement,” Alfin said, putting the city on stronger ground. Again: that’s not what the contract wording says.
The Ferguson letter includes a full proposed amendment to the existing agreement, underscoring the Green Lion’s continuing position that the city cannot arbitrarily change the agreement, call it a lease, or even impose some of the new costs it is imposing.
Ferguson’s letter acknowledges, without naming the Marlows, that “the public frustration that was exhibited could have been tempered,” but he said “it’s hard to blame them when 5 years of their sole risk and effort are in jeopardy. If my client would have been provided the simple decency of speaking without time limits last Tuesday, he would have discussed” the issues outlined in the letter “so that the Council could have made an informed decision.”
The city, Ferguson argues, is disregarding its own intention to charge the fair market value estimated by Cornelia Manfre, the commercial Realtor it had hired to arrive at such an estimate. Instead of paying $9 to $10 a square foot, the restaurant, Ferguson wrote, would have to pay the equivalent of $17.64 a square foot, or “86 percent over fair market value.”
“The City is getting more than what it wanted,” Ferguson wrote. “There is no justification for changing from a concession to a lease agreement. There is no need to hide other changes to the relationship in a new agreement. There is an Existing Contract.”
Alfin on Wednesday said the council has voted, the deadline was set. He was especially soured by the way the Marlows had treated city staff “repeatedly” or by a social media campaign that he says is mischaracterizing the issue and portraying the city as seeking to throw out the Green Lion, “which is absolutely false.” The mayor said and he was not going to let a “massive social media campaign” decide city policy. (The Green Lion has been directing supporters to mail their thoughts to city council members. Emails have poured in by the dozens, but so have emails asking the city not to extend further subsidies, Alfin said.)
But setting that aside, he said, the process does not allow negotiations at this point. “There was a motion, there was a vote, a unanimous vote, and the staff and the city attorney were given direction and there can be no deviation from that direction, certainly not before another public meeting,” Alfin said. “The mechanism or the tool doesn’t need to exist and does not exist. That’s the way the the charter is set up. So that start button was pressed. The process or the procedure were ignited and launched at the conclusion of the vote at the last city business meeting.”
A city spokesperson said the motion did not specify when the Friday deadline would run out–end of business on Friday, or midnight. The city is taking the position that if the Green Lion were to send in the agreement with its signature by midnight, the city would still accept it. But no later.
Monday is a holiday, so no termination letter will be issued to the Green Lion that day. The council meets again next Tuesday at 6 p.m., by which time such a letter presumably would have been issued. But could a city council member still intervene and seek consensus for a different direction at that meeting? Yes. “A city council member, under member comments at the end of the meeting,” Alfin said, could “say say, Hey, I think we should hold off, do a cooling off period or something like that. That’s possible.” But Alfin concluded: “I do not believe that will happen. Ninety-nine percent.”
Letter and Amendment to Mayor and Councilmembers