After Flagler Beach city commissioners and the owners of the Funky Pelican turned a 40-minute segment of Thursday’s commission meeting into a gushing lovefest, the two sides agreed to a stunning lease extension that would keep the two partners wedded through 2057.
The extension is conditional on the Funky Pelican’s makeover of its exteriors over the next 12 months, with new paint, color designs, new signs, a new “photo-op spot,” an awning over its oceanside bar area, and interior investments.
The lease’s financial terms do not change. The restaurant’s original rent was $3,000 a month, increasing at 3 percent a year. It is now $4,152, rising to $4,277 in January. (Loopers, the restaurant at the city-owned Palm Harbor Golf Club, started at $1,500 a month in 2022, increasing 3 percent annually.) By 2057, if it hasn’t been washed away by rising seas or a collapsed economy, Funky Pelican will be paying $11,013 a month.
The monthly rent is actually a smaller part of the more commanding terms those commissioners negotiated in 2010 and 2011 (among them Jane Mealy, who lost earlier this year to John Cunningham). The restaurant must pay the city 3 percent of all gross revenue over $1 million. That has proven to be a lucrative source of income from the successful business.
In 2024, the Funky Pelican generated $4.77 million in gross revenue, or close to $400,000 a month. That’s resulted in a $113,160 windfall for the city on top of the $50,000 in rent for that year, for a total of $163,000. Revenue is down this year, as has been the city’s windfall, which stands at $76,249, not including rent, with two months to go. (See fuller numbers here.)
Still, the Pelican isn’t just funky. It’s a golden goose, which may explain last night’s mutual admiration society.
“They’ve been great tenants, and they’ve been good to work with and they’ve definitely made the city proud, as far as compared to what was there, if y’all go way back,” Commissioner Eric Cooley said.
Even the reserved Barshay, who usually calibrates his emotions to strategy, gushed: “Over time,” he said, “it’s been a great partnership. The city’s helped us with the various things that need to go on out there, roof replacements and so forth. And we’ve done a lot of things to the place as well.” He described the changes in the lease as lightening some of the city’s responsibilities.
It was in marked contrast with the tortuous and protracted negotiations that pitted owner Ray Barshay on one side and six different commissioners over two commission terms on the other for almost a year and a half from April 2010–when Barshay submitted his first proposal to take over the property– to September 2011, when Barshay signed the original lease. The interim was worthy of Thucydides.
Not this time. Like unusually magnanimous lovers eager to look past dustups–dumpstergate in 2022, and the imperious, misinformed behavior of Funky Pelican employees that led to the false arrest of a peaceful demonstrator outside the restaurant earlier this year, and a likely costly lawsuit for the city–the two sides only remembered the good times.
By 2057, the Funky Pelican will have been at the pier just one year less than its predecessor, the Pier Restaurant.
But unlike in 2010 and 2011, Barshay this time did not appear before the commission unarmed. He’d brought a Cobb Cole lawyer. There was still quite a bit of calculated strategy behind the oyster plate. City Attorney Drew Smith spelled it out. “My suspicion as to why they’re asking to lock in those terms, to a certain extent, is because of the investment they’re putting into the property,” he said.
Amending the lease was Funky Pelican’s idea. It wanted those improvements to the facade. If its landlord wasn’t going to make them, it required revisiting the lease. “We want to bring forward a new design,” Jessica Gow, the lawyer from Cobb Cole, the Daytona Beach firm, said. “It has a new, updated color palette compared to the existing. You see signage elements included, including a little cartoon Pelican icon along that boardwalk. We think that the facade improvements create kind of a fresh and new building design, kind of breathes new life into this business that’s been here and really enjoys the partnership with the city.”
When the city has to make repairs, the city has to follow its usual procurement process and go out for bids. “It really slowed down the ability to respond in a timely manner to the maintenance concern,” City Manager Dale Martin said. “They want to take some of that under their control and be able to respond a little more timely for maintenance concerns that are within their capability of addressing.” It follows the model of the Funky Pelican’s origins, when Barshay took on the responsibility of rebuilding it after its many years as the Pier Restaurant, and the rebuild “just took the place down to the studs.”
Gow said the restaurant has a “proven record of success,” and would keep it that way with a lease extended 20 more years, conditional on the restaurant accomplishing the new construction. The permits would have to be issued within six months, the construction would have to be completed within one year. “So while the lease term is being extended, you will not have to wait for any of those extensions to see these proposed capital improvements come forward,” Gow said.
The revised lease with four five-year renewal options did make a commissioner pause. “That’s too far out,” Commissioner Rick Belhumeur said. “That’s 35 years out. How do we possibly have any idea what the economy is going to be like 35 years from now.”
Ray Barshay, the owner, did not disagree, but also conceded to Cooley’s and Belhumeur’s discomfort, which was addressed with new wording allowing for a trigger to renegotiate the lease in the future, “something in there to just make sure that we don’t lock ourselves in as something that potentially could be abnormally low, and yet we’re stuck with it,” as Cooley put it. Smith was to craft that wording.
“As far as Funky being there until ‘57, any good tenant that’s going to continue to run a good operation and make the city proud, that would be fine. The only question becomes: is it a fair and balanced agreement?” Cooley said.
Ray Barshay’s son, Alex, summarized the makeover ahead. “It’s really just putting a lot of paint and a lot of love back into the building,” he said. There’s been no painting since 2011. He described the future oranges and blues and trims and more prominent pelican. “We don’t want to be red and the city be blue. We don’t want to be black and the city be white. You know, everything should kind of look nice and be cohesive. And I think it’s a cool partnership to be able to do, and the timing sort of matched up. So a lot of the elements we hope to see in here, we hope to see kind of alongside and be congruent with the pier that’s getting rebuilt.”
The commission voted 4-0 to approve the new lease. Commissioner Scott Spradley was ill and not present. The item drew not a single public comment.
Commission Chairman James Sherman capped the renewal of vows with his own blessing. “You guys have been nothing but model tenants, and I personally look forward to seeing this next chapter, the Funky Pelican, with our new pier,” he said. “I think we were able to work through some of the fine details here with the contract.”
Keep Flagler Beautiful says
Only ate there once. No complaint about the food. Service was OK. But we never returned because we were seated at a table with music blaring loudly from overhead. We weren’t keen to repeat the experience, as there didn’t seem to be much difference in the decibel level at any of the other tables. I’m not an old fogey who doesn’t like certain types of music, but I can’t enjoy lunch when I can’t even hear the other people at the table when they’re talking. I hope lowering the volume of its music is one of the things Funky Pelican will add to its list of improvements. If they do, we’ll gladly return.