The Palm Coast City Council this evening will consider approving a new lease or an amended lease with the Green Lion Café at the city-owned Palm Harbor Golf Club, raising the popular restaurant’s rent from $600 to $1,665 and ending subsidies for most utilities.
But key differences remain between the Green Lion and the city. The council will have two options: accept the lease proposal as drafted by city staff–which the Green Lion may not accept–or accept amendments as presented by the Green Lion, through its attorney. A further negotiated compromise could also result in a third, yet-undefined option.
The city administration is recommending against going with the Green Lion’s proposals.
The Green Lion would preserve some of the utility subsidies the restaurant has benefited from, unless rent is reduced, and would reduce the starting rent to $1,500 a month, based on $9 a square foot, as opposed to the city’s $10. It also reduces hours of operation by two hours in the morning most days.
The new proposals are the result of blowback the council did not expect after a majority of its members opted to reject a lease proposal put forth in February, calling it a “sweetheart deal,” and demanding to sever the lease, scrap the relationship with Green Lion and start a new request for proposal, to which Green Lion could have applied.
Green Lion management had been told by city staff of the February workshop weeks before that meeting. It was told that the lease would then be discussed and voted on at a subsequent morning meeting. It was also assured that the workshop matter would be a routine discussion and updating of lease terms the city had been working on with management. City staff itself never expected the council members’ reaction (the drive against the Green Lion came from Council members Eddie Branquinho, Victor Barbosa, who has since stepped down, and Ed Danko.)
The reaction to the council’s turnabout was swift, angry and disbelieving. It came from Green Lion management itself, a large base of patrons, and an equally large group of people who, though not necessarily patrons of the restaurants, were dismayed at the city’s manhandling of a business that had helped turn around the golf club’s fortunes. (City staff would later say that while Green Lion helped in that regard, it was not the driving factor of the club’s recent success.)
Only a week later, and after hearing from angry residents for two hours, the council sharply reversed course. It asked city staff–namely, Jason DeLorenzo, the development director and point person who’d been renegotiating the lease for most of the previous year anyway, precisely because its terms were too generous–to go back to the negotiating table, with a few pointers. The council wanted the rent to be based on a fair market value analysis. And it wanted subsidies removed.
Both objectives are reflected in the administration’s proposal submitted for a vote this evening, while the continuing differences between the city and the restaurant reflect the rather hard-nosed negotiations that have undergirded the relationship between the city and the restaurant for almost a year.
The city signed a lease with the Green Lion in 2017 after receiving only two responses in reply to its request for proposal to fill the space, one of them from an ice cream vendor that would not have met the city’s requirements. The club was doing poorly at the time. It was in annual need of subsidies from the general fund to keep operating. The restaurant space had lost its charm and look as an inviting place to eat or drink after the departure of Chef Karen Barchowski (owner of Sally’s Ice Cream in Flagler Beach).
The city, then managed by Jim Landon, crafted generous terms for the Green Lion: No rent for the first six months. Then $500 a month, increasing by $25 a year starting with year two. That brought current rent to $600.
The new lease as proposed by the city administration is nearly a tripling in rent, up front. But the new rent terms are more generous than those the city had negotiated with Green Lion in February. Back then, Rent would have kicked up to $1,207 by this September, then increased sharply each year–$1,448 a month in 2023, up to $2,503 by September 2026, a 317 percent increase.
The current proposal has rent starting at $1,665 a month, but increasing at just 3 percent a year thereafter. By year five, rent would be $1,873, or the equivalent of an annual $7,560 saving by 2026 when compared to the terms DeLorenzo had negotiated in February.
On the other hand, all utility costs would now shift to the Green Lion. In the February terms some of those costs would have shifted even then: the business would have had to start paying for natural gas (propane) and its internet bills. But nothing more. The city would have continued paying the water, sewer, garbage and electricity.
The current proposal, at least as prepared by the city, has Green Lion shouldering most of those utility costs.
The city estimates that the monthly cost for electricity ranges between $1,000 and $1,300. The city is not proposing to separate out water and sewer costs for two reasons: to do so would be cost-prohibitive (it would require re-plumbing the triple-wide trailer where the Green Lion operates).
The monthly water and sewer bill is around $2,000. Currently, it’s difficult to determine who uses what water and sewer services in. the trailer, which is shared by the pro shop and the club office, where patrons, pay, neither of which is associated with the Green Lion. The restaurant shares bathrooms with those operations. Last year the club was host to 54,000 rounds of golf: how many of those golfers flushed the toilet?
The Green Lion’s attorney’s marginal notes on the proposed lease reflect various points of contention, including a dispute over the annual 3 percent increase: “Council – staff would like the rent to increase by 3% [per] year even beyond these 5 years,” a note reads, referring to increases beyond 2026. “But if the Green Lion is paying [fair market value] today and that FMV is increasing by 3% for 5 years even if the economy slows or, worse, retracts. For the City to say that it has to continue increasing at 3% for a total of 10 years when the starting point is already FMV is not fair. If the economy retracts, the City is still ahead b/c this doesn’t allow for decreasing the rent.”
The Green Lion’s attorney also proposed a nuanced approach to electricity costs in those marginal notes: “At the Council meeting, the Council wanted the Green Lion to pay for its own electricity, which they’re willing to do if the City can get the Leased Premises separately metered,” John Ferguson of Cobb Cole, the Daytona Beach law firm representing the Green Lion, wrote. “I did not address that in this comment (and can) but wanted to point out that the Fair Market rent determined by the City’s appraiser said $9-$10/sq ft ‘inclusive of utilities’. So, if the City wants to incur the cost of creating separate meters (several thousands of dollars) to have the tenant pay their electricity (which is okay), then we will need an energy audit (as recommended by the appraiser) which will then reduce the rent range lower than $9-$10 sq. ft. Green Lion is okay with that. And they’re also okay not having separate electricity meter and paying $9.50/sq ft.”
To conduct the fair market value analysis, the administration sought bids, got none, and ended up securing the services of not-entirely independent voice: Cornelia Manfre, a two-time recent candidate for mayor and a council seat who was among those addressing the council at the Feb. 15 uprising, before the council reversed course. “I respectfully request that the city council reconsider, gracefully, professionally renegotiate the five year renewal that was agreed to in the document,” she told the council at the time. (A briefing memo to the council indicates Manfre solicited the city: “After the quote period closed, continuing with standard procurement, staff followed up with [Manfre] who then provided a quote and was selected to provide the Fair Market Value analysis.”)
On the other hand, her comments to the council were not polemical. Beyond calling for a reconsideration, the member of the newly formed One Sotheby’s International Realty presented a straightforward, Reader’s Digest version of a market analysis that pointed out what she saw as a mishmash of miscalculations in the way square footage within the business was calculated.
“The Green Lion as I see in the document is going to be dubbed as 2,000 square feet,” she said in that February meeting, “however, it’s 2,000 square feet of traversed real estate by others, by the golf course members and by the public and the pro shop. So the proposal that I see now equates to $724 a foot, $869 a foot $1,043 foot, $1,252 and $1,502 for a blended average of $1,077 a square foot for shared space.” She added: “The document that was created is not a real estate lease. It is a concession lease, a concession agreement. Thereby you’re not talking about the real estate that is referenced but is a concession agreement.”
In February, the city had calculated that the restaurant’s total square footage added up to 2,000 square feet. That included the kitchen, the office, indoor dining, the patio, the bar, a fenced in storage area and a storage area. The new agreement keeps that square footage.
The city and the Green Lion disagreed over another important point. The city wanted a new lease. The Green Lion thought it was in its right to continue the current lease with an amendment. A particular section of the agreement “provides that the Tenant has the right to renew the term of the existing Concession Agreement by providing notice. It is not a mutual option,” Ferguson wrote the city’s attorney, Neysa Borkert, on April 21. “And it does not provide that the City has the right to compel changes to the Concession Agreement in connection with the exercise of the renewal. It does not even say that the City can increase the rental rate beyond what is contemplated in Exhibit B for the renewal term. But, as my client agreed at the City Council meeting, they are willing to make the changes that the City Council asked for, including paying fair market rate. That concurrence does not include a full rewrite of a currently binding agreement.”
Joann Soman says
The article called the original lease “a sweetheart deal” but didn’t mention the amount of money that the Green Lion had to spend to revitalize the restaurant (I understand it was in really rough shape). It seems like, once again, the council jumped to conclusions without knowing all the facts
It was a council member who previously called it a “sweetheart deal.”
Joann Soman says
Of course it was.
As an Ex Former Resident I would have zero confidence in any of the Local Government to negotiate. Vote Accordingly
The dude says
Man do these guys love tripling things… cost of garbage collection, their salaries, now the rent on a successful business who fixed up their shitty little building while adding a tremendous value to the area.
Soon, our property taxes will also be included in that list.
Well Alfin approved his own outrageous raise and now once again him and the council are playing games with the Green Lion Lease.
No wonder PC can’t get decent businesses to come to town since they play games with businesses once they do come. It is time to think about who you are elected into these positions. Now were are stuck with con artists until our next election.
Dude rent in pc is more than south Florida now get real. This as sweet as the Disney deal to them
So over 5 years their rent would go up about $42 a month and they pay a portion of the utilities? Still a nice deal figuring some renters had their monthly rents rise $100 and more in this town over the last year. Yes they turned around a not too profitable location into a popular eatery yet I’m pretty sure they can afford this new deal.
Land of no turn signals says says
Well somebody has to pay for those big raises.
It would serve those idiots right if the Green Lion walks away and nobody else opens shop there.
They’re going to do that for unaffordable housing. The one’s that want to leverage a roof over your head are raising listing prices, Biden & the Fed raising interest rates. Your dollar will buy less & less under the Biden-Harris regime. The current administration claims that this will cool demand. The fallacy & lie of that is that it will price people out of home ownership & into a market of higher rent payments. Financial hardship has always been Obama-Bidens’s weapon & tool of choice. As the population grows, demand will always be higher. Biden-Harris need to go, 82+ million of you voted for this. Trump’s biggest mistake, letting Fauci & Democrats close down the economy in the power grab & coup of 2020. Inflation is going nowhere anytime soon, refugees from the borders haven’t slowed, those people need a roof over their heads, energy needs, food and anything else a human being needs to exist on this planet. 74+ million that voted the other way, don’t deserve this victimization. How come Trump-Pence was racist & anti-LGBTQ, yet Biden-Harris rampant inflation isn’t. Poor are going to get poorer & left behind, the wealthier are going to thrive under the Delaware Liar. Since we are getting instant adult demand for everything across the board as population increases and shifts are happening. Demand & supply shortages eorm Covid are WH/Biden-Harris lies. Solution stop having more children & growing an overpopulation explosion. That was we won’t have to build more schools. See how inter-related & complex this whole man-made system is. It’s all about the payment, the money you have to never earn to have the quality of life we’re all after. You’ll be working until you drop, it’s the failures of social security system & lies of a retirement. At a certain point in your 50’s employers push you out for age discrimination, you stop earning the income that requires a 6 figure lifestyle. All you become that day is a senior as a government welfare recipient.
This Green Lion thing, of course they need to pay their utilities, the rent increases, that a real estate & inflationary price up. You can kill that business with higher food costs. The Green Lion invested $ 100K into that property out of pocket to succeed. Palm Coast government is trying to sandbag that effort & upgrade. If Green Lion goes under from these inflationary measures. Ask the one’s wanting to modify the terms of the lease whether they’re going into business as a golf course restaurant to replace the Green Lion. Ask them if they’re going to pay back any loans the Green Lion has outstanding for a default on debt. Ask them if the money comes out of their new salaries that go into effect in Nov 2022. Across the board, these govt council types will drive over to the Green Lion for a meal and take advantage of pre-existing infrastructure. Green Lion goes down, I bet they drive over to Golden Lion in Flagler Beach for that meal for them & their families, after they ruined the Green Lion. That’s just the way they roll, always looking for the next revenue source. Really, this is such a sweetheart deal ? Alfin & his merry band of government thieves did nothing to make Green Lion successful. When they entered the lease terms, they had a property that wasn’t generating any business. A failed hot dog & ice cream stand. They’re trying to drive that restaurant into the ground again. That’s why the city council probably needs to be voted out in November. Who do we get instead is the uncertainty of that, that next morph of government might be more Biden-Harris like.
Ramble much? Apparently, according to you, everything that happens locally is, well of course, the fault of Biden/Harris???
Michael Cocchiola says
Well, Jimbo99… hard to understand your point(s), but you have, for sure, flunked Economics 101.
First, Biden/Harris have pretty much nothing to do with inflation. They have overseen a robust economy and full employment. That causes increasing demand for goods and services. The private sector has been unable tp keep up with this demand because of supply chain and worker impediments. Cases in Point – shortage of new cars due to the lack of computer chips and other critical parts provided by offshore suppliers and delivery of goods by trucking companies where employee shortages leave trucks parked. Again, Biden/Harris don’t control private sector automobile manufacturers or trucking companies.
Let’s talk about the FED. The FED establishes monetary policy in America, In order to forstall rampant inflation the FED increased loan rates making borrowing and lending more expensive. Remember the last housing bubble? Do you want that chaos again? Anyway, the FED is independent of the Biden/Harris administration. Joe and Kamala have nothing to do with interest rates.
Hope this helps you.
You go girl! says
Cheaper to rent there than a single family home.
“The council wanted the rent to be based on a fair market value analysis”
You mean based on extremely overinflated market value that is impractical, just like housing. Idiots. I can’t wait for the bubble to burst.
I think Palm Coast is getting money hungry like there not getting enough from all the permit fee when building a home .So they should let the place go empty then see what PC does .It seems like some one has to pay from that huge pay raise