FORT PIERCE – Costly problems with leases for two, city-owned waterfront restaurants could be closer to settlement Tuesday.

The Fort Pierce City Commission is expected to approve a settlement agreement with the Florida Department of Environmental Protection (FDEP) over boundary and unpermitted structure violations at Little Jim Bait and Tackle that resulted in more than $16,000 in fines assessed against the city.

Salty Baitshack 3, the current operator and leaseholder for the North Hutchinson Island causeway restaurant/bar, is expected to agree to pay those fines and agree that it will not add any new, unpermitted facilities at the site.

In another waterfront eatery development, city officials say they believe a deal could be finalized within 30 days for a new lease assignment to take over operation of the former Crabby’s Dockside restaurant near the downtown marina.

At their Tuesday night meeting, commissioners will be asked to approve another 30-day extension to allow the city to evaluate a plan submitted by an unnamed party to take over the long-term lease held by Winking Starfish LLC.

“…the City has received a proposal from a potential assignee,” a memo to commissioners says. “Preliminary review indicates the assignee may be suitable; however, additional financial information is required to complete the City’s due diligence. The City is extremely close to having a complete assignment package ready for Commission review, with only a few outstanding items remaining.”

The name of the potential new operator has not been disclosed yet.

One of the conditions set by the city will require the new leaseholder to pay at least $290,000 of unpaid rent and property taxes. The city said it discovered, after-the-fact, that Winking Starfish was in arrears before the operator announced on Facebook it was closing Crabby’s in mid-February, citing financial issues.

City officials have not said who was responsible for its failure to collect several years of property taxes that had been paid by the city rather than Winking Starfish and alerting them about rent that was in arrears.

In 2018, the city awarded Winking Starfish a 20-year lease for the Avenue property, with the possibility for two, five-year renewals. The company spent $4 million to build a new, two-story restaurant/bar on the site and the city says it will own the building if Winking Starfish terminates the lease.

Terms of the original lease call for Crabby’s to pay the city a base annual rent of $159,558, increasing 2 percent in each successive year. In addition, the city receives 2 percent of food sales over $2.5 million; 7 percent of alcohol sales after the first $600,000; and 5 percent of ice cream sales over the initial $100,000.

In regard to Little Jim, FDEP has ordered the city to pay $5,000 of investigation costs and another nearly $11,000 in rent owed because Little Jim built docks without permits and that encroached on state land.

Salty Baitshack 3 is expected to agree to pay those costs.

That’s one of the issues that has muddied the city’s process for awarding a new lease after the current one expired in 2025. A Request for Proposals resulted in controversies when some bidders claimed property information provided by the city was flawed, the current operator failed to include financial terms and a proposal from a Michigan group was initially chosen. But then the city terminated the process and Little Jim’s current operator had their lease extended on a month-to-month basis while the FDEP issues played out.

It’s unsure how the city plans to proceed with a new lease once the FDEP fines have been paid.

Little Jim property was a former military guard post that was given to the city by the Navy after World War II.

Tuesday’s city commission meeting begins at 5:05 p.m. in the commission chambers at Fort Pierce City Hall.