New amenities at Jaycee Park include an elevated boardwalk along the Caloosahatchee River, a band shell and three new playgrounds, including the splash pad pictured. FILE\/MARK CLIFFORD<\/p>\n
City staff was directed to tweak the concessionaire agreement for Jaycee Park and bring it back to next week\u2019s Cape Coral City Council workshop.<\/p>\n
City Manager Michael Ilczyszyn said Wednesday the concessionaire agreement was typed up over the weekend and transmitted to the concessionaire. He said he had gone over the terms with city council and wanted to go over them in public.<\/p>\n
The presentation compared the Public-Private Partnership agreement, or P3, with The Reef LLC, and the current concessionaire agreement with the Kearns Group.<\/p>\n
The term for The Reef, which fell through, was a 10-year initial term with provision to extend the term eight times for two years each for a total of 26 years, compared to a 15-year initial term with provision for one five-year renewal for a total of 20 years.<\/p>\n
The upfront initial payment structure for The Reef was to be $1.3 million.<\/p>\n
\u201cThe city was going to be fully providing a turnkey facility that was built out on the outside, and interior, and had furniture, fixtures, and equipment. They filled the juice machines and started selling on day one,\u201d he said. \u201cWe did not secure the $1.3 million, which led us to cancel the agreement.\u201d<\/p>\n
Ilczyszyn said the city had to fund the roof.<\/p>\n
\u201cWe are turning over a gray shell. In a gray shell, you don\u2019t know who your end user or tenant is,\u201d he said. \u201cThe contractor builds the shell for the building \u2013 the windows, doors, exterior walls and roof, and the tenant to do a tenant buildout. In this case, we are turning over a gray shell to our concessionaire.\u201d<\/p>\n
Ilczyszyn said the initial concession fee from the Kearns Group is $130,000 with $1,170,000 to be paid in 240 equal monthly installments of $4,875 plus interest with a fixed interest rate not to exceed 5%.<\/p>\n
The Kearns Group will finish the building.<\/p>\n
\u201cThe tenant has to build out the building. All the improvements that the concessionaire makes to our building, it improves the value of our asset and at the end of the term, it is ours,\u201d he said.<\/p>\n
Ilczyszyn said the concessionaire will spend a minimum of $300,000 to complete the building that will become a bistro, which is cash to the city to finish the building.<\/p>\n
\u201cWe would have to put at least another $300,000 to be useable,\u201d he said.\u00a0<\/p>\n
Ilczyszyn said when the Jaycee Park concession opens there is going to be a minimum guarantee of $6,250 a month, or $75,000 per year from the concessionaire.<\/p>\n
\u201cWhere we are with this agreement, we are starting at 4%. There is no maximum cap. This is a drastic difference. We are higher on what we are getting and all the way through no reduction and no cap,\u201d he said.<\/p>\n
The agreement also includes construction services for Phase II of boat slips at Jaycee Park \u2013 24 boat slips up to 40 feet plus associated improvements.<\/p>\n
Ilczyszyn said some of those docks are going to be used for people who come to the park to watch shows, go to the playground, volleyball courts, and splash pad and some are coming to go to the bistro, or whatever the concessionaire is going to call it.<\/p>\n
\u201cInstead of reimbursing 100% of the docks, (the city) only will be reimbursed 90% of the docks. That was meant to address the upfront money and being more of a partner,\u201d he said.<\/p>\n
The concessionaire agreement with the Kearns Group includes time from 8 a.m. to 9 p.m., which is different than the previous agreement that began at 11 a.m.<\/p>\n
\u201cThere are families waiting in the parking lot of the splash pad to open at 8,\u201d he said, adding that they want to be able to grab a coffee, and some kind of breakfast. \u201cWe adjusted the start time back to line up with what we are hearing from the users of the park.\u201d<\/p>\n
Zak Kearns, of Kearns Restaurant Group, said they came together and met in the middle with mutual beneficial terms \u2013 paying for the building, finishing the building, percentage of sales \u2013 the city is getting all the layers it can get. He said they will pay for the docks, which is an added amenity that will enhance the park, as well as the business.<\/p>\n
\u201cThat is what our goal was,\u201d Kearns said.<\/p>\n
Council, overall, was in favor of the terms that were presented.<\/p>\n
Councilmember Bill Steinke questioned a required mutual agreement. He asked that if the concessionaire is in good standing is the five-year renewal automatic, unless they say they do not want to be in the agreement anymore.<\/p>\n
\u201cSince the balance of $1,170,000 is being repaid in 240 installments, what happens with the balance on that $1.170 over 240, when we lose 60 months of the 240?\u201d Steinke said.<\/p>\n
City Attorney Aleksander Boksner said it\u2019s a binding contractual agreement and could result in litigation if the renewals fall through and that direction is given by the majority of council. If the concessionaire does not take the five-year option, he said they could arguably be able to walk away with no recourse.<\/p>\n
Steinke said what would make him feel better is if the concessionaire was still obligated in writing to fund those dollars and become immediately payable.<\/p>\n
\u201cAs long as that happens, I can live with this,\u201d he said.<\/p>\n