The Beach Merchant Leases

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We keep hearing from a small few that the beach merchants do not pay market rent. It was brought up, once again, at the last Financial Advisory Board meeting. They continue to say this and must have some crystal ball as to how much money John G’s is making stating “millions of dollars with lines going around the building.” They begrudge the fact that John G’s made a successful business through hard work and by offering superior food at reasonable prices for 37 years. Those who keep complaining feel that the City has been cheated in some way. They judge everything on this visual of John G's making skatey eight million dollars and apply it to all the other beach merchants some of whom sell pizza, t-shirts, and sun-tan lotion.

It was not the Merchants that offered long term leases to the City. They were drawn up by the legal department of the City of Lake Worth and presented to the merchants. So, to continue to complain that they haven’t nor are they now paying market rent and insinuating that is their fault somehow, is an argument that has no ring of validity. In fact, Steven Carr, Finance Director, said that they were paying the low end of market rent right now. The beach merchants make the biggest part of their annual income during the Winter Season and certain holidays.

The merchants are on a month to month. Technically they are Tenants at Will as they have the City's permission to remain...they are not trespassers. They are in possession of the property after their Lease expired (October 2008) and the Landlord (the City) can eject them from the property with reasonable notice. The tenant must pay rent based on their expired lease amount. The way I understand it is and as in Tenants at Sufferance, the City can offer a new Lease and the Landlord can raise the rent as long as they told the tenant of the higher rent before their Lease expired. The City had the good sense not to increase rents or evict these tenants or spend money drawing up short-term leases after their expiration because of the circumstances of the casino and its future demolition or reconstruction.

William Coakley' virtual solution
showing the possibility of a simple upgrade

As we know, the casino building has been in limbo ever since the City contracted with Greater Bay LLC (and a poodle can threaten to file a law suit these days--it means nothing but a tactic to distort money from the City of Lake Worth) whose plans were to demolish the present building. How any resident can defend Greater Bay and its right to be anywhere in this City, is a mystery to me. Since then, the Contract was terminated with Greater Bay; we have the forensic that proves that the building is structurally sound (something we had been saying for years) and the City is proceeding to re-build the present Casino. I have always thought it best to shore-up, paint, new roof, pavers, etc. and spend the $700,000 instead of totally re-doing the building but it was the decision and the desire of most to have a newly restored/refurbished building there. One thing for certain, this is the time to rebuild when costs are low.

Ground is expected to break this year unless politics or Staff holds it up. (Who is in charge of the RFP for the contractor now that Mike McManaman works for the CRA and not the City and why this delay?) (Why a delay on REG's Contract?) Why isn't the Commission checking on these delays? Why are there always delays?

The beach merchants have been given notice and an approximate time to vacate. Once the new building is erected, the present merchants will have first consideration to lease in the new building under a new Lease term and rental amount.


All the Leases at the beach expired on October 11, 2008 with the exception of Benny’s that is in effect until September 2011. Benny’s pays a percentage of gross proceeds based on figures provided by Benny’s.

Right now we have one empty store at the Casino building whose owner was sick, in the hospital for many months and who fell behind in rent. The City took action even though his sister arrived from South America to try and straighten it out. This was during the period when Larry Karns was still our city attorney. At that time, the city wanted these merchants out--that was the objective--after all, the city was going to knock down the building.

Ann McGill, daughter of Dot Pickett, will be closing her store.
The McGills are a Pioneer family from Lantana

Dot Pickett, is leaving after being there for 39 years. The owner has been operating in limbo for several years with no guarantees. She must close now for business reasons. When she asked the City if she could come back once the new building is ready for occupancy, she was told "no," that she would have to stay until eviction day to have the right of first refusal later. Is this how we treat a tenant of 39 years?

The City will be offering a market analysis of comparable rents in the very near future in order to complete its financial feasibility study for the Casino and beach park property. Even with that, it will be a policy decision of the City Commission as to what rents will be charged to the beach merchants. Every tenant there might be looked at on a case by case basis as to dollar per square foot; all might be paying the same rent per square foot with John G’s paying a percentage of gross receipts or any restaurant that may occupy the second level doing the same. Again, this will be a policy decision.

There are some who are getting confused when they read the Capital Improvement Plan. Just because there is a line item for the Casino project of $9,650.000 does NOT mean that it is being paid by tax dollars. There are some community activists who are perpetuating this myth and even a member of the Financial Advisory Board.

The financial feasibility study for the casino property is in the works with the goal of self-sustainability in mind. It is the intent, and has been all along, for the City to go out on a Revenue Bond. So, to all of you who keep on saying, even in a public meeting, that we will be going into debt to build a casino, this is just not the plan and just not the FACTS. "Unlike general obligation bonds, only the revenues specified in the legal contract between the bond holder and bond issuer are required to be used for repayment of the principal and interest of the bonds; other revenues (notably tax revenues) and the general credit of the issuing agency are not so encumbered."

We are losing hundreds of thousands of dollars a year on broken parking meters. The broken pump house has finally been fixed and the simple fact that the City has not maintained anything at our beach has cost us dearly. Joe Kroll is getting kudos for fixing the pump house under budget when he first said it would cost $150,000 and then he upped it to $275,000 and finally it came down to $50,000 with the final cost at $30,000...confusing, right? Actually, credit should be given to Marcus Wilson, Facilities Manager.

Even Wellington has beat us to the punch on an Olympic pool and they are ready to promote national swim competitions. The merchants at our casino have put up with the worst of conditions because of the City's gross neglect, even fixing roof leaks themselves. To continually complain that they are not paying what they deserve is an unfair assessment of the situation.

The "proper" market rent rates, not necessarily the high or middle of the fair market rate study, will be offered to the prospective tenants well before the new building is ready for occupancy and will be based on several factors to include rent comparables, amenities, and market conditions.

Best Beaches. Once our Casino is built and beach is refurbished, we need to see about getting on this list.