Jaycee Park concessionaire misses city payment deadline; submits contract modification proposal
The funds due from the private party partner in the city of Cape Coral’s redevelopment of Jaycee Park were not received by Friday’s city-imposed deadline.
A contract modification is now proposed.
The Reef Cape Coral LLC did not meet the deadline due to a timing issue, said Stephen Soloway, with The Reef Cape Coral LLC, adding they have been in constant contact with the city and open dialogue has been had.
“The city has been great – pretty awesome to deal with. We sent the city a letter and explained to them what was going on, so it is on record,” he said.
Soloway said it boils down to a timing issue pertaining to financing for the project.
The Reef Cape Coral LLC is the city’s approved and contracted concessionaire for the commercial component of the redevelopment plan for the riverfront park at the end of Beach Parkway.
“We have a preapproval from a lender, but they don’t want to release the funds until 30 days of opening. Since we are not going to own the building, they can’t give it to us as a construction loan because they can’t lien the building,” he said. “More than anything, it’s a timing issue.”
The response letter sent by Soloway and Michael Amato to the city attorney’s office highlights four reasons “several lenders and private equity firms who expressed great interest in the proposal have indicated the project is not currently financeable for several reasons.”
Those reasons include:
• The building will not be owned by The Reef Cape Coral LLC, which means lenders cannot claim the property in the event of default.
• The building is not being constructed by The Reef Cape Coral LLC, which means a construction loan cannot be procured.
• The project is projected to take nine months to complete, and lenders are unwilling to provide funds until la building is near completion.
• The timeline for opening is subject to potential delays due to unforeseen circumstances, such as natural disasters.
“Quite simply, it is very difficult to get a business loan without a building for the business,” the letter states.
The city attorney’s office sent The Reef Cape Coral LLC a notice of default last week that asked for funds the city says are overdue, more than $1.4 million, to be paid last Friday by 5 p.m.
Cape Coral City Council is expected to have a discussion on the contract for the management and operation of the park’s concession area and food truck court at its Wednesday, April 2, meeting.
“We intend to go forward with the project,” Soloway said, adding that most of the people he has talked to are pretty excited. “It’s going to be the most family-friendly park you can ever imagine. Folks that know Mike and I – it’s all about family and community and doing the right thing.”
Solloway said the letter they wrote to the city offers to give them their deposit – the owner equity for the bank as an amendment to the contract.
According to the letter, “we are proposing the city accept a non-refundable earnest deposit in the minimum amount of $425,000. The deposit includes late fees and penalties we agreed to pay in return for the 90-day extension totaling $68,264.06 as of today, March 20. The remainder $356,735.94 will be credited to the total investment bringing the balance due down about 25% to $1,013,264.06. As part of the pay plan, we also would agree to pay interest costs on this outstanding balance as determined by the city. Once we close on the loan, the balance and interest will be paid to the city.”
“That is what they are going to decide on the second, accept that as new terms to the contract and amend the concessionaire agreement,” he said. “The council is going to have to make a decision on that deal.”
He said the bank is saying they know the building is not built – they cannot lien the building.
“The bank needs to feel good,” Soloway said.
Soloway said he intends to attend the Council meeting next week.