Playing the market
Cape Coral City Council’s response to terms negotiated by city staff for private management of the planned bistro and food court area at Jaycee Park was similar to that of potential business partners — tepid at best.
The city’s request for proposals for the operation and management of food and beverage concessions at the razed-reinvented-and-rebuilt riverfront park at the end of Beach Parkway drew 11 responses with only four nibbles and a single submission.
The Kearns Restaurant Group, with which the city had negotiated a similar concessionaire agreement for the Yacht Club where the group had operated the popular Boathouse Tiki Bar & Grill before Hurricane Ian destroyed much of the community park, submitted the lone proposal.
At the direction of council, city staff and the Kearns Group negotiated terms for an agreement that would grant the group exclusive concession rights for all food, beverage, alcohol and retail sales at Jaycee Park for up to 30 years.
Those rights would include the 1,100-square-foot building shell and six fully serviced pads for food trucks — a city investment of $1.3 million-plus — as well as two game areas for cornhole and pool, and a small bandshell for onsite entertainment.
The city would complete the concession building shell and the Kearns Group would finish the buildout including furnishings, fixtures and concession operations equipment with the city to provide a “complete set of plans and specifications.”
Council took issue with both the proposed length of the contract and the concession fees the city was proposed to receive for exclusive rights to sell food and drink at the park.
A 30-year contract was too long, some council members said at the workshop, and the proffered financial arrangement was basically calling for the city to bankroll the infrastructure costs,
The negotiated term sheet called for an initial payment of $1,064,876 plus interest to be paid in 240 equal monthly installments of $4,437, plus interest costs.
Some on council also thought the city should get a larger share of revenues generated.
The minimum guarantee to the city was proposed at $75,000 per year, or $6,250 per month.
The percent of total gross receipts was proposed at 4% in years 1-10; 5% in years 11- 20; 5.5% during any renewal term.
A couple of things.
First, given council comments, we are going to agree with city staff that council direction to solicit the request for proposals and then negotiate terms was “clear as mud.”
The financial terms negotiated actually are pretty close to the ones council approved for what it touted as the win-win concessionaire agreement with the Kearns Restaurant Group for the Yacht Club: A 30-year term, and, after an interim ramp-up, a minimum guarantee of $7,000 a month paid monthly; 5% of gross receipts for years one through 10, 6% for years 11 to 20 and 7% for years 21 to 30.
On the city side, its contribution included a $1 million reimbursement towards the restaurant construction, applied as a monthly credit for the first 10 years as well as other costs.
Yes, the percentages are higher but the agreement at the Yacht Club includes fuel and beach operations. The redevelopment and infrastructure plans for the “destination” park on Drifwood Parkway are also more extensive — a new marina, beach, community center and resort-style pool with cost estimates ranging as high as $300 million when all is said and done compared to the $16-$18 million Jaycee Park rebuild to include playgrounds, paths, a public bandshell, and a boardwalk along the river and boat slips.
Can the city bump the numbers on the Jaycee Park agreement?
Probably.
There was plenty of back-and-forth on the Yacht Club negotiations, some of which were contentious, but an agreement was reached.
If the city is hoping to reopen Jaycee Park with a concessionaire agreement in hand — and money coming in to offset tax dollars spent — that likely is the best scenario given the late date, apparent lack of interest, and the Kearns Restaurant Group’s successful history in the Cape.
Can the city get a better deal by going back out with a new request for proposals and so get immediate reimbursement for the building shell Council voted to complete after the deal with a previous prospective concessionaire fell through due to issues with financing?
Easier said than done.
A lot easier said than done as the city has learned in its now two attempts to bring a commercial partner into Jaycee Park, a controversial move that still is drawing opposition.
It will be interesting to see how — and if — the city can make it happen.
Or whether the business community itself will prove that those who insisted that food trucks and alcohol weren’t a good fit for the park were a better judge of what the market will bear.
— Breeze editorial