Memorandum 15-040 Wilson Stick, Inc. Proposal for Lease Bob's Trophy Charters

Memorandum ID: 
15-040
Memorandum Status: 
Backup

Details

Memorandum 15-040

TO:                       MAYOR BETH WYTHE & HOMER CITY COUNCIL

FROM:                  BRYAN HAWKINS, PORT DIRECTOR/HARBORMASTER

DATE:                   MARCH 16, 2015

SUBJECT:           WILSON STICK, INC. PROPOSAL FOR BOB’STROPHY CHARTERS LEASE

 

The purpose of this memo is to supplement the Port and Harbor Advisory Commission’s recommendation.  This lease transfer request has brought up a few concerns regarding the use of TR. 1-B; staff has additional comments/recommendations that may be helpful to City Council.

Background

In 2007, Bob’s Trophy Charters long-term lease for TR. 1-B expired with no options remaining.  Per the City’s Property Management Policies and Procedures, the Lease Committee and City Council decided to advertise a Request for Proposals for the lot.  Only one proposal was received from David and Diane Morris, owners of Bob’s Trophy Charters.

At the time, the Port and Harbor Advisory Commission and City Council had serious reservations about another long-term lease in that location, thinking it may not be the best and highest use of that property.  Therefore a shorter-term lease was granted, which will be expiring March 31, 2018 with no renewal options remaining.  David and Diane Morris exercised their final five-year extension per their lease, which was granted on July 18, 2012 since no other, more valuable uses were presented to the City.

David and Diane Morris have voiced to the City their desire to sell Bob’s Trophy Charters to Wilson Stick, Inc. under the pretext that the new owners are able to take over the existing lease and receive a new, long-term lease without it going out to RFP.  The reason behind the long-term/no RFP request is so the buyers can amortize/justify their loan to their lending institution.

Wilson Stick, Inc. provided a business plan and letter to the Lease Committee and Port and Harbor Advisory Commission.  The Lease Committee reached a consensus that a long-term lease was agreeable, but was unsure as to whether or not the lot should be advertised for RFP again.  The Port Commission moved that a lease transfer be granted to Wilson Stick, Inc. along with a 20-year term with the stipulation that if in the future the City finds a higher and better use for that property, that we (the City) will find another lot that they can move their business onto.  When staff pressed the point of where the commission thought that lot would be there were no suggestions.

As outlined in the Spit Comprehensive Plan, we must consider: 1) How the displacement of an existing use will impact the overall commercial/land use mix; 2) Whether a historic continuity of use on a site provides an important attraction for returning and future visitors; and 3) Whether the economics of the proposed activity are proven and markedly more valuable to the community than the existing use.

Bob’s Trophy Charters has been an upstanding lessee of TR. 1-B since 1992, their iconic halibut displayed on the back of the building for every visitor to remember.  City staff conducted a walk-thru of Bob’s Trophy Charters on February 4, 2015 and determined the building to be functional, but also aged and weathered.  It poses the question as to whether the business’ value is in the lease location/building itself, or in the charter boats and clientele booking list?  The lot is zoned Marine Commercial, similar to the other lots facing Homer Spit Road occupied by charter businesses.  Currently, the existing use of the lot is a financially productive business that promotes visitors to Homer, business to the Homer Harbor, and now has a potential buyer who has submitted a viable business plan to continue this activity. 

 

Recommendation

At this moment, the lot is being used in a way that benefits Homer’s economy, but there may be an even more valuable use in the undetermined future.  Below are some suggestions/possible compromises from staff to help keep this proposal moving forward:

Agree to a lease transfer.  Negotiate with Wilson Stick, Inc. for a standard 20-year lease with options, with a caveat that says they could be moved if a need arises for the property.  This option coincides with the recommendations of the Lease Committee and the Port and Harbor Advisory Commission.
Agree to a lease transfer.  Negotiate with Wilson Stick, Inc. for a lease with as short of a term as possible with no options to renew.  This option ensures the City will be able to utilize the lot for potential future uses sooner, while also establishing the new owners into a set lease, while giving them time to make plans for relocating at the term of the lease.
Reject the request for a lease transfer and new lease to Wilson Stick, Inc., grant a short term extension to David and Diane Morris, allow them to sublease to the proposed new owners, and make it clear that at the end of this final term the Morris’ will be required to remove their property from the lot.  This option would allow the business to transfer and give the new owners time to establish themselves on the Spit in another location, if another location is agreed upon.
Reject the proposal outright and require the owners to vacate the property.  This option is suggested if City Council feels there is a more valuable use of the property in the immediate future.