Memorandum 15-096 Harbor Grill Lease Renewal

Memorandum 15-096

TO:                       MAYOR BETH WYTHE & HOMER CITY COUNCIL

FROM:                  LEASE COMMITTEE

CC:                        PORT & HARBOR ADVISORY COMMISSION

DATE:                   MAY 29, 2015

SUBJECT:           HARBOR GRILL LEASE RENEWAL RECOMMENDATIONS

The City has received a lease renewal request from Jose Ramos for his Harbor Grill restaurant, located next to Ramp 3 on the Homer Spit.  Mr. Ramos’s lease expires February 1, 2016 with no options remaining, and has requested a new long-term lease for Lot 19 without it going out for RFP.  Mr. Ramos’s justifications for this request are outlined in the letter from his Attorney, Ms. Lindsay Wolter, and in his lease application; see attached.

The Lease Committee first met to review this proposal on March 11, 2015 where a few questions seeking clarification were generated:

Were the financial statements in the application for the Homer Spit restaurant, or were they for the Pioneer Avenue restaurant?
How many employees does the Harbor Grill employ during the summer season?
We see that there is a camera on the NE corner of the building, what is it used for?

The Lease Committee received the answers to these questions and reviewed the proposal again on May 28, 2015.  Given the good lease history with Mr. Ramos, the investment in the property, the positive financial flow reported from this business activity, and the number of employees his business employs, the Lease Committee recommends that a new lease be issued to Don Jose, LLC for Lot 19.  The Lease Committee recommends that the term of this lease be for 20 years with the possibility of two, five-year extensions based on performance.

Lot 19 was recently appraised on April 15, 2014 with an annual market rent of $11,000.  This current information can be used during lease negotiations; therefore an appraisal prior to award/negotiations would not be required.  Additionally, one of the findings discovered by the Lease Committee is that the original lease for this property is out of date. If a new lease is granted, it will be in accordance with current lease policies/code and follow the existing boilerplate lease.

Recommendation

The Lease Committee recommends Homer City Council do not advertise this property through the Request for Proposals process, and award a new 20-year lease with two, five-year options to Don Jose, LLC of Homer, Alaska, for Lot 19 on the Homer Spit, and instruct the City Manager to move forward with lease negotiations.

Attached:                 Harbor Grill Lease Proposal & Application

                                        Letter from Lindsay Wolter to City of Homer Re: Lease Application Questions dated April 3, 2015