Bretts and the City: No Love Lost

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By Mike Lednovich

While the owners of Brett's Waterway Cafe want a big payday over damages they claim were a result of engineering experts declaring the restaurant's substructure unsafe, the city has received no rent payments from restaurant sales for the past seven months.

In fact, Centre Street Restaurant Group, which holds the lease for the building with the city, made just one lease payment of $4,852 for the entire year of 2023. That payment came last August.

For 2022, the city received a single payment of $5,161 in May.

City Commissioner Chip Ross said at the March 5 city commission meeting that Centre Street Restaurant Group wanted $655,000 from the city because of lost revenues it claims were a result of negative publicity regarding the safety of the restaurant structure. It also claims the city’s failure to maintain its portion of the substructure over the river and the loss of parking spaces negatively impacted business.

Ross also noted that Brett’s had stopped paying rent to the city.

City Attorney Tammi Bach said meetings are planned to begin selecting a mediator to determine if Centre Street Restaurants' claims are valid, and if so, what are the associated damages.

"I expect the issue of Centre Street Restaurant not paying (the city) rent will come up during mediation," Bach said.

She said the city hopes to begin the mediation process by mid-June of this year.

The legal wrangling comes as Centre Street Restaurant's lease is set to expire on Dec. 31, 2025. The 40-year lease has been a disaster for the city. As originally written, the city was poised to receive 5% of gross revenues generated by the restaurant and gift shop. But the leaseholders soon found a workaround in the lease in which they were able to sublet the lease to outside business interests. That diluted the original 5% gross into 5% of whatever the sublease holder paid to Centre Street Restaurant Group.

An August 2020 accounting by Centre Street Restaurant Group's Rob Hinckley to the city detailed how the formula works, according to city documents.

The accounting showed total rents from tenants of $149,331 from June 2019 to May 2020 to Centre Street Restaurant Group. At 5%, the city earned just $7,466. Brett's reported $2,218,859 of gross revenue for that time period.

Brett's paid sales tax on revenue of $2.796 million from June 2018 to May 2019, while the city earned just $9,389 from 5% of $183,983 in rents paid to Centre Street Restaurant Group.

"Obviously this wasn't the original intent of the lease with the city and it's really not fair to the city," Bach said. "But that's how the lease is written."

Also unusual in the lease is that if Centre Street Restaurant receives no rent from its sublease, it is not required to pay the city without any penalty of being in violation of the lease agreement, according to Bach.

Bach said currently there are two businesses on the sublease. First is Amelia's Restaurant Inc., who in turn is subletting the building to Brett's Waterway Cafe Inc.

"If they're (Centre Street) not receiving rents, they don't have to pay us," Bach said.

Last August, Centre Street Restaurant Group threatened to sue the city with attorney John Tucker writing, “Brett’s has determined that unless a settlement can be reached between Center Street and the city, Brett’s may be required to sue the city to recover the substantial damages it has and continues to suffer."

The supporting structure of Brett’s Cafe over the river has undergone numerous inspections by maritime engineering experts.

An inspection last June approved by the city commission of the supporting substructure of Brett’s Waterway Cafe led experts Kimley-Horn to recommend that the restaurant and its adjoining deck be closed to the public until repairs could be made to make it safe.

"Of the five (substructure) pile caps that need repair, three are the responsibility of the city," Bach said.

The city has compiled numerous engineering reports detailing how severe the damage is to the undercarriage supporting the restaurant over the river. The city’s own coastal engineering expert, Charlie George – now serving as interim city manager – had declared the building unsafe in 2022.

At its March 7, 2023 meeting, city commissioners voted 3-1 to “take no further action to repair or demolish” the Brett's building, but to monitor the substructure annually and after storms.

Late in 2022, then-City Manager Dale Martin told commissioners that a buyout of the Brett’s lease could cost $1.2 million or more. But after a city election, the newly seated commission ended the lease buyout negotiations and then subsequently fired Martin in February, 2023.

The latest available state sales tax revenue documents from 2021 report Brett's income of about $330,000 through June of that year. The city was paid $4,354 for the first six months of 2021.