S. Tahoe revamps city lease agreement policy
By Kathryn Reed
South Lake Tahoe this week revised its policy for how contracts are awarded, and then later revised the lease with the restaurateur at Lake Tahoe Airport.
The overall contract issue keeps rearing its head. There are multiple multi-decade agreements in place or ones done decades ago that have not been enforced. The parking agreement with Heavenly Mountain Resort would be an example of the latter.
Then there’s the 30-year lease with Mountain West Aviation to operate the airport. It in large part favors the lessee and not the city.
The owners of Flight Deck restaurant have a year to pay off their debt to South Lake Tahoe. Photo/LTN file
The council asked for a more stringent policy when last year it came to light the electeds had not been notified of the multi-year agreement a now fired employee entered into with a nonprofit for it to lease a city-owned building.
While the city owns more than 200 parcels, this includes things like retention basins. Council asked staff in the future to provide a list of amenities people might actually want to rent or lease.
A request for proposal must be used when the amount is $30,000 or greater or the length of the contract is more than six months.
“We want to make sure the lessee can run a business and that the benefits to the public are maximized,” Deputy City Attorney Nira Feeley told the council April 2.
While rent is supposed to be charged at fair market, that isn’t happening at the airport.
The council agreed to alter the agreement with Tom and Diane Miller who own and operate the Flight Deck restaurant. The base rent is now $700. It had been $600 when the contract was signed in April 2010. It increased based on inflation so they were most recently supposed to be paying $631.
In addition to that $631, the Millers were supposed to be paying 5 percent of gross revenues less than $15,000 per month or 7 percent of gross revenues above $30,000. This included alcohol sales.
Instead, they chose not to pay anything. They were $40,000 in arrears as of March 1.
With the Alcoholic Beverage Control looking into how the city collects rent at the ice arena in terms of alcohol being part of gross sales, the city is amending most of its agreements.
The Millers took issue with the alcohol sales being part of gross revenues even though it’s in the original the contract. (This is per staff. The Millers did not attend the meeting.)
It was agreed the Millers back rent would be reduced to $22,500. They have one year to pay it — interest free. If the restaurant, which is on the market, sells, then the debt would be tied to the sale.
Rent is now a flat $700 month with the city not collecting any percentage of any sales.
Councilwoman Brooke Laine brought up how this site has a history of losing money, and how former Councilman Mike Weber “walked away from considerable debt” when he owned Chase’s restaurant at the airport.
Mayor Tom Davis tried to defend his former colleague, saying that wasn’t true. But the airport manager said Laine’s memory was more accurate.
(Weber didn’t pay the debt until the next owner came along to give him some cash. City Clerk Suzie Alessi later wrote Lake Tahoe News to say, “Mike Weber’s profit from the sale of the restaurant was reduced to pay off the debt he owed the city.”)
Laine reluctantly voted for the revised agreement with the Millers.
“I want it to work, but I’m concerned,” Laine said.
Why do the Miller’s get a 44% reduction in what they owe?? Can I only pay 44% of what owe on my business license when it comes up for renewal?
It’s now April 5th. Did they pay March’s rent?
Soooo, let me see if i understand this right… the renters violated the lease terms, they just “chose not to pay” the lease payent and racked up a $40,000 dollar default ” and now the city responds by cutting the back rent due, almost in half.
SAY WHAT??? Plus no interest or penalties either. What a deal…
… and here is the really sweet part… going forward the city just eliminated what is a standard part of this type of lease, a tiered percent of the gross. The alcohol aspect needs clarification but I can tell you having spent 4 years in the commercial real estate business with Grubb and Ellis that a percent of gross is considered standard and common. But here in SLT the corruption and incompetence center of the Sierras the city eliminated payment entirely?
WOW…
If it’s such a loser of a business, let it go under, don’t subsidize it, it’s not like it’s an elementary school, it’s a private restaurant, not a necessity.
The council needs a business therapy counselor.
Nothing ever seems to make any common sense.
If my math is correct they haven’t paid any rent since they signed their lease in April of 2010
April 2010 — April 2013
3 years
3×12 = 36 months
36 X 600pr/month = 21,600 but they owe more because of %’s
Why do they still have keys?
Chris, – I saw “percent of gross language” in almost all commercial properties with a retail component. That was how the property owners would get their value from the property.
The miss management of the South Lake Tahoe government is beyond compare.
Must have been alot of free lunchs and drinks to council and staff to get such a deal.
How did Conner vote on this? I thought she was the city’s savior. She and Laine could have stuck together.
Steven, what planet do you live on. Conner a savior? Check out her background… no real business experience beyond small change things.
As to Davis and Weber, yeah….. the old guard sure knows how to take care of each other. Watch though, this little town of ours will vote him back in.
Sounds like someone at the airport wasn’t doing their job. years go by with no rent being collected? What in the world is going on over there? What city employee is responsible for this mess? Let the ax fall on their neck.
Another City Debacle, with taxpayers left funding the blunders and incompetence by people who have no clue what they are doing.
This article seems to be somewhat biased. Leases are to the benefit of the lessee. That’s the whole point of the lease. In return, the Landlord receives rent. In the case of the restaurant, it seems that the landlord who is the city hasn’t been paid the rent. That’s a problem. But to fault the city for entering into agreements benefitting the lessee is absurd.
If you enter into a lease for a home, you have the benefit of living in that home. In return, you pay rent to the landlord. That’s their benefit. If you lease space for your business, you have the benefit of using that space to operate your business. In return, your landlord is paid rent.
Somewhere along the line there is the misconception that leases with the government should benefit the landlord more than the tenant.
To the author of this article – that’s not the way it works in the real world. Get a clue before you embarass yourself further.
Dude, Have you ever worked in the public sector. It’s not the same as the private. Maybe you would like to figure out how that world works before you embarrass yourself more. Have you heard of “gift of public funds?”
If the tenant is paying rent to the entity, public or private, there is no “gift of public funds”.
The liberal element always wants more out of private enterprise.
Just think what the federal government could get today for all the land granted to the railroads in the 1800’s. A lot more than they got 150 years ago.
However, a deal is a deal, no matter how it looks in the present day. If the government entered into an agreement with private enterprise, where the government is the landlord and the private company is the tenant, that tenant has every right in the world to continue occupying their premises provided they are paying the rent. No court in this state or this nation will ever side with a landlord, especially a municipality, that tries to seize a leasehold from a tenant just because the government feels in retrospect that they are not receiving more economically than they are entitled to.
Consider this – if you have a 30 year mortgage, your monthly payment over time becomes minimal when adjusted for inflation. Would it be legal for a bank to seize your home as a result of a long term mortgage that they wouldn’t enter into today? The answer is obviously no. Government is not immune to the laws.
As long as we keep hiring [VOTING] people like Tom Davis, Hal Cole,and the rest of those Council persons the city will continue to fail, where was the brilliant City Manager when this was being talked about?? Nancy Kerry was doing such a great job!! where was her input ?? The city fried all of the good personal because they were trimming the fat and now they are replacing them all again with higher salaries in the same positions, like a new Public Works Director, The city used to hire a Public Works Director’s that were also an Engineer and that saved one very high salary, that was smart thinking, but now we have to put up with the small OR SHOULD I SAY NO brains of KERRY, COLE & DAVIS and the rest of them, WHEN WILL WE EVER LEARN ??
The moral of City employees through out the City is the worst I have ever seen, and getting worse everyday.
As long as we keep hiring [VOTING] people like Tom Davis, Hal Cole,and the rest of those Council persons the city will continue to fail, where was the brilliant City Manager when this was being talked about?? Nancy Kerry was doing such a great job!! where was her input ?? The city fried all of the good personal because they were trimming the fat and now they are replacing them all again with higher salaries in the same positions, like a new Public Works Director, The city used to hire a Public Works Director’s that were also an Engineer and that saved one very high salary, that was smart thinking, but now we have to put up with the small OR SHOULD I SAY NO brains of KERRY, COLE & DAVIS and the rest of them, WHEN WILL WE EVER LEARN ??
The feelings of City employees through out the City is the worst I have ever seen, and getting worse everyday.
Oh Tommy Davis Shame on you,again and again!!!