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City should become better steward of its properties, leases
The city of Key West's
handling of its valuable properties was in the public eye again last
week.
The occasion was the
city commission meeting. Commissioner Ed Scales -- whose day job is as
attorney to the city's largest tenant, Historic Tours of America --
proposed changing the timeline for renegotiating leases. With only
Commissioner Carmen Turner dissenting, the commission duly granted their
tenants another favor.
Some important
background: The city has a deplorable history of handing prime
properties to favored groups via sweetheart leases for extremely long
periods of time. Some are notorious, like the Yacht Club's $1-a-year
deal until the year 2060, or the Chamber of Commerce's $10 monthly rent
(this for the same group that regularly hammers the city for charging
too much in taxes and fees).
Under public pressure,
the city has taken some steps to fix this history, limiting leases of
city property to 10 years maximum under the city charter. And the city
also had a 90-day maximum for negotiating new leases, a measure taken to
correct the bad history of renewing leases years before they expired --
thus locking in the tenant for long periods and precluding anyone else
ever getting a chance to make a proposal for the property.
Commissioner Scales
said those 90 days were unreasonable, that it was too short a time
period and did not provide security to the tenant and landlord. Other
commissioners were sympathetic to the notion that a business looking to
upgrade through financing might need more long-term security.
Scales' suggestion was
to place the words "at least" in front of the 90 days, thus extending it
theoretically to the entire length of the lease. At commissioner Harry
Bethel's suggestion, the commission amended that to no more than three
years before the lease expiration. The commission also, laudably, added
a provision requiring a report on tenant payment performance when any
lease is up for renewal.
Even as the commission
was considering these changes to its lease policies, the public has
learned that its largest tenant, Historic Tours of America --
Commissioner Scales' client -- has been hundreds of thousands of dollars
in arrears to the city over the last year. This even as the company,
through its various principals and affiliates, was attempting to win
control of even more valuable city-owned property such as the ferry
terminal and the old Plantains restaurant property. Fortunately for HTA,
its lease with the city had no provision for penalties or interest. The
citizens of Key West have given HTA, in effect, an extremely large,
interest-free loan.
The city and HTA say
that the company offered to make estimated payments, but the city staff
told them not to worry about it. How kind. We all should try that next
time we're late with a parking ticket or a sewer bill.
Last Tuesday, even as
they were backsliding on their responsibility to get the best deal for
the citizens, commissioners made righteous noises about how the city
needs to clean up its lease policies. The famously tightfisted
Commissioner Bethel even suggested hiring a new city employee to oversee
the matter. Bethel has also recommended asking current tenants to add
penalty and interest provisions to their leases. If they'll do it, that
would be a benefit to the public. A larger benefit would be a truly
independent audit and analysis of how the city should approach its
properties.
Here's another good
way to start (and the city would not even need to hire a new employee to
do it): The Key West Bight Board receives monthly reports on its rent
collections, with listings of tenants who are late in payment, and by
how much. Why not also provide similar reports to the city commission,
at least on a quarterly basis? That way the commission -- and more
importantly the owners of the property, aka the citizens of Key West --
would have some idea if their leases are working in their interest.
It would be a start to
providing public accountability and shining some long-overdue public
light on the city's overly cozy relationship with some of its tenants.
At least. |
