May 17 2018 10:07 AM

Waterfront grill lease not being renewed


The Lansing City Council is considering ending an $80,000 a year subsidy for the Lansing City Market and potentially placing the building up for sale.

Council President Carol Wood said the market was a “failure.”

“I don’t think the taxpayers want to be subsidizing a bar,” said Wood in a phone call Tuesday. Many on the Council are pushing to cut the money and funnel it into the city’s code compliance program, specifically to pay for an officer to police the city’s business corridors.

The timing to defund the market and even sell it may be ripe. The market’s largest tenant, Waterfront Bar & Grill, has lost its lease, effective June 30, according to Scott Keith, president and CEO of the authority that runs the City Market.

Keith said the market is about 60 percent occupied, but the bar and grill is by far the largest tenant.

Lansing Mayor Andy Schor held out the possibility that such an effort to defund the market this year could produce his first veto.

“They can try and take it out if they want,” said Schor. “Then I will review it and decide if that makes sense or if I have to veto it. And we’ll go from there.”

Schor, who took office in January, said the funding is part of what he called a “continuation budget,” which he said he explained to the body when he submitted it. He said he hoped the Council would honor its “promise” to recognize that his budget was a continuation of the previous administration’s and uphold it as presented.

The Council is reviewing the budget with an eye toward a vote in the next few weeks.

Wood and others on Council see the 2010 building, which cost $1.6 million to build, as a drain on the city that would be better jettisoned. That money, Councilmembers argue, could then be used to fund other, more pressing financial concerns for the city.

Councilmembers also discussed selling the City Market. They asked Angie Bennett, the city’s finance director, for a copy of the most recent appraisal of the property. The building was built using the proceeds of the sale of the former City Market building, which was built in 1938, to developer Pat Gillespie. He’s since built the Marketplace Apartments on that site.

But the pole barn structure, has struggled to gain traction in the midst of the Great Recession and the flowering of the local agriculture and farmers markets in the area.

Schor said he was not opposed to selling the building. Keith, of the Lansing Entertainment and Public Facilities Authority, also did not oppose that option in an interview. But he said it is the city’s call, not his.

The City Market’s largest current occupant is the Waterfront Bar and Grill.

Patrice Drainville, vice president of Simmons’ Properties, which owns the bar, said Williamston resident Scott Simmons’ has offered to rent the City Market property or purchase it in the past.

“We want to see downtown Lansing thrive,” she said. “We’ve made those offers but so far to no avail.”

In fact, communications between LEPFA and Simmons’ Properties show the city has notified the bar that its lease will end June 30. That letter was sent May 1. But Drainville said that when Simmons’ agreed, at the urging for former Mayor Virg Bernero and Keith, to open a bar in the City Market, a 20-year lease was drawn up. That lease was redone in 2015, she said, because of a rent increase. The terms of the previous agreement allowed automatic renewals of the lease every three years.

That provision is not initialed by either side in the lease agreement furnished by City Attorney Jim Smiertka.

That misunderstanding could result in legal action, but Drainville said her company hopes to negotiate something with LEPFA.

Schor said the payment for LEPFA was necessary, though. and cutting the money could impact his long-term plans.

“We have big plans for the City Market,” Schor said. “We’re talking to a lot of people about that, but it’s not soup yet.”

He did not discuss what those “big plans” were.

Councilmembers raised concerns about the need to use general fund dollars to plug a budget hole in the operations at the mMarket. The largest rental vendor, Waterfront Bar and Grill, occupies 4,618 square feet of the market, including 1,735 square feet of outdoor patio, according to the lease. For that space, the company pays $54,720 per year plus utilities, for an average of $11.85 per square foot a year.

Mindy Biladeau, executive director of Downtown Lansing, Inc,, said average yearly per square foot leasing rates for first floor retail space in the area ranges from $12 to $15 plus utilities. Gillespie said rates range from $12.50 to $19 per square foot per year depending on the building.

Drainville said the average annual square foot lease amounts were comparable to what her company charges for its retail leasing locations.

“I think it’s comparable,” she said. “I think that’s about right, and it might be a little less for some people.”

Councilwoman Jody Washington said she is supports cutting the subsidy. She said the $80,000 could be spent on other city priorities.

“That’s one full-time code officer,” she said.

Despite a move by Schor to increase two part-time positions to full-time positions in code compliance, Council was clear Monday night it felt more officers were necessary.

A key issue for many of them is policing the business corridors for code violations. Washington said the City Market payment could be used to pay for a dedicated officer for that, which in turn would free other premise inspectors up to loosen a backlog of rental housing inspections.

Wood also floated a possible solution to paying for dedicated enforcement officer for the corridors. Under her plan, 2.1 percent of the city’s planned general fund spending on miscellaneous spending would be diverted to code compliance. That’s $50,000 she said. To rustle up the remaining dollars necessary to fund a position for an entire years, she said she would insert a planned $50,000 increase in revenue which would be attributed to the new enforcement.

Schor said he was opposed to those options.

“You have to have evidence that you are going to generate that kind of revenue,” he said. “And that miscellaneous budget is important. It pays for something. If we cut that, what are we losing?”