SEBASTIAN — Fisherman’s Landing Sebastian is in line to renegotiate its lease with the City of Sebastian to be the “working” part of the Working Waterfront project on Indian River Drive.
That lease, if approved by the city council, could give the non-profit commercial fishermen a base from which to keep operating for just $12 a year for the next 20 years.
The city’s financial analysis of the proposed lease shows Sebastian earning a little more than $3,000 a year for 20 years, which is better than the current lease.
The existing lease shows the city losing about $22,000 annually for 10 years.
But a discrepancy between the financial analysis and the possible terms for a tenant in the former Hurricane Harbor building – Crab-E Bill’s Indian River Seafood – could mean the city losing almost $15,000 each year instead of making the potential $3,000.
City Manager Al Minner recently presented the proposed new lease with Fishermen’s Landing Sebastian to the Sebastian City Council, which gave him conflicting ideas on what to change.
One member wanted the non-profit group to have just one special event each year. Another wanted more than the proposed two. Others wanted the city’s obligation to build the estimated $325,000 fish house be contingent on the city receiving a nearly $167,000 grant from the Florida Inland Navigation District.
Vice Mayor Don Wright and new Councilman Jerome Adams voiced reservations on having a 20-year lease with Fishermen’s Landing Sebastian.
“I’m somewhat undecided,” Wright said. He said that while the city intends to do business with the group, he hopes the group can keep going for that length of time. Pointing to his commercial real estate background, Wright noted it would be an “oddity.”
Adams offered a compromise between the current 10-year lease and the proposed 20-year lease. He suggested the city establish a 10-year lease with Fishermen’s Landing Sebastian with a 10-year option, enabling the city to evaluate the project.
“It really shouldn’t matter” if it’s 10 years with a 10-year option if the nonprofit is performing, he said.
Minner expects to make a final lease presentation at either the March 13 council meeting or in April, because one council member won’t be in attendance for the March 27 meeting.
Along with providing the commercial fishermen a site for fishing for $240 over 20 years, the city could also be on the hook for an estimated $325,000 fish house and the $3,040 annual submerged lands lease. The city would also have to construct a dock that connects the Hurricane Harbor property to the commercial fishing site and other such site improvements.
But to say that the commercial fishermen are essentially getting their site for free isn’t accurate – they were the ones to foot the bulk of the bill rehabilitating the former Hurricane Harbor building, getting it ready for Crab-E Bill’s Indian River Seafood to move in.
According to Minner, the fishermen have approximately $425,000 worth of lease credits currently, due to the improvements the non-profit has made to the property.
The current lease stipulates that the fishermen must pay $1,000 a month in rent or 2 cents per pound of caught fish less any capital improvement credits. With the amount of credits Fishermen’s Landing Sebastian has, the group could essentially stay on the property for almost 35 ½ years without paying rent.
“I will take the beef on the rent credits,” Minner said, explaining that the credit-rent system made sense in the beginning because the fishermen fixed up Hurricane Harbor quicker and at less expense than the city would have been able to do on its own.
But the credits became a source of friction, he said, between the city and Fishermen’s Landing Sebastian.
Though the city would continue not collecting a monthly rent check from the fishermen under the proposed new lease, the city would be able to earn income off the fish market inside Hurricane Harbor.
That’s because the new lease calls for the city to take over the lease with Crab-E Bill’s Indian River Seafood and any other ancillary leases within that side of the working waterfront project.
“They’ve kept the project moving forward,” Minner said of Crab-E Bill’s, adding that the company has been an “important player” in the working waterfront project.
Because Fishermen’s Landing Sebastian would no longer collect the $3,000 per month rent from the fish market, Minner has suggested the city cover the $3,040 annual submerged lands lease tied to the property.
“In my opinion, that is a wash,” Minner said.
The new lease simplifies not just the rent calculations for Fishermen’s Landing Sebastian, but also who has control of what. The city, if the proposed lease were approved, would oversee everything at Hurricane Harbor while the fishermen would be in charge of the commercial fishing operation.
“We never struck this deal to make money,” Minner said.
Any revenue the fishermen generate on their side of the project – what is known as the Dabrowski property – they get to keep. Allowed under the working waterfront’s rules, Fishermen’s Landing Sebastian can rent out boat slips on the docks, which could generate an estimated $38,400 in annual income.
Minner estimates that the fishermen could see approximately $600,000 in revenue – not counting utilities, insurance and other such expenses – over the course of 10 years. Under the proposed lease, the fishermen could double that revenue to $1.2 million over 20 years.
According to Minner’s financial analysis of the proposed lease, the city could be in the black by about $3,000 a year – or $60,000 over the 20-year lifetime of the lease.
The amount assumes the city receives the requested grant from FIND, which it won’t hear about until later this year. It also assumes a 20-year lease agreement with Crab-E Bill’s, which currently has a 10-year lease with Fishermen’s Landing Sebastian.
Minner’s presentation shows that the city would be renegotiating the lease with the fish market, and under the terms to consider, shows continuing the fish market’s lease for a 10-year period, not the 20 years his financial analysis shows.
So what does that mean for the project?
A recalculation of the financials assuming a 10-year lease with Crab-E Bill’s Indian River Seafood, shows the city would lose nearly $15,000 a year – nearly $300,000 over 20 years.
Under the current lease, the city is on track to lose $22,000 a year – or $220,000 over 10 years – just in covering its obligations to handle normal wear and tear on the property.
And even if the council were to approve a 10-year lease with the fish market, the city would still come out ahead of its current lease, losing $15,000 a year instead of $22,000.
