A ‘Biz’ Benicia can’t afford

I recently read in the Herald that Carter’s Biz Cafés was losing its lease. Then there were subsequent letters to the editor expressing  opinions that we should not loose this “valuable” resource to our community. I do not believe Benicia can afford this “Biz.”
A brief history:
The city expended in grants from the California Office of Historic Preservation and the California Cultural Historical Endowment the sums of $900,000, $400,000 and $500,000. There apparently were also sums paid from the general fund, all to rehabilitate the Commanding Officer’s Quarters.
When the city began the process of seeking a tenant for the building, they determined the going market rate was $1.52 per square foot. Despite this rate, the city entered into a five-year lease with Carter Rankin to begin on July 1, 2015. The first year’s rent would be $500 a month. The next year would rise to $3,500; next year $5,900, next year $6,077, and final year $6,266. Three percent of gross sale above $766,400 would be paid to the city with a cap of $3,000 annually. Security of $15,000 was payable ; $5,000 upon possession with $10,000 to follow. This would generate the sum of $191,724 to the city, excluding any percent of gross sales, over the life of the lease.*   The security deposits  were paid on April 22, 2015 (at time of possession) and on Sept. 11, 2015, some two month later than lease requirement of July 1, 2015.
After the first year’s lease period– payments of $500 a month– the lease was amended on July 19, 2016. The new lease term was for three years beginning on July 1, 2016 with monthly rent cut to $2,000 for the first two years, and then $2,500 from July 1, 2018 to lease termination on June 30, 2019. The new lease would then generate $78,000 over its term.
The reasons for the reductions and term of lease were delays in the time to move in, and a longer time was necessary to grow memberships.  There  apparently was not “interest by others” in the property. Of course, Mr. Rankin was operating a business out of the location. All these factors lead the city to lease the property at substantially less than the fair market value.
After a lengthy period of late payments and the application of late fees, Mr. Rankin was mailed a Default of Lease Agreement  on Nov. 27, 2017, noting there was an outstanding balance of $17, 985.66. A breakdown of payment history is available from the city finance office.
My questions are:

* Prior to amending the lease, what efforts were made to secure other leasees?

* Will the security deposits be returned to Mr. Rankin or applied, per the lease, to the amounts owed on the lease?

* What efforts are currently being made to secure a new leasee?

* Can the city afford this “Biz,” or is in time to part ways with Mr. Rankin?

Russell Spitler,
Benicia  

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