HomeMy WebLinkAboutItem S r
MEMORANDUM
April 10, 2000
TO: MAYOR YOST AND
MEMBERS OF THE CITY COUNCIL
FROM: KEITH TILL,
CITY MANAGER
SUBJECT: Status report on Ruby's Restaurant agreement
SUMMARY OF REQUEST: Council to receive and file status report and provide
guidance and direction as deemed necessary.
BACKGROUND: Following a fire that closed the pier for an extended period,the City
in 1995 determined not to resume the tram service that ran from the base of the pier to
ruby's Restaurant. This decision was based primarily on liability concerns. The City had
paid out approximately $85,000 in claims settlements directly related to the tram service
in the 18-month period prior to closing the pier.
Because the contract between Ruby's and the City required the City to provide tram
service, Ruby's demanded in 1995 that it be reinstated. When the City declined due to the / l
liability problems, Ruby's ceased paying a portion of rent to the City. Specifically, b°Ip
Ruby's paid only the $38,000 per year base rent due, but ceased paying the additional
percent of gross. The average loss in income to the City was approximately $40,000 per
year.
The $40,000 loss in income is, however, approximately equal to the cost of operating the
tram, not taking into account the liability expenses. In this respect, the City realizes no
net loss in income.
Still, efforts continued since 1995 to find an optimal solution for both parties.
Negotiations at first centered on a possible floor area expansion, with Ruby's picking up
costs of new restrooms and resuming payment of the rent"overage." After reviewing
Ruby's expansion proposal, the City Council determined it was not acceptable.
Additional negotiations focused on an extension of the contract—which will expire in
2002—in return for resumption of rent overage payments and other considerations. This,
too, reached impasse.
AGENDA ITEM S
Y
With both parties suggesting legal action for breach of contract, the City Council
eventually determined to invite new restaurant proprietors to submit bids beginning in
mid-2000, and allow the contract with Ruby's to expire. However, Ruby's retains a right
of first refusal, and may at its own election renew its contract by meeting the terms of any
other bidder.
COUNCIL ACTION: Receive and file and provide any direction deemed appropriate.