Potential tenants will get first year rent free
The historic HB Jeffries House and its accompanying carriage house are closer to having an eatery as its newest tenant as city council approved the lease agreement with Tina and Joe Novak of Tina and Joe’s Café.
Following a lengthy discussion where members of city council were soundly against the original lease agreement that was designed to provide the Novak’s to operate their restaurant in the city’s most historic building rent free for three years.
The subsequent compromise calls for the Novak’s to operate the first year with no rent payments. The second year will cost one percent of the café’s gross revenue. The third year rent is set at two percent of the gross and the fourth and fifth year of the lease calls for three percent of the gross revenues.
The terms of the lease were approved unanimously.
If the café brings in gross receipts of $200,000 in the second year, their annual rent for the two-story home and the recently renovated carriage house would be $2,000 or $167 per month. It would be $4,000 ($333/month) in year three and $6,000 ($500/monthly) in year four and five.
The city has more than $500,000 invested in the Jeffries House and the carriage house. Additionally, the lease calls for the city to be responsible for large ticket maintenance items.
“I have no problem with the any of the lease except the three years of no rent,” said Councilman Charlie Proctor. “Where did that idea come from?”
City Manager Billy Poe explained that the Novak’s has a substantial investment into a building that isn’t theirs such as kitchen equipment.
City Attorney Matt Maggard who drafted the initial lease agreement noted that the city is not looking to make money on the rental, but to make enough money to maintain the facility while generating foot traffic to the downtown area.
Councilman Ken Burgess was concerned about the renegotiation of the agreement at the end of the term and looking out for the city.
“I know we’re looking at things to help them succeed,” Burgess said. “We also have to look out for the city’s interest.”
Council president Alan Knight was quick to point out the city’s investments in the property and the initial plans to rent it out to recoup the money. Instead, other projects could have been done with the money.
“We spent a ton of money with the promise that we could rent it out for $2,000 a month,” Knight said. Now we’re stuck. We have to be more prudent with money for the city. Every time I see that building, I see sidewalks, playground equipment, I see a lot of thing that need to be done and now for three years, we’re not going to get another thing out of it.” Poe responded, “Part of the idea is not for the city to make money on it. Obviously we want to cover the costs of replacing the roof, the A/C or the plumbing. The bigger picture we prepared as staff was to draw people downtown. We want to increase foot traffic downtown. The idea of having a restaurant does that.”