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Downtown Pensacola continues in its quest for "quality of life" City may now own the "Fish House" LOL

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Russenberger, Merrill to negotiate with Pensacola officials
More than $5 million on line in dispute over Fish House lease
Dec. 3, 2013 7:52 PM   |  

Written by
T.S. Strickland

FILED UNDER
News
Local News
City leaders will meet Monday with local businessmen Collier Merrill and Ray Russenberger to discuss claims that the two owe more than $5 million in overdue sales royalties and interest from Merrill’s landmark restaurants the Fish House and Atlas Oyster Bar.

Meanwhile, officials are also claiming ownership of the building in which the restaurants are housed and seeking to renegotiate the lease for the property at terms more favorable to the city.

Merrill called the demands a “money grab” on Tuesday and has characterized the city’s claims as “baseless.”

The dispute, which came to light two weeks ago, revolves around the piece of property known as the Pitt Slip Marina — leased to Russenberger in 1987 and subleased to Merrill’s company, Merrill Land, LLC, in 2000.

The city claims taxpayers are entitled to a percentage of sales at Merrill’s restaurants for the last 13 years — a position which Merrill vehemently disputes. He has estimated that satisfying the city’s demands would cost his business more than $5 million, or about one year’s revenue.

The city threatened last month to evict the businessmen if payment were not made by February. Both sides have said they hope that is not necessary, but have also said they would take the matter to court if need be.

The issue of the disputed rent payments, while daunting, is not the only wrinkle of contention to be ironed out at Monday’s meeting. The city is also claiming that the lease for the property on which Merrill’s restaurants stand expired in June. Merrill and Russenberger dispute this point, as well.

The answer is important, because if the lease has, in fact, expired, the title to the restaurants would, according to the lease terms, revert to the city. Officials also hope to renegotiate the lease to reflect the fair market value of the land and improvements.

The Pitt Slip Marina has been a matter of dispute within City Hall since at least 2008 and with Russenberger and Merrill since 2011. In that year, City Attorney James Messer sent the men a letter outlining the city’s stance on the lease renewal. However, the issue of the $5 million in sales royalties was not raised until last month, in a letter sent by real estate attorney Nixon Daniel on behalf of the city.

Merrill has expressed frustration with the city’s apparent evolution of opinion.

In a letter dated Nov. 27 and released to the media this week, attorney Bruce Partington, who represents Merrill, called the city’s legal analysis on all points fundamentally flawed. He also chided the city for leaking the story to the media “for dramatic effect” and said the coverage had been detrimental to Merrill’s businesses.

“This course of action has already caused damage to Great Southern Restaurant Group,” Partington wrote, “and the city is responsible for that damage, and any additional damages to any of our clients.” Partington also demanded that the city reimburse his clients for attorneys fees
.

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Maren's Blog Dot Biz

Monday, December 2, 2013

Mayor/Barnhart/Asmar... Pitts Slip Games?
In the post below, I detailed the off the record discussions Mayor Hayward and lobbyist Scott Barnhart were having involving parcels in and around the port property for David Freeman, a Nashville developer. The email directly mentions the Russenburger plots in and around Pitts Slip.

Link to discussion below.

http://pensacolad3.blogspot.com/search?q=Barnhart

Well in the January email below, Barnhart asks then Chief of Staff Asmar about an outline of the deal that Asmar was putting together.


From: Scott Barnhart [mailto:scott@jenkinshillconsulting.com]
Sent: Tuesday, January 22, 2013 10:45 AM
To: John Asmar
Subject: follow up on call with David Freeman

John:

I hope all is well.

I wanted to follow up on our last call and see if you have been able to put an outline on the deal together yet. Please let me know.

I was planning to set up a visit to Pensacola for David in the next several weeks. I would appreciate your counsel to make sure we meet with the appropriate community leaders and political influentials. At this point, I want to do meetings with the County Commissioners (those who will have appointments to the Escambia County RESTORE Act committee – project assessment), City Councilmen, possibly Homyak and possibly the UWF folks.

Please let me know.

Thanks

C. Scott Barnhart
Principal
Jenkins Hill Consulting, LLC
Jenkins Hill Group, LLC
444 N. Capitol Street, NW
Suite 645
Washington, DC 20001
Office 202-544-7990
Fax 202-544-7706
Cell 202-494-6784
Scott@jenkinshillconsulting.com

Questions:
Was an outline of the deal done by Asmar? Where is it?
Has Freeman begun lobbying for Federal Restore act money?
Is the CAO, who has links to Jenkins Hill, brokering a deal for the City?
How much of the Pitts Slip lease issue is a play to get Russenberger and Merrill out of the way?
Wouldn't Freeman be better able to respond to a good ole fashioned RFP with Merrill and Russenberger precluded from bidding since they are in default?
Is the Nashville based developer going to swoop in 2 years after the spill and take a lions share of the Restore money for a private development?
Hmmm

Posted by Maren DeWeese at 3:35 PM
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1 comment:
Anonymous said...
New phrase for the vocabulary - "political influentials."
December 2, 2013 at 4:28 PM
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Guest


Guest

Interesting read.. City's Demand Letter.....

http://www.scribd.com/doc/187050166/Pitt-Slip-Demand-Letter-11-15-2013http://www.scribd.com/doc/187050166/Pitt-Slip-Demand-Letter-11-15-2013

4Downtown Pensacola continues in its quest for "quality of life"  City may now own the "Fish House"  LOL Empty In 12/4/2013, 6:58 pm

surfnrg

surfnrg

Interesting read today from the In news.
Without the actual lease to read the above letter is in a vacuum for me.

According to the In the city would have to demonstrate a subsidiary
Relationship between the corporations involved which is a legal relationship
Not based on whether individuals/shareholders sit on common Board of Directors. Clearly there is not a legal subsidiary formed.

Since the lease has been renewed successfully without challenge this whole scenario by the City is highly suspect and especially since the city leaked the contents of a certified letter to the Merrills to the PNJ the next day.

Hopefully the city is not going to lose a huge lawsuit over damages to the Fish House et al.

It will be interesting to see how this plays out in court if that is where it leads.

Guest


Guest

I just enjoy watching the snakes fight.  He said, She said, They said......LOL

surfnrg

surfnrg

I have never had any dealings with the Merrills in which they were less than honest. That is only any business I had with them.

The city's position without any prior notices seems very very unusual. Normally in a default there would have been several formal notices.....

There are seemingly two issues, one on a percentage of sales as part of rent, and the. Other about the lease ending in June?

In any case the leaking of this to the press prior to the tenants having an opportunity to cure defects knowing it would cause monetary damages to them would seem to put the city in a precarious legal position.

Guest


Guest

Hayward might be in on the deal. Do something goofy, let the city get sued for a jillion dollars then him and the Boys will split the lawsuit money after he loses the election. Everybody wins, except for the city but that is nothing new.

surfnrg

surfnrg

I. Cannot find all the leases.

However the prevailing lease is to russenberger's marina corp which is the ground. Lease, it is almost nothing. The sub lease was to the Merrills LLC
Merill Land Co. which then leased the buildings on the land. Then the corps
Fish house and atlas rented space from the LLC. Nothing in this to me constitutes a legal subsidiary relationship. The lessee is the only entity which
Is paying a lease payment plus percentage of sales. In this contract i don't see the city prevailing, they wrote the original lease wrong. And, have not in all these years demanded any percentage of sales from the lease.

The lease ending in June 2012 i also found but cant find the renewals which must have been done by Marina mgmt. However in the terms of the original lease at renewal the buildings themselves, not the ground lease, revert to the City. This contract seems flawed internally and this may require court interpretation. Additionally the city may have waived this provision by not acting on it. It will get sticky. Knowing the principals a deal is already underway.....

An investment the size of which would be required is. Not going to be amortized out in 5 or 10 years so any lease will have to be pretty long term i would think....

2seaoat



The formal structure of the corporations may be pierced in discovery. The piercing of that corporate veil may indeed lead to a court deciding that a fiction was created to avoid the percentage lease. An example would be a ground lease with minimum base rent and percentage of sales. The lessee does not sublease, but allows exchange of floor space of half the leasehold to a cellular phone company who has another retail location across town where the Lessee who is a retail electronic store, sets up space for their products in that retail location, and only charges the cell phone company $300 a month for the space, which the Lessor gets a percentage of the same from the lease. The real cost of that space would be 3k a month, but it is hidden with the exchange of space.

The lessor would be successful, and the courts have imputed rent where the intent of the parties was to avoid the terms of the original lease and percentage provisions. I think Surf is correct that the drafting of the original lease was sloppy, and it will be strictly construed against the City, but I would not be too quick to say the City has no basis in pulling back the layers and having the court impute the rent.

surfnrg

surfnrg

Seaoat

The lease and subsequent sub lease , then the renting of retail space is all out in the open. What the city is trying to construe is that there is a subsidiary relationship. As you state discovery could compel any more financial disclosures.

What is really telling is that for 13 years the city has never construed the lease this way. On the heels of an adversary relationship involving the mayor and the merrills, on a different project the mayor mails this letter with an entirely new interpretation. Then it is leaked to the PNJ with intent to harm a going enterprise. No matter any monies involved the mayor's actions bespeak political grudges. And bode very poorly for the city. It's really a shame he has chosen this route.

2seaoat



The funny part is that just a year ago in March I saw the Mayor having lunch with him at the Fish House....and it was all smiles.....you have a feel for the pulse of what might have gone wrong, I am only saying that the discovery process might open a can of worms, where the avoidance tactics(if any)could be pierced, and the corporations and their relationships rendered in such a manner to allow a percentage rent......have not read the leases, and other than this thread and the PNJ.....I do not know a thing......and did not realize that there had been a falling out.

Guest


Guest

It is just a drama show for the rubes. The deal has already been made. Our new "Saviour"might well be the developer from Nashville. Remember, we have a "inferiorly complex" and will need some one to save us. Levin and the Boys are laughing their asses off at the new "Wannabes"

Guest


Guest

Better question is "Where is Fred?"  Aston is his good friend but yet he makes all these "silly" moves?  LOL  right'''

Downtown Pensacola continues in its quest for "quality of life"  City may now own the "Fish House"  LOL 443852
Porchettas
When we first opened, I told Helen, that one day the Mayor of Pensacola Ashton Hayward would stop by for lunch. About 3 weeks ago, he did just that along with a staff member. Well that was great in itself. So I said to Helen, where do we go from here? I thought about it for a while and came up with celebrities. We need celebrities to stop on by for lunch. So here comes 4 men in the door and low and behold, one looks like Fred Levin. Fred is considered one of the top 10 lawyers in America and is also very wealthy. Maybe the wealthiest in Pensacola. They said they were waiting for another person to arrive and once again, here comes Ashton Hayward. This of course had Helen in a tizzy. She said she wanted a photo and we had one of our good customers take the photo of her with Ashton and Fred, arm in arm. So there you have it. Porchettas on its way with celebrity status.  

Yella

Yella

Mr Ichi wrote:Russenberger, Merrill to negotiate with Pensacola officials
More than $5 million on line in dispute over Fish House lease
Dec. 3, 2013 7:52 PM   |  

Written by
T.S. Strickland

FILED UNDER
News
Local News
City leaders will meet Monday with local businessmen Collier Merrill and Ray Russenberger to discuss claims that the two owe more than $5 million in overdue sales royalties and interest from Merrill’s landmark restaurants the Fish House and Atlas Oyster Bar.

Meanwhile, officials are also claiming ownership of the building in which the restaurants are housed and seeking to renegotiate the lease for the property at terms more favorable to the city.

Merrill called the demands a “money grab” on Tuesday and has characterized the city’s claims as “baseless.”

The dispute, which came to light two weeks ago, revolves around the piece of property known as the Pitt Slip Marina — leased to Russenberger in 1987 and subleased to Merrill’s company, Merrill Land, LLC, in 2000.

The city claims taxpayers are entitled to a percentage of sales at Merrill’s restaurants for the last 13 years — a position which Merrill vehemently disputes. He has estimated that satisfying the city’s demands would cost his business more than $5 million, or about one year’s revenue.

The city threatened last month to evict the businessmen if payment were not made by February. Both sides have said they hope that is not necessary, but have also said they would take the matter to court if need be.

The issue of the disputed rent payments, while daunting, is not the only wrinkle of contention to be ironed out at Monday’s meeting. The city is also claiming that the lease for the property on which Merrill’s restaurants stand expired in June. Merrill and Russenberger dispute this point, as well.

The answer is important, because if the lease has, in fact, expired, the title to the restaurants would, according to the lease terms, revert to the city. Officials also hope to renegotiate the lease to reflect the fair market value of the land and improvements.

The Pitt Slip Marina has been a matter of dispute within City Hall since at least 2008 and with Russenberger and Merrill since 2011. In that year, City Attorney James Messer sent the men a letter outlining the city’s stance on the lease renewal. However, the issue of the $5 million in sales royalties was not raised until last month, in a letter sent by real estate attorney Nixon Daniel on behalf of the city.

Merrill has expressed frustration with the city’s apparent evolution of opinion.

In a letter dated Nov. 27 and released to the media this week, attorney Bruce Partington, who represents Merrill, called the city’s legal analysis on all points fundamentally flawed. He also chided the city for leaking the story to the media “for dramatic effect” and said the coverage had been detrimental to Merrill’s businesses.

“This course of action has already caused damage to Great Southern Restaurant Group,” Partington wrote, “and the city is responsible for that damage, and any additional damages to any of our clients.” Partington also demanded that the city reimburse his clients for attorneys fees
.
I smell a rat,nay, it has a fishy smell. Surely, methinks,there is something fishy going on with the GOBs again downtown.

http://warpedinblue,blogspot.com/

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