TROY — Members of the law and ordinance committee reviewed and approved a request to modify the lease agreement for Smith’s Boathouse Restaurant on Tuesday.
The committee is chaired by John Schweser with Todd Severt and Bobby Phillips. The building underwent renovation in 2015 for approximately $959,000. Smith’s Boathouse Restaurant business opened in November 2016.
The city owns the marina building and the Community Improvement Corporation (CIC) leases the marina from the city for $1 a year and “acts” as the city’s agent arm.
According to Director of Public Service and Safety Patrick Titterington, the lease modification was requested to simplify and stabilize expenses, as renovations continue, from their current agreement. The current agreement is a base rent of $1,200 per month plus a quarter of percent of revenue over a $1 million.
Restaurant owners asked for a flat 3 percent lease. The CIC approved a 3.25 percent lease with the additional 0.25 percent going to the CIC and the full 3 percent paid to the city of Troy.
Severt asked who was performing the accounting for the receipts by the tenants. Titterington said the city auditor will account for the city’s 3 percent of revenues and the 0.25 percent will be distributed to the CIC’s treasurer.
“They write one check to the city auditor for 3 percent. They write another check to the CIC for the quarter percent. They have to write two checks,” Titterington said.
Dando explained the CIC is a 13-member board and its funds are audited every year. Prior to approval, Severt said revenues should increase since council approved a loan to add a bar area to the restaurant.
The committee approved the legislation to modify the lease at the council’s next meeting on Tuesday, Feb. 20. The lease expires in 2021. City requests emergency legislation to move forward with the lease agreement.
Earlier this month, council approved the Smith’s Boathouse Restaurant’s request for $126,875 from the city’s small business development revolving loan fund for a new bar area. The loan is to be used to install a new bar area in the middle of the restaurant to seat more than 60 people. The current bar area would be turned into a small dining area. The new bar area is expected to increase sales by 15 percent.
The loan repayment term is 10 years of monthly principal and interest payments with 3 percent simple interest. The first six months would be interest-only payments during construction.
The loan also included a contingency clause to forgive up to $49,900 for the building improvements, which city staff reported will stay with the building if the ownership should change hands. The restaurant does have another loan of $152,300 from 2016. That loan has had $13,349 paid thus far. The first loan request was for restaurant equipment, furnishings and other equipment.