Placement: First Reading of Ordinances / Public Hearing
Action Requested: Motion / Vote
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Ordinance 26-32, Public Hearing, Authorizing the First Amendment to a Lease Agreement between the City of Port St. Lucie and PIII Investments, LLC, for a Portion of Real Property Located at 2454 SE Westmoreland Boulevard (The Port District Riverfront Park) for a Riverfront Restaurant.
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Submitted By: Jennifer Davis, Director, Community Redevelopment Agency
Strategic Plan Link: The City's Goal to enjoy culture, nature and recreation, as well as diverse economy and employment opportunities.
Summary Brief (Agreements/Contracts only)
1. Prepared by: Jennifer Davis, Director, Community Redevelopment Agency and Margaret Carland, Senior Deputy City Attorney
2. Parties: City of Port St. Lucie and PIII Investments, LLC
3. Purpose: Execute an amendment to the ground lease agreement in accordance with the negotiated modified terms and conditions between the City of Port St. Lucie and PIII Investments, LLC, for the development, construction and operation of a riverfront food garden in The Port District’s riverfront park site.
4. New/Renewal/Modified: Modified
5. Duration: Initial term of thirty (30) years, with four 5-year renewal options.
6. Benefits to Port St. Lucie: The creation of a destination along the North Fork of the St. Lucie River has long been a strategic priority of the City of Port St. Lucie. Through the development and construction of the riverfront park and related park elements, the public will have a unique opportunity to connect with the river. The addition of a riverfront restaurant to the park site will enhance the draw to the site and surrounding amenities including the City’s Botanical Gardens, Historical Museum, Pioneer Park Playground, and extensive interconnected trail network.
7. Cost to Port St. Lucie (Annual and Potential): There are no annual cost associated with the lease agreement. A synopsis of the anticipated annual revenue is outlined below. The cost of preparing the restaurant pad for the restaurant developer was included in the sitework for the overall Port District park project.
Presentation Information: A brief presentation will be provided by staff, if requested.
Staff Recommendation: Move that the Council approve the Ordinance authorizing the First Amendment to the Riverfront Restaurant Lease Agreement between the City of Port St. Lucie and PIII Investments, LLC.
Alternate Recommendations:
1. Move that the Council not approve the Ordinance authorizing the First Amendment to the Riverfront Restaurant Lease Agreement between the City of Port St. Lucie and PIII Investments, LLC. and provide staff with additional direction.
Background: In late 2020, the City of Port St. Lucie engaged Colliers International to assist with marketing and recruitment efforts for the riverfront restaurant site in The Port District. Colliers worked closely with several interested parties and brought forward PIII Investments, LLC, with a restaurant village concept for the site in January 2022. City staff worked with the proposed developer on the lease terms and conditions, of which the Lease Agreement was approved by City Council on January 23, 2023. Since that time, the park construction was completed and the park opened in June 2024. PIII Investments continue to work on their development approach and anticipates mobilization and construction to commence in early April 2026.
Financial Information:
The following provides a synopsis of the major lease terms for the project, as approved by City Council in January 2023:
• Lease Term: Initial 30-year term, with four 5-year renewal options
• Base Rent: $40,000 annually, paid monthly; 3% escalation annually
• Percentage Rent: 4% of gross sales over $2,500,000
• Property Taxes and Assessments: Lessee will be responsible for paying property taxes and assessments associated with the leased parcel and the improvements thereon.
Issues/Analysis: The leased area is contained within the overall park site. As part of the Lease Agreement, the City delivered a “pad ready site” to the restaurant developer for the construction of a riverfront restaurant. Certain terms and conditions within the Lease Agreement and related exhibits were amended, replaced or added, as outlined in the First Amendment to the Lease Agreement, and summarized below.
Section 2: Definitions
• Section 2.1.3 "Anticipated Delivery Date" (replaced)
• Section 2.1.13 "Construction Commencement Date" (replaced)
• Section 2.1.16 "Due Diligence Period" (amended)
• Section 2.1.20 "Lease Commencement Date" (replaced)
• Section 2.1.22 "Leasehold Improvements" (replaced)
• Section 2.1.25 "Lessor Improvements" (amended)
• Section 2.1.27 "Permit Period" (replaced)
• Section 2.1.30 "Plans and Specifications" (amended)
• Section 2.1.31 "Project" (replaced)
• Section 2.1.38 "Phase I" (added)
• Section 2.1.39 "Phase II" (added)
Section 4: Uses
• Section 4.12 is deleted and replaced with: Temporary Facilities. In accordance with City Codes and following the Construction Commencement Date, Lessee shall be permitted to install kiosks, tents, temporary food stations, food trucks and similar facilities (“Temporary Facilities”) on the Leased Property and subject to the Lessor’s prior written approval, within other designated areas of the Port District Riverfront Park. Prior to the installation of any Temporary Facilities, Lessee shall provide Lessor with a written request including an illustrative representation of the Temporary Facilities and the proposed location(s). Upon receipt of such written request, Lessor shall have ten (10) business days to review and advise the Lessee whether the Temporary Facilities are approved or not. If Lessor fails to notify the Lessee that the Temporary Facilities are approved or not within the ten (10) business day period, Lessee’s request shall be deemed not approved. Lessee shall not be permitted to install any Temporary Facilities which are not approved, in writing, by the Lessor. If any such Temporary Facilities are approved by the Lessor prior to the Lease Commencement Date, the use and operation of such Temporary Facilities shall not trigger the Lease Commencement Date nor the commencement of payment of Base Rent under Section 6.1.1 hereof or Percentage Rent under Section 6.1.2 hereof, but Lessee shall pay to Lessor five percent (5%) of all Gross Sales generated from such Temporary Facilities prior to the Lease Commencement Date (“Temporary Facilities Sales Payment”). Lessee shall pay to Lessor the Temporary Facilities Sales Payment, within seven (7) days following the end of each month after the Construction Commencement Date. Following the Lease Commencement Date, the Gross Sales generated from the Temporary Facilities shall be included in Gross Sales for purposes of calculating Percentage Rent and shall be subject solely to the Percentage Rent rate and terms set forth in Section 6.1.2, and no separate or different percentage rent or fee shall apply to such Temporary Facilities. Notwithstanding the foregoing, in the event that the Lease Commencement Date does not begin within sixteen (16) months of the Construction Commencement Date, then Lessee will cease all operations of Temporary Facilities as set forth in this paragraph unless otherwise approved in writing by the City Manager or designee.
Section 6: Absolute Net Rent
• Section 6.1.3 is deleted and replaced with: Partial Opening of Leasehold Improvements. Lessee anticipates opening Phase I of the Project in advance of completion of Phase II of the Project. Once Lessee obtains a Certificate of Occupancy for any portion of the Leasehold Improvements, then the date of the issuance of said Certificate of Occupancy shall be considered to be the Lease Commencement Date. Within three 3) years of the Lease Commencement Date, Lessee shall either commence construction of Phase II of the Project based on the approved site plan for the Leased Property or submit a request to amend the approved site plan for the Leased Property to the City. Once all Permits and Approvals for Phase II of the Project or any such amendment to the site plan for the Leased Property have been obtained, Lessee shall have two (2) years to complete the construction of Phase II of the Project, subject to any extensions approved in writing by the City Manager or designee. If Lessee has timely commenced construction of Phase II of the Project based on the approved site plan, or has timely submitted a request to amend the approved site plan to the City and is diligently pursuing required Permits and Approvals in good faith, Lessee shall be permitted to continue operations during such period of permitting and construction, and Lessor shall not require Lessee to cease operations due to delays in the issuance of permits or approvals that are outside of Lessee’s reasonable control.
Section 7: Contingency Periods
• Section 7.4 is deleted and replaced with: Termination. If: (i) Lessee determines that the Leased Property is not acceptable for any reason, as determined by Lessee in its sole and absolute discretion, Lessee shall have the option to terminate this Lease by written notice to Lessor, which notice must be delivered on or before the expiration of the Due Diligence Period in accordance with the notice requirements of this Lease; or (ii) if (a) Lessee does not obtain Lessee's Permits and Approvals on terms and conditions acceptable to Lessee in Lessee's sole discretion or (b) if after the expiration of the Due Diligence Period but prior to the expiration of the Permit Period, in Lessee's determination the cost to develop the Leased Property for the Project and intended use will exceed 120% of Lessee's preliminary estimate of the cost of such development, then Lessee shall have the right to terminate this Lease by written notice to Lessor, which notice must be delivered on or before the expiration of the Permit Period and in accordance with the notice requirements of this Lease (a notice under subpart (i) or (ii) hereof being a “Termination Notice”); provided however, if the termination is pursuant to subpart (ii) above, Lessee shall pay to the Lessor the amount of $40,000.00 as an early termination fee. Upon any such termination, this Lease shall be null and void and of no further force or effect.
Section 9: Construction of Improvements
• Section 9.1 is deleted and replaced with: Construction of the Lessor Improvements. Lessor shall, at its sole cost and expense, permit, perform and complete the Lessor Improvements required to put the Leased Property into the Required Condition. Lessor has commenced the construction of the Lessor Improvements and completion of the Lessor Improvements, and the Delivery Date will occur on or about March 31, 2026 (the “Anticipated Delivery Date”). Lessor shall use all commercially diligent efforts, as quickly as reasonably practicable, to achieve completion of the Lessor Improvements by the Anticipated Delivery Date. If Lessor does not complete the Lessor Improvements by the Anticipated Delivery Date, the period between the Anticipated Delivery Date and the actual Delivery Date shall be referred to as the “Lessor Improvement Delay Period”.
• Section 9.2 is deleted and replaced with: Construction of New Restaurant Building(s). Lessee shall, at its expense, design, obtain all required permits for (including permit fees and impact fees), and construct the Leasehold Improvements on the Leased Property, subject to the terms and conditions of this Lease (the "Lessee Work"). It is mutually understood that the Lessee Work does not include Lessee's equipment, fixtures, or other personal property to be placed on the Leased Property. Lessee shall use all commercially diligent efforts, as quickly as reasonably practicable, to obtain all Permits and Approvals necessary to begin construction of the Phase I Leasehold Improvements. Lessee anticipates that commencement of the Phase I Lessee Work will occur on or before ninety (90) days after the expiration of the Permit Period and completion of Phase I of the Lessee Work is anticipated to occur on or about August 31, 2027 (the “Anticipated Completion Date”). Lessee shall use all commercially diligent efforts, as quickly as reasonably practicable, to achieve completion of Phase I of the Lessee Work by the Anticipated Completion Date subject to extension based on the Lessor Improvement Delay Period and any Unavoidable Delays. Prior to the Construction Commencement Date for Phase I of the Lessee Work, the Lessee shall furnish an acceptable Performance and Payment Bond in recordable form, complying with the statutory requirements set forth in Section 255.05, Florida Statutes, in the amount of one hundred twenty (120%) percent of the cost of Phase I of the Lessee Work. A fully authorized surety, licensed by the State of Florida shall execute the Performance and Payment Bond. The Performance and Payment Bond for Phase I shall remain in full force and effect until Phase I of the Lessee Work has been completed and final Certificate of Occupancy is issued by the City. Notwithstanding and in accordance with City Codes, Lessee may request a reduction of the amount of the Performance and Payment Bond upon completion of the construction of any portions of Phase I of the Project. Prior to commencing construction on any portion of Phase II of the Lessee Work, the Lessee shall furnish an acceptable Performance and Payment Bond in recordable form, complying with the statutory requirements set forth in Section 255.05, Florida Statutes, in the amount of one hundred twenty (120%) percent of the cost of Phase II of the Lessee Work. A fully authorized surety, licensed by the State of Florida shall execute the Performance and Payment Bond. The Performance and Payment Bond for Phase II shall remain in full force and effect until Phase II of the Lessee Work has been completed and final Certificate of Occupancy is issued by the City. The Lessor and Lessee acknowledge that the impact fees to be charged by the City for the Leasehold Improvements will be based on the square footage of the building improvements and outdoor dining areas, provided that any general outdoor seating or recreational areas will not be subject to the City's impact fees.
Section 21: Notices
• Section 21.1 is amended by the deletion of Akerman, LLP as a recipient of copies of notices to Lessee and replaced by the following: Gaurav Butani, PIII Investments LLC 1101 Brickell Avenue, South Tower 8th Floor Miami FL 33131. Attn; Gaurav Butani Email: gbutani@p3investments.com <mailto:gbutani@p3investments.com>.
Exhibit B: Lessor Improvements
• Exhibit B is amended to include Lift Station: The Leased Property will be serviced by an existing lift station (the “Lift Station”) as indicated on the construction plans referenced herein. The Lessee has proposed, and the Lessor has approved, a site plan permitting development of up to a 15,000 square foot multi-venue facility. The site is to be delivered in pad-ready condition. Upon the Anticipated Delivery Date, the Lessor will provide the Lift Station to support a seating capacity of 243 seats. The Lessee shall pay the reserved connection fees set forth in the Port St. Lucie Utility Systems Department Connection Fee Worksheet, attached hereto as Schedule 1 (“Connection Fees”), concurrently with the payment of other applicable permit and impact fees in connection with the pulling of construction permits for the Leasehold Improvements. Further, and upon the Lessee’s request, the Lessor will pay for and conduct a study to analyze the necessary infrastructure sufficient to support a seating capacity of 550 seats (the “Lift Station Upgrade”). Any Lift Station Upgrade necessary to serve 550 seats will be at the cost of the Lessor. During construction of the Lift Station Upgrade, the Lessor shall take all reasonable steps to provide that such work not result in the unreasonable disruption, suspension, or limitation of Lessee’s operations. Subject to the foregoing, the Lessee shall either: (1) pay any and all then-current connection fees associated with the Lift Station Upgrade to meet the 550-seat capacity (“Upgrade Connection Fees”); or (2) enter into an agreement with the City of Port St. Lucie Utility Systems Department outlining a payment plan for the Upgrade Connection Fees. Any future modifications of the Lift Station requested by Lessee to increase the capacity beyond 550 seats (“Future Lift Station Upgrade”), including all applicable connection fees, shall be the sole responsibility of the Lessee. If Lessor approves and Lessee undertakes construction of the Future Lift Station Upgrade, the parties shall cooperate in the filing and prosecution of all required permits and approvals for the Future Lift Station Upgrade on an expedited basis.
Location of Project: The restaurant site is located along the east shoreline of the North Fork of the St. Lucie River, generally at the western edge of the Westmoreland Middle Tract site, south of Port St. Lucie Boulevard, in The Port District.
Attachments:
1. Ordinance
2. Exhibit A to Ordinance - First Amendment to Lease Agreement and related exhibit
3. Original Lease Agreement
4. Location Map
NOTE: All of the listed items in the “Attachment” section above are in the custody of the City Clerk. Any item(s) not provided in City Council packets are available upon request from the City Clerk.
Internal Reference Number: 25141-05
Legal Sufficiency Review: Reviewed by Margaret M. Carland, Senior Deputy City Attorney. Approved as to Legal form and sufficiency by Richard Berrios, City Attorney.