In July, Miami Beach Commissioners approved COVID-19 rent relief to nearly 100 commercial tenants and operators of City-owned property, waiving rents and fees totaling $3.4 million due from April through the end of the fiscal year on September 30. The City is now discussing how to proceed into the next phase of recovery, balancing the desire to retain tenants and the long-term finances of the City.
In a memo to the Commission’s Finance and Economic Resiliency Committee, City Manager Jimmy Morales wrote, “To date, some neighboring municipalities have instituted rent deferment with the obligation to pay it back, but none have provided rent forgiveness as the City has.”
Before recommending a policy for the next phase of dealing with COVID losses and recovery, Morales said, “Each agreement is being reviewed individually in order to evaluate and identify gross revenue decreases as a result of COVID-19.” The Administration is also “meeting with tenants to understand the economic impact inclusive of gross revenue loss, financial statements, and potential business plans to recover.”
In an analysis presented with the memo, Morales indicated actual rent paid in FY 2020 is “preliminarily 32% lower than the FY 2019 Actuals” which were $8.85 million. The FY 2020 number is expected to be $5.98 million. The FY 2021 Adopted Budget assumed a $964,364 or 11% decrease from the FY 2019 actuals, Morales said.
Once the information is gathered, the Administration will come back to the Committee in December with “recommendations for each agreement considering eligibility for rent relief or deferment.”
Meanwhile, one long-term tenant, Smith & Wollensky, stepped up this week to pay the approximately $365,000 that it owed in back rent. In a letter to the City, attorney Alex Tachmes, Shutts & Bowen LLP, wrote, “Smith & Wollensky has been a tenant of the City for more than 20 years and we are grateful for the wonderful relationship we have established with the City. And we would like to do our part.”
Henry Delgado has been Smith & Wollensky’s General Manager for nearly 15 of the 23 years the restaurant has been located in South Pointe Park. Delgado said the popular restaurant was able to get back on its feet because of the amount of outdoor space it has along with its large indoor space which allows for social distancing.
“The City was gracious enough to say to all its tenants, ‘We’re going to put a hold on all [rents],’” he said. Smith & Wollensky, however, wanted “to continue to do our share,” so it put money aside with the thought, “We’re going to do what’s right. We’re going to hold it somewhere. When it comes due, we want to make sure that we’re going to do our part."
“We managed. We put it away and I think it’s the right thing to do. Everybody, including local governments, they’re especially in need of money. Taxes have been reduced. Tourism is significantly down. We felt we just needed to do our part and be responsible citizens.”
Smith & Wollensky opened the first day restaurants were allowed to reopen following COVID closures. “We were among the first and the few that opened back up,” at the end of May, he said.
“We needed to shift our entire way of thinking, our whole way of doing business,” Delgado added. Menus were redesigned, the restaurant was reconfigured, and safety measures were put in place for employees and guests. “It was almost like starting a new business all over again, with a lot of restrictions, a lot of restrictions,” he said.
The outdoor dining areas helped – from the deck upstairs to the patio by the water. “The only downside is it was in the middle of summer. The weather didn’t cooperate every day, but we sure tried,” he said. There haven’t been many people from out of town, but a lot of the local regulars have come back.
Delgado is mindful of surges in cases of the coronavirus around the country and the discussion of additional shutdowns. “We’re hoping that’s not the case,” he said. “Many of the other local businesses on Miami Beach have not recovered. [A shutdown] right now would not be beneficial to the City. It would really hinder the future of the hospitality industry and, look, even the City. Are we prepared for it? Absolutely, but it’s not something we would really want to see happen unless it was totally necessary, if the cases increased so much, or we were running the risk of another large number of people infected.”
“We continue to do our part,” he said. Smith & Wollensky monitors the number of guests to ensure it is adhering to the 50% capacity limit. “Our industry as a whole wants to make sure we’re not one of the contributors to the increase in the number of cases in South Florida.”
Smith & Wollensky has been a City of Miami Beach tenant since 1997. The current lease runs through November 2025. According to an email from City Spokeswoman Melissa Berthier, when the lease comes due, “[T]he City Commission has the option of either issuing a competitive solicitation or waiving competitive bidding if it is in the City’s best interests, i.e., to retain a good tenant with a strong brand and a long-term proven track record of being a good neighbor.”
Any lease over ten years would require approval by a majority of the City’s voters in a citywide referendum, she noted.
“Smith & Wollensky is a Miami Beach staple — offering fine dining, stellar service and stunning water views for our residents and visitors,” she said. “They have been an outstanding operator for over two decades.”
Photos courtesy Smith & Wollensky
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