Thursday, January 23, 2014

Prescott, Arizona: Council debates 10-year lease, replacement of kitchen equipment for airport restaurant

Les Stukenberg/The Daily Courier
 Susie’s Skyway Restaurant has had to operate for the past eight months without a hood, grill or deep fryer as the owners awaited lease renewal negotiations. The City of Prescott owns the space, and some members of the city council are leery of a 10-year lease because of future plans to replace the terminal.

PRESCOTT - A "red tag" on much of the essential kitchen equipment at Susie's Skyway Restaurant has had a significant impact on the airport eatery. 

For the past eight months, restaurant lessee Susan Sullivan says the establishment, which is located inside the airport terminal, has had to function without core kitchen elements - a hood, a grill, and a deep fryer.

That, in turn, has caused Susie's to dramatically scale back its menu, leading to a nearly 70 percent reduction in business, Sullivan said.

This week, Prescott City Council members discussed a lease renewal agreement that would include the replacement of the aging kitchen equipment in the city-owned space.

During a nearly hour-long discussion, however, the proposed length of the lease, as well as pending city plans for a new airport terminal, generated debate among the council.

Airport Manager Jeff Tripp led off the discussion by explaining that the red-tag situation stemmed from the discovery of a gas leak in the kitchen in June 2013.

During the leak repairs, the city's building and fire departments determined that the 1957-era kitchen equipment needed to be replaced with code-compliant equipment, and issued a red tag that made the equipment unavailable for use.

Meanwhile, Sullivan said the restaurant has remained open, but has had to make do with a small griddle. Many of the items that drew patrons had to be temporarily removed from the menu.

Tripp explained that while the current lease calls for the lessee to maintain and, if necessary, replace kitchen equipment, he said the timing of the lease brought that requirement into question.

"Since the current lease is about to expire (on May 31, 2014) is not reasonable to expect the tenant to expend the monies necessary to bring the kitchen into compliance at this time," a city memo stated.

That raised a concern from Councilwoman Jean Wilcox, who maintained that city replacement of the kitchen equipment - at a cost of nearly $25,000 - would be a gift to the lessee, and would violate the state's gift clause.

City Attorney Jon Paladini responded that because replacement of the equipment was negotiated as part of the new lease, it would not be considered a gift to the lessee. "It's a business decision, but I don't think it violates the gift clause," he said.

Councilman Steve Blair added that the city should take responsibility for repairing the kitchen, despite the original lease. "To me, it's irresponsible not to do this as a city," he said.

Under the new lease, the lessees - George and Susan Sullivan - would see their rate rise from the current $331 per month to $850 per month. That rate would apply for the first two years, after which the rate would go up to $1,186 per month.

Wilcox also questioned the 10-year term of the lease. "A 10-year term is a long time," she said. "A lot can happen."

Other council members also had questions about the length of the lease, noting that the city has long considered the possibility of building a new terminal at the airport.

With the prospect of a new terminal on the horizon, Councilman Chris Kuknyo said, "I get heartburn every time we spend money on this (existing terminal) building."

In 2001 and 2002, the council held a number of discussions on the need for a new terminal to replace the 1948 building, and the issue has come up regularly through the years. Meanwhile, the plans for the new airport terminal have been largely on hold.

This week, Mayor Marlin Kuykendall cautioned that the new airport terminal could still be years off. "I don't think in 10 years, we'll see a lot of dirt moved," he said. "Just because of the way we do business and the way the FAA (Federal Aviation Administration) does business."

The council made no decisions at Tuesday's study session, and the item will be back on the agenda for the council's Jan. 28 voting session.

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