Why the council is reviewing park’s tennis complex lease

By Brian Pariser….

Brian Pariser, Vice Mayor

A May 1, 2011 option for the village to renew the present vendor’s lease with Palmetto Bay’s Coral Reef Park public tennis and racquetball complex will be coming before the council in March.

The village council must decide if it is to all the resident’s continued benefit to exclusively lease the Coral Reef Park tennis complex and appurtenant facilities for another five years to the privately owned for-profit corporate vendor Jane Forman Tennis Academy Inc.

Tennis is a great activity for all ages, and the present corporate vendor is experienced and appears to have done a competent job. Palmetto Bay residents and area non-residents presently patronize the courts.

The council must consider the interests of all residents in deciding to exercise the option, particularly reviewing the amount of lease revenue to be paid to the village and policy considerations of leasing public park property to a private for-profit entity.

As elected officials, the members of the village council are obligated as the fiscal watchdogs of the assets of the village to debate whether the village has done its best to maximize a source of non-tax revenue from the tennis complex, if the village can renegotiate a better lease with the present vendor, send out an RFP (Request For Proposal) to seek a competitive bid or manage the tennis facility itself and keep all the income it generates.

The five-year lease option up for review was contractually entered into by the prior village council in 2006 (by a 3- 2 vote). The village council at the time of executing the 2006 five-year lease option was saddled with a pre-existing lease from Miami-Dade County, when the county-controlled Coral Reef Park prior to Palmetto Bay’s incorporation.

The county, as a condition of deeding Coral Reef Park to the village, required the village to assume a 20-year lease (four five-year options) which the county and the vendor executed just six days after the residents of Palmetto Bay voted on Feb. 5, 2002, to incorporate.

The Palmetto Bay Council in 2006 attempted as best it could to renegotiate the county lease with the present vendor (five years plus five-year extension at the option of the village) in exchange for eliminating many of the more onerous terms of the original county lease.

If the Coral Reef Park tennis complex with appurtenant parking and clubhouse spread over approximately three and a half to four commercial acres in a similar site were to be constructed today, the cost of the facility would be in the millions of dollars. With the announced intention of the YMCA to close its tennis complex in Briar Bay in the near future, the Coral Reef Park tennis complex will be literally the only public tennis complex in the area available for hourly rentals, leagues and instruction, greatly enhancing its potential revenue stream.

The council has to determine what is a fair rent, in relationship to the value of the village asset. An example of the rent the village can expect to be paid under the five-year lease option terms from the vendor is as follows: The vendor grossed for the past five years $3,436,627.35 in revenues, yet was only obligated to pay the village $307,040.69 in base rent and percentage opportunity fees paid after the exclusion of the first $156,000 in gross revenues generated by the corporate vendor’s Coral Reef Park activities.

If the village was not to renew the present vendor’s lease, the village will be obligated to repay half of the tennis facility renovations paid by the vendor, which the vendor claims is approximately $120,000. The accuracy of reimbursable items claimed by the vendor is being reviewed by village staff. The council has to determine if this cost can be recouped by a better rent and/or direct revenue stream to the village over the next five years.

The council should not be hurried in its decision to exercise the five-year lease option. Please let the village council know your thoughts on this issue by visiting the village website to email the council members or attending the upcoming council meetings. After all, it is your park.

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