City officials terminated the lease of Snappy Tomato Pizza in The Commons, voting Friday to accept $18,500 to settle the restaurant’s financial obligations.
Columbus Redevelopment Commission members evicted the restaurant effective 10 p.m. Friday.
City officials learned as early as mid-November that the restaurant had not paid any of its obligations for 2013, a new development that emerged Friday. Previously, it was believed that the restaurant’s weak financial condition first became known in mid-December.
Snappy Tomato was informed Dec. 23 that it owed $27,237.52 in monthly rent payments, additional lease obligations, utilities and late payment fees for last year. It also had not made its $1,500 lease payment for January that was due at the beginning of the month.
The restaurant was open Friday afternoon while commission members were deciding its fate, although restaurant employees at lunchtime said they already knew that it would be closing that night.
Snappy Tomato owner Tim Larken, of Larken & Co. LLC, did not attend the commission meeting, nor did his attorney, Jeffrey Rocker.
The commission’s four voting members in attendance unanimously accepted the restaurant’s oral offer to pay $18,500 to clear its debt. Voting in favor were Mayor Kristen Brown, Sarah Cannon, Dave Wright and Frank Jerome. Steven Scgalski did not attend. Robert Abrahms attended, but is a non-voting member.
Jerome told The Republic on Wednesday that he thought the proposed settlement amount was $18,100 but acknowledged Friday that there was no written documentation and he was going from memory on the settlement amount.
On Jan. 7, the restaurant offered to pay $16,601.27, but increased the amount during negotiations.
The next step is to work out settlement language with Larken’s attorney, redevelopment attorney Stan Gamso said after the meeting. No deadline was immediately set for the $18,500 payment, although Gamso said the exchange could occur within 10 to 15 days.
Redevelopment officials said that if Larken or his company fail to meet settlement terms, the commission would be forced to file a lawsuit.
Gamso told commission members during the meeting that he found out in mid-November that Snappy Tomato hadn’t been paying rent. Jerome questioned Gamso on the date, which is a month sooner than city officials had been told previously.
“I don’t honestly remember how I found out,” Gamso said during the meeting.
The attorney did not further elaborate on the timing discrepancy regarding first learning of the restaurant’s problems. Repeated attempts to contact Gamso Friday night about the discrepancy were unsuccessful.
Commission members took more than an hour to weigh accepting the settlement, or instead go to court seeking full payment.
Gamso walked them through the Snappy Tomato’s lease terms. The attorney also outlined $61,715.24 in build-out costs incurred by the city before the restaurant’s 2011 opening.
Commission members were advised that eviction and litigation could take up to eight months, and the city could end up with nothing if the Larken filed for bankruptcy and other creditors stepped up seeking payment.
Gamso estimated legal costs to litigate at $4,000 to $5,000.
Commission members questioned whether the city could go after the restaurant equipment or Larken’s personal property. But Gamso cautioned that based on the lease, the city was not entitled to go after either as part of a settlement.
Larken was reported to have been under a personal guarantee to pay the lease capped at $8,000, but Gamso said the city could not legally recoup that.
“It does not appear the personal guarantee was ever executed,” Gamso said. “However the lease says it should have been executed.”
Without Larken’s signature, Gamso said no guarantee exists.
It would take a court to look at whether the city could go after the personal guarantee anyway, Gamso said.
Neither the settlement option nor heading to court was a great option, said Brown, who serves commission president.
“The settlement offer is in the best interests of taxpayers. Litigation would be lengthy and costly and possibly yield nothing,” she said.
The city’s decision means it accepts a monetary loss of at least $9,000, but obtains immediate legal control of the property and may start looking for a new tenant immediately.
The city will now talk to appraisers to determine the market value for Snappy Tomato’s 678-square-foot space in preparations to find a new tenant. Commission members agreed to hold off on working with a real estate agent and let word of mouth be a promotional tool for re-leasing the space.
Jerome asked that the commission work with the Commons Board to have better signage, including an outdoor sign, to help any new tenant.