City officials intend to start from scratch in the search for a restaurant to fill the Scotty’s Burger Joint space in The Commons.
Mayor Kristen Brown and City Attorney Kelly Benjamin explained to the Columbus City Council on Monday night that the leaseholder for the space in The Commons breached its contract with the city when the restaurant operator ended its relationship with the Scotty’s franchise.
Based on Benjamin’s advice and a discussion with the State Board of Accounts, unless that breach is repaired, the city is obligated to go through a bidding process to find the next tenant for The Commons. Under the contract with the city, the only way to fix that breach would be to bring back a Scotty’s restaurant, Benjamin said.
“The lease was very specific,” Brown said. “The lease was for one and only one use — a Scotty’s restaurant.”
Brown said the previous city administration, which made the deal for the restaurant, specifically sought the Scotty’s franchise because the restaurateur was expected to provide a regional draw to downtown Columbus.
The lease holder, Greenhouse Restaurants Inc., will receive a letter explaining the breach during Thursday night’s Redevelopment Commission meeting, which will start a bid-seeking process to fill the space, Benjamin said. Based on timelines under state law, the process must take a minimum of 39 days but would likely take at least two months, Benjamin said.
Benjamin said the State Board of Accounts could not advise the city on whether or not a breach occurred — that was up to the city to determine. However in the event of a breach, the state agency advised that the city has several steps it must take including a 15-day window for the leaseholder to fix the problem. The way to do that would be to bring back a Scotty’s franchise.
Benjamin said she spoke Monday with Scott Wise, the principal behind the Scotty’s restaurants, and was told it was unlikely that the relationship between Wise’s company and the leaseholder could be repaired.
After the 15 days, the city must then decide on the requirements it expects from submitted bids, seek those bids by advertising twice for at least 10 days each and then receive approval from public boards, Benjamin said.
Brown will ask the Commons Board to decide the parameters of what should go into that restaurant space. The Redevelopment Commission then will recommend which of the bidders best meets that criteria. Final approval would need to be given by the City Council, because under state law a contract for more than $25,000 a year needs City Council approval, Benjamin said.
Under Mayor Fred Armstrong, the lease was negotiated by Columbus Downtown Inc., a not-for-profit corporation set up by city officials to negotiate leases and deals without having to go through the state-mandated approval process. That meant much of the negotiation and approval for a Scotty’s franchise happened outside of the public eye. Brown said the process outlined by Benjamin is the same process the city should have initially followed, without the CDI detour.
The entire chain of events was sparked when MSCB Group, the owners of Greenhouse Restaurants, terminated its agreement Dec. 19 with A Pots & Pans Production, the company which franchises Scotty’s restaurants. A Pots & Pans Production closed the restaurant as a Scotty’s Dec. 31.
Greenhouse Restaurants came back to the city last week with an emergency request before the Redevelopment Commission to alter the lease, allowing them to operate a Detour American Grille instead of a Scotty’s Burger Joint. That request was not acted on, and another Redevelopment Commission meeting was scheduled for Thursday to address the request.
Mark Maddox, one of the co-owners of MSCB Group, told the Redevelopment Commission last week that if the city didn’t approve the request to change to a Detour American Grill, the city would be putting at risk the jobs of about 70 employees. The company initially planned to continue training employees for the anticipated restaurant change, and Maddox last week said they planned to reopen the day after approval from the Redevelopment Commission.
Early last week, there was a banner in front of the restaurant saying it would reopen this week. Brown said the company had to take down the sign because it violated the city’s sign ordinance and was not approved by the city, which owns the building.
Benjamin and Brown spoke to the attorney for MSCB Group LLC, the owners of Greenhouse Restaurants, following Monday’s City Council meeting, informing him of the city’s findings and intentions
Brown said MSCB Group would be welcome to submit a proposal as a bidder for the new lease.
Councilman Frank Jerome, who also serves on the Columbus Redevelopment Commission, said he had concerns that the city would be portrayed as driving out the restaurant. But by dropping Scotty’s, Jerome said the company set itself on this path.
“It is not our position to bail them out,” Jerome said.
“I think the important thing to remember here is that we did not terminate the agreement; we did not breach the agreement,” Brown said. “They had a Scotty’s restaurant here that lasted for 13 months.”
Mert Shipman and Maddox, the co-owners of MSCB Group, could not be reached for comment following Monday night’s council meeting.
October 2012: Mert Shipman, holder of the lease for The Commons space, said the Fourth Street construction project was costing him $20,000 a week in reduced restaurant receipts.
November 2012: Shipman said the city owed him $25,521 for extra construction costs for the space in The Commons. The city said Shipman owed $28,762.44 for unpaid electric, water and sewer bills and had yet to reassign his lease from CDI to the Redevelopment Commission. The city gave Shipman 15 days to comply or face eviction.
Dec. 17, 2012: The lease for the Scotty’s space in The Commons was reassigned to the Redevelopment Commission.
Dec. 19, 2012: Shipman severs the management agreement with A Pots & Pans Production to operate the Columbus Scotty’s restaurant.
Dec. 31: Scotty’s Burger Joint closes.
Jan. 2: New plans were presented to the Columbus Redevelopment Commission for the former Scotty’s Burger Joint. The lease-holder wishes to reopen the restaurant space with a Detour American Grille franchise. Commission takes no action because of unanswered questions.
Monday: The city attorney and State Board of Accounts agree that the lease for the restaurant space in The Commons must be opened up to a competitive bidding process after the city declares a breach in the contract.
11:30 a.m. Wednesday: The Commons Board will meet at the Xenia Miller Room in The Commons. The board has been assigned to come up with the requirements for proposals for the restaurant space.
6 p.m. Thursday: Next Columbus Redevelopment Commission meeting in the City Council chambers at City Hall, 123 Washington St. The city will present the leaseholders with a letter declaring them in breach of their lease.