FORT PIERCE — Mistakes were made, city leaders now admit, in their handling of the lease for now-dormant Crabby’s Dockside restaurant at the Fort Pierce City Marina.
Still, they are standing by their claim that the restaurant’s owners, Beachside Hospitality Group, bear the sole legal responsibility for defaulting on their contract and the Feb. 15 closure.
Commissioner Michael Broderick, himself a commercial real estate broker, admitted at the March 2 City Commission meeting that “nobody has clean hands here,” and multiple officials said changes are needed to ensure nothing like this happens again.
Still, city leadership presented a united front, saying Fort Pierce was not in a position to negotiate a sweetheart deal for Crabby’s to stay open when its owners already were months behind on their rent.
Timeline of events
The update began with City Manager Richard Chess presenting the most detailed timeline yet of what occurred between the city and Crabby’s. At times, Chess openly refuted some of the claims made by Beachside Hospitality Group in its own publicly available timeline and explanation.
The dispute began July 25, when Beachside Hospitality Group was sent invoices to reimburse the city for portions of the 2023 and 2024 tax bills for the property, at 5 Avenue A in the marina.
The invoices had not been sent during those years, despite the lease agreement with the city requiring Beachside Hospitality Group pay the city for the portion of the tax bill associated with the restaurant building.
How misinformation spread
In a Feb. 19 meeting, Chess erroneously claimed the city had not received the tax bills from the St. Lucie County Tax Collector’s Office for those years, and then received three years of bills all at once, invoices for which were then forwarded to Beachside Hospitality Group.
In reality, the city did receive, and pay, the tax bills for 2023 and 2024 on time, but never billed Beachside Hospitality Group for its portion. The 2025 bill also was received on time, and paid, and an invoice was sent to the tenants in December. That means three years of property-tax reimbursement came due in just a five-month span.
Chess acknowledged that he was wrong, and said he had reached out to county Tax Collector Chris Craft and apologized. He’d only told the commission what he had been told by staff, said Chess, and he does not regularly fact-check the information staff provides him, assuming it’s accurate.
Internal measures are being taken to prevent misinformation from being passed along by staff, through Chess and to the public, he said.
“I only can deliver what was actually told to me,” Chess said. “I’m addressing that intimately, I can say, with the Finance Department and with staff, in a serious way. I’ll just say that. When I come to you, to this dais, I expect that I got good information and I share good information with you.”
The timeline continues
Two months after the invoices were sent in July, on Sept. 26, Beachside Hospitality Group asked, in writing, to meet with the city, and proposed an 18-month rent abatement until the tax bill could be paid off. That meeting did not occur until Nov. 19, nearly an eight-week delay that Beachside Hospitality Group specifically pointed out in its timeline.
Rather than anything nefarious, Chess said, it merely was the soonest that the nine participants all were available.
By the time the meeting was held, Beachside Hospitality Group already had stopped paying rent, although the city had agreed to no abatement plan.
For his part, Chess took issue with one part of Beachside Hospitality Group’s timeline: The company claimed Chess did not attend that meeting and was represented by an assistant city manager. Chess said he was there, and spoke with the tenants for more than an hour.
“I don’t know why they don’t know who I am, but I was there,” Chess said.
Chess said he and other staff at the meeting asked Crabby’s to submit a proposal with specific things, including detailed financial reports on the health of the business.
On Dec. 29, Beachside Hospitality Group submitted its proposal. But, Chess said, many of the specifics he had asked for were missing. Soon, an even more worrying fact emerged: No rent had been paid since September.
It was Jan. 26 when staff determined Crabby’s operator was in default.
A notice of default was sent on Jan. 30, and Beachside Hospitality Group said it was received Feb. 5. On Feb. 12, without notice to the city, Crabby’s announced on social media that it would close Feb. 15, the same date as the city’s deadline to pay the balance of its rent, property taxes, sales tax and late fees — a total of $418,788.20.
Could a deal have been reached?
Broderick criticized Chess for not bringing the issues to the City Commission sooner, saying he believes if all of the stakeholders had been able to get in a room early-on, a deal could have been worked out. It was “inappropriate” for the city manager not to inform the commission of Beachside’s Sept. 25 request for an 18-month rent abatement.
The city also bears the blame, he said, for not invoicing two years of tax reimbursements and then asking for all the money at once.
“The real estate tax issue, we own that,” Broderick said. “We were setting them up for failure.”
Still, the City Commission likely never would have approved an 18-month rent abatement, he said, and once Beachside Hospitality Group defaulted by not paying its rent, there no longer was room for a deal.
The city could not take the December proposal seriously since it was coming from a tenant already in default, and the tenant bears legal responsibility for the default, Broderick said.
“You don’t come to your landlord, when you’re already three months in arrears on your rent, asking for 18 months forgiveness of rent. That’s just not how this works,” Broderick said.
Even considering a deal for Crabby’s once it had stopped paying rent would open a Pandora’s box, Commissioner Arnold Gaines said. It could lead other tenants of city properties to stop paying rent and expect to get their own deals.
’12-step program’ needed to fix city issues
The city cannot end up in this position again, with staff not following through on billing and then providing inaccurate information to the city manager as an explanation, Commissioner Curtis Johnson said.
“We can’t be back here again,” Johnson told Chess, adding that “corrective measures” need to be taken.
Commissioner Chris Dzadovsky, who has been on the City Commission for just one month, went even further in calling for change. Dzadovsky invoked the language of addiction recovery, saying the city must embark on a “12-step program.”
“The first step is to admit we have a problem. I think we’ve done that tonight, and we’ve been doing it for the last four weeks,” Dzadovsky said.
The issues surrounding the closure of Crabby’s present an “opportunity to change what we’ve seen for too many years,” Dzadovsky said. “I think we’ve ‘come to Jesus,’ tonight and we have an opportunity.”
What’s next?
That opportunity includes not just changes to how leases are managed at City Hall, but also what to do with the now-vacant Crabby’s building, Johnson said.
“We now have an asset there,” Johnson said.
Crabby’s lease ran until 2040, Chess said. If the restaurant building remains unoccupied until then, the city would lose more than $3 million, according to Chess.
Before the city can begin looking for a tenant to take over that space, it needs to make sure there are no issues with the property’s title. Chess said staff hopes to wrap up that review by next week, though Broderick warned it could cause significant delays if issues arise
After that, Chess said, the city will begin the legal process of ending Beachside Hospitality Group’s lease, including seeking recovery of lost funds. Only once those issues are resolved can a bidding process for a new operator begin, Chess said.
Wicker Perlis is TCPalm’s Watchdog Reporter for St. Lucie County. You can reach him at Wicker.Perlis@TCPalm.com.
This article originally appeared on Treasure Coast Newspapers: Fort Pierce leaders admit mistakes in Crabby’s Dockside lease dispute
Reporting by Wicker Perlis, Treasure Coast Newspapers / Treasure Coast Newspapers
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