Cafe disputes income claim
Gene Schaefer of P.S. Beach Associates Inc. finds he’s saying “no” quite often lately.
As in “no,” the company he and wife Dee Percifield-Schaefer run did not sell Cafe on the Beach for a sum of $650,000 in November 2003, as mentioned in several county documents.
“That absolutely didn’t take place,” Schaefer said last week. He’s said that to a number of Cafe on the Beach patrons and others who read the local press.
P.S. Beach did enter an agreement to subcontract operations of the kitchens at Manatee Public Beach and Coquina Beach, Schaefer said, but the dollars earned are much less than $650,000, and he wants Manatee County officials to acknowledge such.
P.S. Beach has a license agreement with the county for the concessions at the two county-maintained beaches.
Earlier this summer, the county board of commissioners, with Commissioner Carol Whitmore opposed, authorized its staff to prepare to solicit bids for the concessions.
A county memo recommending that action stated, “It may be timely to explore the strength of competitive interest in this opportunity at the end of the currently extended license. P.S. Beach Associates would, of course, be invited to participate in that process.”
The memo states, “The results of a recent telephone survey of similar agreements in nearby counties demonstrated a seemingly greater willingness by commercial interests for public/private partnership. Such a new … opportunity, with a provision for private capital investment, could significantly expand revenues to the county through a more competitive license agreement.”
There was a response to that commission vote — a petition drive to keep Cafe on the Beach operating and a flurry of letters and calls from customers supporting the restaurant and the Schaefers.
County administrator Ed Hunzeker responded to the outcry, emphasizing in letters to Island newspapers the government “responsibility to the taxpayers of Manatee County to maximize whatever revenue can be earned for the benefit of county residents.”
“It’s worth noting, public records show Dee Percifield-Schaefer of P. S. Beach Associates subcontracted operations of Cafe on the Beach to another entity in November 2003 for the sum of $650,000,” Hunzeker wrote. “At present, she is operationally involved in only the gift shop — the Cafe and kitchen are run by another company. This would indicate that six years ago, this concession was worth $650,000, a sum far greater than the amount paid annually to Manatee County by P. S. Beach Associates.”
Following that statement, the Schaefers began fielding questions from customers and expressed concern that the public, and perhaps county commissioners, were misinformed about their role in the concession and their income.
“We just hope that none of the county commissioners were encouraged to go out to public bid at this time rather than renewal because of this misunderstanding over the $650,000,” Gene Schaefer said.
The county, however, noted the dollar figure was based on a public record.
Last week, Hunzeker said, “There is no debate — the facts come from P.S. Beach Associates’ own financial reports.”
Public records indicate that the company now incorporated as P.S. Beach Associates received permission from the county in June 1992 to fulfill the remainder of a contract for the beach concession previously held by H&H Concession.
P.S. Beach and the county entered into a license agreement in October 1998 that provided for P.S. Beach to operate a gift shop and the food establishments at Manatee and Coquina beaches.
The agreement provided options for two five-year renewals.
In November 2003, county commissioners approved a resolution that allowed P.S. Beach Associates to subcontract the restaurant concessions with Cafe on the Beach LLC.
A June 11 county memo proposing the solicitation of bids on the concession refers to the subcontracting and states that “now P.S. Beach Associates operate the gift shop only.… The Schaefers now maintain the license agreement with the county, receiving payments from the subcontractor, while maintaining a minimal interest in the gift shop.”
Gene Schaefer said the statement is incorrect and that P.S. Beach is involved in the day-to-day operations of the concessions at both locations.
“We’re still the concessionaire and are responsible for everything that happens and we’re the sole point of contact for the county,” Schaefer said. “Dee is here most days. We watch the menu. We approve the menu.”
The June 11 memo, referring to the subcontract between P.S. Beach and Cafe on the Beach, also states that financial statements for 2003 indicate “a $650,000 sale on this transfer was realized.”
The financial statement, filed with the county by P.S. Beach, references the sale of the restaurant in at least two locations.
After reviewing the document last week, Gene Schaefer said the bookkeeper erred in accounting for the sale and that only the first allocation of $200,000 took place that year.
“We had to correct the sale on our tax statement,” Schaefer said, but there was a change in bookkeepers and no copy was sent to the county.
“We redid our income tax statement. We had to correct it. The county quoted legitimately from what they had, but it was incorrect.”
He remained adamant that P.S. Beach did not sell the restaurant operations for $650,000 and provided a copy of the subcontractor agreement.
That document contains an “Exhibit C” that details the financial deal between P.S. Beach and Cafe on the Beach.
For equipment, furniture and fixtures, Cafe on the Beach paid P.S. Beach $80,000, as well as $80,000 for “good will/use of trade name” and $40,000 for the subcontract/sublicense.
The subcontracting agreement also provided that “if the first extension of the license with Manatee County is granted, the subcontract/sublicense allocation will increase from $40,000 to $240,000. If the second extension of the license with Manatee County is granted, the subcontract/sublicense allocation will increase from $240,000 to $490,000.”
In June 2004, according to the county records, the county commission approved the first option to extend the license agreement with P.S. Beach.
The board, in that vote, increased the annual license fee from $127,600 to $175,000, with a 4 percent annual increase, as well as increased the yearly fee for alcohol sales from $12,000 to $18,000.
The agreement was scheduled to expire Oct. 31, 2009, with an option to renew for another five years.
Commissioners extended the current contract to July 2010 due to delays in renovation projects that interfered with concession business.
Commissioners, however, have not voted to extend the license agreement another five years. Instead the county will issue the request for proposals.
Schaefer said that because the county declined to move forward with a second extension of the license agreement, the subcontract/sublicense allocation will not increase from $240,000 to $490,000.
“It was not sold for $650,000,” Schaefer reiterated last week, firm in his position.
Hunzeker, too, remained firm.
He referred to the license agreement between the county and P.S. Beach that stipulates that the company submit an annual balance sheet prepared by an independent certified public accountant.
Hunzeker said, “The official financial report P.S. Beach submitted to Manatee County in the first quarter of 2004 for their 2003 operations lists on their statement of revenue under ‘Other Income: Sale of Restaurant, $650,000.’ The accounting firm that prepared the report states in their cover letter: ‘All information included in these financial statements is the representation of the management of the company,’ in other words, P.S. Beach Associates.
“I presume that, in complying with the terms of their agreement with Manatee County, P.S. Beach Associates has submitted accurate financial statements on their concession operations at Manatee County beaches.”
The administrator added, “Regardless of whatever terms either of these two parties negotiated between them, the fact remains that they both valued this contract at $650,000 and that sum is documented as revenue on the P.S. Beach Associates financial report to Manatee County government.”
Looking forward on the issue, Hunzeker said, “But really, the $650,000 and how it is arrived at is not the issue at hand. Let me reiterate that the RFP process is for the sole benefit of determining the value of an asset held by the citizens of Manatee County regardless of what value P.S. Beach Associates and Cafe on the Beach LLC have agreed upon. There is no harm in benchmarking the current value of this contract through the RFP process.… All interested parties are invited to respond — including P.S. Beach Associates.”
P.S. Beach does plan to participate in the RFP process, and Gene Schaefer stressed a “wonderful working relationship with the county through two public bids and 17 years of operation.”
What might the RFP seek from a concessionaire?
The county memo recommending the process noted that a new license agreement might lead to diversified revenue streams at the beaches “by adding the possibility for cabana and chair rental, ATM and vending machine revenues.”
More recently, Whitmore asked Hunzeker and county staff to consider several other elements in an RFP.
Whitmore was pushing for a five-year extension with P.S. Beach but said last week, “I support the current owners.… Unfortunately I don’t have the majority of the commission on this.”
So she drafted a proposal for the RFP because she wants to see the atmosphere at the concessions remain the same.
Whitmore said she wants to make sure that the request calls for continuing the all-you-can-eat pancake breakfast at the Manatee Public Beach, the prohibition of straws in drinks, limiting alcohol sales to beer and wine, the regular presence by owners, the music for dining entertainment and the accommodations for group meetings, such as a regular AA gathering.
Whitmore also suggested considering separate concessions for Manatee and Coquina beaches.
“They have different characteristics,” she said.