Submitted By: John Spencer
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Presentation By: Julie Johnson
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Department: Recreation and Parks
STAFF RECOMMENDATION (Motion Ready):
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Approve a lease with Healthy Hub Ocala, LLC for the Café at the Mary Sue Rich Community Center at Reed Place with an initial term of three years
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OCALA’S RELEVANT STRATEGIC GOALS:
Operational Excellence, Quality of Place
PROOF OF PUBLICATION:
N/A
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BACKGROUND:
The Mary Sue Rich Center at Reed Place (the Center) is a 41,000 sq. ft. community recreation Center at 1821 NW 21st Avenue. The facility’s first floor includes an open high-ceiling entryway and corridor, a café area and commercial kitchen, a 390-seat banquet hall, two full-court basketball courts, restrooms, and building administration areas. The second floor includes an indoor walking track, a fitness area, three multi-purpose rooms, a senior program room, a branch library, a media Center, and two huddle meeting rooms. The facility's only on-site vending is a soda machine offering soda, sports beverages, and water.
A small café on the main floor of the Center was part of the original facility design. The café space includes a 185-square-foot café and a 442-square-foot commercial kitchen space. The objective is to lease the café to an independent vendor to operate the café, providing healthy and affordable grab-and-go or quick-service breakfast, lunch, and beverage options for the Center’s guests. The café lessee may also offer catering to patrons renting the Center’s banquet facilities.
In August 2022, the City issued Request for Proposal (RFP) No. REC/220231 for Café Operation and Lease at the Mary Sue Rich Community Center. A single proposal was received but subsequently withdrawn. The opportunity was readvertised in September of 2022 and February 2023. No proposals were received for either re-solicitation.
The decision was made to pursue alternative café lease options, including negotiating leases directly with vendors interested in the opportunities. For the remainder of 2023, there was little interest in leasing the café, despite meeting with several potential lessees.
In early 2024, a local business owner who operates two smoothie shops/cafés in the community expressed interest in leasing the café space at the Center. The Procurement Department authorized Recreation and Parks to begin lease negotiations and contract development with Healthy Hub Ocala, LLC. An agreement was successfully reached in June 2024.
FINDINGS AND CONCLUSIONS:
Healthy Hub Ocala, LLC will operate the café space at the Mary Sue Rich Community Center at Reed Place, providing smoothies, beverages, and breakfast and lunch items. Healthy Hub Ocala, LLC will operate as a quick-service restaurant during most of the Center’s regular business hours. Healthy Hub Ocala, LLC will fill a food service void that has been missing since the building’s opening in January 2023.
Terms of Lease - Summary
• The initial lease term is three years with the option of one renewal period of three additional years.
• Fifty percent of Healthy Hub Ocala LLC menu entrees must include healthy options for breakfast and lunch.
• The City is leasing the Café at the Mary Sue Rich Community Center at Reed Place on a sliding scale to allow the Tenant to build their business.
o First Lease Year:
§ $750 per month for months one through five.
§ $1,000 per month for months six through 12.
o Second and Third Lease Years: $1,250 per month.
• The City maintains ownership of the café and kitchen facility.
• The City will provide and maintain ownership, including maintenance or replacement needs for the kitchen equipment as provided in Exhibit B - Plan Sheets (Kitchen w. equipment list). The City shall provide and maintain ownership, including maintenance or replacement needs for the three flatscreen TVs mounted in the café area and the equipment.
• The City will provide utilities. The Tenant will pay for internet and phone services.
• The Tenant shall provide and maintain any start-up items not supplied with the premises or as equipment within the lease agreement.
Staff recommends approval of the café lease, as the services will provide food and beverage benefits to the Mary Sue Rich Center at Reed Place users while creating another revenue source from Center operations.
FISCAL IMPACT:
This lease will generate $40,750 in revenue over the initial three years, deposited in account number 001-362-000-000-02-36168.
PROCUREMENT REVIEW:
These services were procured in compliance with the City’s Procurement Policy.
LEGAL REVIEW:
This Agreement was reviewed and approved for form and legality by City Attorney William E. Sexton.
ALTERNATIVE:
• Approve with Changes
• Table
• Deny