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St. Petersburg cuts rent for Pier tenants

ST. PETERSBURG — Faced with the threat of another fallen downtown landmark, the City Council agreed Thursday to pump more money into the shops and restaurants at the Pier despite a decades-long goal to wean the iconic attraction off government subsidies.

The council voted 7-1 to provide $66,737 in rent cuts for nearly a dozen struggling Pier tenants. The business owners had threatened to close their shops and deny the city $269,951 toward future rent payments if they did not receive some relief.

The Pier has faced an annual deficient of about $1.3-million since at least 2001, and city officials had hoped to see the attraction become more self-sufficient with downtown's expansion.

"We keep adding money to this bucket with a hole in it," said council member Wengay Newton, who cast the lone dissenting vote.

But a lifeless economy piled on top of the Pier's many deficits proved to be too much of a challenge for the attraction's small-business owners. For months, tenants struggled to pay rent as attendance and sales dwindled.

"Obviously the economy is affecting business," said Mark Schroeder, owner of Cones on the Pier, who received a $16,704 reduction on his $52,128 annual rent Thursday.

Many council members expressed discomfort with the decision they faced, but the possibility of another downtown attraction sharing the same fate as BayWalk, where ongoing financial struggles have left the half-empty downtown entertainment complex struggling to attract new tenants, proved to be sufficient incentive.

"I hate subsidizing," said council member Bill Dudley. "The reality of it is, unfortunately, with the economic times we are facing right now, we probably don't have any choice."

Bay Breeze, Just Hats, Rainforest Gifts, Corner Cottage, Burger Bay, Boating at the Pier and Wheel Fun Rentals were all granted rent cuts. Businesses that owed back rent were given repayment plans.

Still, the bailout might not be enough to keep the Pier open. One pizza shop owner abandoned the attraction last month and city officials say at least three more tenants are likely to ask to renegotiate their leases if the economy does not immediately improve. The third floor of the five-story building is entirely vacant.

"We are in uncharted waters," said Don Paul, a project manager for Urban Retail Properties, which manages the Pier for the city.

The Pier's latest economic challenge unfolds as the city debates how to spend $50-million set aside to make over the deteriorating attraction. Mayor Rick Baker's staff is forming a task force to discuss how to use the money to address the complex's shortcomings.

That's no small task.

Saltwater breezes have weakened the Pier's approach, requiring costly maintenance and ongoing repairs.

The complex's limited retail space has made it unattractive to many regional and national chains and uncertainty about the complex's future means existing tenants are hesitant to upgrade their stores.

Negative perceptions of the touristy shops and fast food joints has not helped, Paul said.

Attendance has dropped by about 851,000 visitors since 2001, according to city estimates.

As a result, the Pier's earnings are barely enough to pay for half of its $3-million operating budget and taxpayers must subsidize 45 percent of the complex's costs.

"If this was a nongovernmental structure and I owned it and I ran it and I knew that my expense level was 45 percent, I wouldn't keep it," said council member Herb Polson.

But since the Pier is a public attraction, "the question is do we want to have dark spaces at the Pier or do we want to have them filled?" Polson said.

St. Petersburg cuts rent for Pier tenants 01/23/09 [Last modified: Friday, January 23, 2009 12:23am]
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