City of Kent tells Mick Kelly’s Irish Pub it won’t extend lease

No eyes are smiling about the expected closure of Mick Kelly’s Irish Pub & Restaurant in Kent.

“It’s not by our choice,” owner Mick Purdy said about the June 30 expiration of a five-year lease he signed in 2010 with the city of Kent to run the restaurant at the city-owned Riverbend Golf Complex.

But a late development this week might give Purdy a chance to keep the restaurant going. Purdy said on Wednesday that Mayor Suzette Cooke has agreed to a meeting on Friday to discuss possible ways to keep Mick Kelly’s operating.

“If a solution can be hammered out, I want to do that,” Purdy said. “I talked to the mayor about a resolution and she said let’s get together. It’s a positive sign.”

City staff has notified Purdy that Kent won’t extend the lease because he is behind in lease and utility payments to the city, which led to a breach of the contract. Purdy said he tried to work out a compromise with city staff over the debt, but no agreement could be reached.

Parks Director Jeff Watling, who helps oversee operations of the golf complex, told the City Council’s Parks, Recreation and Community Services Committee on May 28 that the lease wouldn’t be renewed.

“Struggles from the tenant began to show themselves pretty early on,” Watling said. “We had a situation where they were in breach of contract in April 2011. At that time, we worked with legal (staff) and the tenant and negotiated a plan to cure that lease. … Struggles continued to April of last year, and we notified the tenant they were in breach again in owing a significant amount of money ($86,000) to the city and not stating a plan that they had in place to addressing that.

“We spent a lot of time through last spring and summer to cure that breach,” Watling said. “We spent a lot of time about costs and shares of costs and the city provided a significant amount of credits (in connection with the water drainage fund) to the tenant.”

As of May 30, the restaurant owed $78,336 to the city in delinquent lease and utilities, Watling said on Tuesday.

“Unfortunately, we could not come up with a plan that they were willing to sign. … We reached out to them in February to find out their interest (in extending the lease). At the same time, given all of the parameters, we notified them in February we would not extend the lease. It’s not a matter of kicking them out but more of a decision at this five-year period to extend the lease another five years or let the lease expire.”

Mick Kelly’s signed a contract to pay $3,500 a month to lease the space as well as pay 66 percent of the utility costs for the clubhouse and restaurant. Purdy disputes the utility costs because there is no separate meter for how much of the utilities the restaurant actually uses. He said he pays anywhere from $3,200 to $4,000 a month in utility costs, an amount he believes is too high for what his business actually uses.

“We can survive if we pay for what we use,” said Purdy, who asked city staff to install separate meters for the restaurant. “We were paying for more (utilities) than we consume.”

Watling said the 66 percent payment toward utilities was negotiated at the singing of the lease. He said previous restaurant tenants paid as much as 75 percent. The percentage applies to the clubhouse building at the 18-hole course, not the entire golf complex.

“The kitchen, the walk-in fridges and freezer, the restaurant and bar make up a majority of the clubhouse square footage and consume the highest energy use within the clubhouse,” Watling said in an email. “The tenant knew prior to signing this lease that separate meters did not exist and that the percentage split was negotiated to a ratio that both parties accepted.”

Purdy said he estimates the restaurant pays about $1,000 more a month in utility costs than what they consume. He said if you add that monthly cost up over five years, it’s about $60,000.

“It’s big government not working with the little guy,” said Purdy, who used to operate an Irish pub in Burien but sold his interest in the restaurant a couple of years ago. That pub closed last month.

Watling said separate meters were not installed within the clubhouse when it was originally constructed and that putting in separate meters at this time is an expense that Riverbend has not been able to absorb.

Purdy said he proposed to the city about four weeks ago that a portion of each credit card sale at the restaurant would go toward paying his debt and that he’d be willing to go to a month-to-month lease. He said the city told him no deal.

“We, the city administrator, the finance director, the city attorney and myself considered it,” Watling said about Purdy’s offer. “For a variety of reasons, including their historical lack of performance as well as the need to keep our city finance system completely separate from their financial system, we decided it best to stay with the earlier decision to not renew the lease.”

Purdy said he’s lost money each year on the restaurant and bar but expected it to start to make a profit this year.

“It takes about five years to turn a profit,” Purdy said about starting up a new restaurant. “I spent $125,000 to build this place and my investment is gone. But we have increased sales about 5 to 10 percent each year. I’ve not made a profit. This year I probably would have made a profit. We are at the turning point.”

City staff began a transition plan for the restaurant earlier this year after notifying Mick Kelly’s its lease wouldn’t be extended. Watling said the city hired Kirkland-based Restaurant Group, Inc., as a consultant to look at the restaurant model at Riverbend and whether the space should be re-sized to better fit the needs of a long-term tenant with an interior modification.

The consultant contract will cost the city $20,850 with the goal of new negotiated lease by late fall, Watling said. The consultant will market the property to help the city find a new operator and receive $15,000 of the fee when a new lease agreement is reached.

Meanwhile, Watling said the city is close to signing a deal with a concessionaire to operate a portable grill on the restaurant patio this summer and fall so golfers still have access to food until a new restaurant opens.

Councilman Dennis Higgins didn’t want to see Mick Kelly’s go but understands the city’s stance about the contract and a lack of payments by the restaurant operators.

“There is a long tortured history here that needs to be part of the whole story,” Higgins said at the parks committee meeting. “I’ve enjoyed my times down at Mick Kelly’s, and there’s been quite a few of them the past five years. I really regret that forever what reason that it didn’t work. They have been in contact with council members asking us to ask questions, which we have done. We have asked parks staff to respond to some of their comments and questions and parks staff has done so.

“I really regret that they are going to be leaving. I really hope this right-sizing is done in a way that we don’t have to do this every few years.”

Higgins said it isn’t the council’s role to step into the dispute between city staff and restaurant owners at Riverbend.

“We don’t as council members have the ability or the desire to micro-manage what you are doing there,” Higgins said. “When you lay out contract stipulations and say these were breached that’s information about the way it is.”

Councilwoman Brenda Fincher said the ending of the lease makes sense.

“The rates that were in place were negotiated by both sides,” Fincher said.