Javier Baños
Baños is the Editor of Gables Insider
Introduction/Disclaimer:
In a statement issued on December 24, 2023, Coral Gables city officials relayed a comprehensive response to Gables Insider about the lease renewal process for Fritz & Franz Bierhaus. This response was supplemented by several documents, which, due to their number and format, are not reproduced in this article. However, our review of these materials suggests they corroborate the historical data and the contents of the referenced email from October 2023. It’s important to note that these documents do not explicitly address the various conclusions and questions raised by the Asset Manager, but rather point to a series of disputes that date back to the financial crisis of 2008 and more recently during the pandemic. To maintain clarity in our reporting, references to “attachments” in the city’s response have been omitted.
Gables Insider has also visited the premises of Fritz & Franz Bierhaus to ensure comprehensive coverage. We intend to provide the Tenant’s perspective in a subsequent report.
Response sent to the Commission on Friday December 22, 2023:
Pursuant to several requests for information received regarding the history of the Satchmo Blues Bar & Grill Inc. d/b/a Fritz & Franz Bierhaus’ Lease Agreement with the City, we have reviewed city records, and compiled information for your review as follows:
06.24.1997- The original 60 Merrick Way tenant, Jumpin Java Inc., entered a 10-year, 4-month Lease Agreement with the City (06.24.1997-10.23.2007).
05.03.1999- The city filed a default eviction case against Jumpin Java who, as part of their settlement with the city, assigned their Lease to Satchmo’s Blues Bar and Grill, Inc. (“Satchmo’s”). In the assignment, Satchmo’s agreed to make the following payments to the city for the remainder of the Lease:
- $64,124 per yr. in base rent plus sales and property taxes, and operating expenses.
- $75,000 for Jumpin Java’s unpaid rent payable over 60 months @ $1,250 per mo.
- 5% of gross sales in Percentage Rent starting in Lease Year Six (6).
- Please note that the city does not have any permit records that when Satchmo’s assumed the Jumpin Java Lease, nor any time thereafter, Satchmo’s ever made any Tenant Improvements to the 60 Merrick Way premises.
09.2002- Satchmo’s stopped making all required payments to the City.
12.16.2003- The city filed a case against Satchmo’s and offered a settlement agreement as follows:
- The city would write off the remaining Jumpin Java unpaid rent (approx. $32,500).
- The city would accept $50,000 as payment for Satchmo’s Base Rent 9/02-7/03 (approx. $63,875.79 was due). The City wrote-off approx. $13,875.79.
- A 24-month payment plan at $967.00 per mo. to cover Aug-Nov 2003 unpaid base rent owed ($23,227.56).
- Up-front payment of December 2003 rent.
- Satchmo’s Blues Bar and Grill would be allowed to change its “dba” to Fritz & Franz Bierhaus.
12.03.2004- The city filed legal action and obtained a Consent Judgment against Satchmo’s/Fritz & Franz for Failure to Pay Back Rent and Back Taxes for $104,207.20, through which, the city offered Satchmo’s/Fritz & Franz a 36-month payment plan to pay unpaid rent and back taxes.
10.23.2007- The City renewed Satchmo’s/Fritz & Franz Lease for an additional ten (10) years (10.24.2007-10.23.2017).
06.10.2014- In 2014, Satchmo’s/Fritz & Franz had not paid the city percentage rent or common area expenses since 2007 and therefore owed the city $173,864.52 in back rent. To resolve the dispute, at the 6/10/14- City Commission meeting, the City Commission:
- approved for the City to write off 60% of the balance owed to the city ($104,318.71).
- gave the tenant a payment plan for the remaining 40% ($69,545.81) to be paid in 48 monthly installments of $1,448.87 per month.
- approved the current 10-year lease (06.01.2014-05.31.2024).
07.01.2019- Satchmo’s/Fritz & Franz, alleged that city employees, and a parking contractor had been using their garbage dumpster, and demanded that the city pay them $37,500 in trash fees. The city settled/paid Satchmo’s/Fritz & Franz $3,782.65 to avoid further dispute.
11.25.2019- Satchmo’s/Fritz & Franz was using two Garage #6 ramp areas to store a large amount of its special event items without authorization. Satchmo’s/Fritz & Franz unauthorized use of these areas impeded access to water/fire system pipes, creating potential liability issues, and safety hazards within the Garage. The city asked Satchmo’s/Fritz & Franz to remove the items within 30 days. Satchmo’s/Fritz & Franz took over a year to comply with this request.
2022- Satchmo’s/Fritz & Franz advertised its business for sale on CoStar/LoopNet for $2,400,000 citing the following:
- The business owner was retiring, and the lease was assumable.
- The restaurant had high-volume gross over $2,100,000 in 2021, had been consistently profitable over the last 24 years, and 2022 profits were expected to exceed those made in 2021.
The “for sale advertisement” begs the following question: Why, if Satchmo’s/Fritz & Franz has been consistently profitable over the last 24 years, has the city had to write off thousands of dollars in un-paid rent, offer payment-plans, and expend thousands of dollars in attorney’s fees to litigate the issues that have arisen from Satchmo’s/Fritz & Franz’s inability to fulfill their financial obligations to the city?
08.03.2023- The city requested that Satchmo’s/Fritz & Franz provide a proposal for lease renewal that would include proposed Tenant improvements to address the maintenance deficiencies, and the end-of-life equipment/fixtures at the premises.
09.27.2023- Because the city did not receive a response, the city sent Satchmo’s/Fritz & Franz a letter of non-renewal and advised the Satchmo’s/Fritz & Franz that the city would be holding a competitive request for proposal process and that the tenant was welcome to participate in that process.
10.04.2023- Only after the 9/27 non-renewal letter had been sent/emailed, did the city receive an email from Satchmo’s/Fritz & Franz stating that it wanted to renew its Lease. Please also note the following:
The 10/4 email cannot be considered a proposal as it lacks any proposed Tenant improvements to address the maintenance deficiencies, and the end-of-life equipment/fixtures on the premises.
The Tenant stated: “I have invested a lot of Money the past two years to upgrade electrical panel, bathrooms, kitchen and dining room and look forward to another 10 years at this location.”
· The city conducted an extensive permit search of the 60 Merrick Way premises since 1999. Except for exterior electrical signage, and temporary special event-related permits, the city does not have any records that Satchmo’s/Fritz & Franz has pulled any permits for the upgrades it cited in the 10/4 email to the electrical panel, bathrooms, kitchen, and dining room. Please note that any such upgrades would require building, electrical, and plumbing permits per the Florida Building Code.
· In addition, in 2022 and 2023, the City conducted third-party commercial property inspections that documented the maintenance deficiencies, end of life equipment, and fixtures at the premises. The city has been requesting Satchmo’s/ Fritz and Franz address these maintenance deficiencies for over a year. Attached is a thread of recent emails where Satchmo’s/Fritz & Franz’s owner Mr. Neuweg insists that maintenance of end-of-life HVAC equipment is not his responsibility. This has resulted in additional service calls to the City’s HVAC contractor at the City’s expense. The Lease clearly states that the Tenant is responsible for all interior maintenance.
The Tenant stated: “I do request to move forward with the same price increase per year as we did the last 24 1/2 years (3%).”
· The Tenant’s current Base Rent is $35.24 PSF (approx. $127,500 per yr.). The current CoStar analytics Central Business District market rent listed is $51.20 PSF.
· It would be fiscally irresponsible for the city to accept a below market rent for the premises that the tenant:
o advertised revenues at $2.1M.
o has existing maintenance deficiencies and end-of-life equipment/fixtures that need to be addressed (pursuant to the maintenance provisions in the Tenant’s current Lease).
o has never made any Tenant improvements to the space (per city the permit records).
o did not offer to make any improvements to the premises.
The Tenant stated: “I think I have shown to the city that I am a good tenant and in consideration that I have paid the rent payment on time and in the amount of way over $3,300,000.00 (three million three hundred thousand) dollars over the last 24 ½ years!”
· Over the last 24 years, the tenant has gone as much as seven years without paying its agreed upon rent to the City. The city has also had to write off thousands of dollars in unpaid rent, (the latest write off was in 2014 for $104,318.71). The city has had to offer payment-plans and has also had to expend thousands of dollars in attorney’s fees to litigate the issues that have arisen from Satchmo’s/Fritz & Franz’s inability to fulfill their financial obligations to the city.
It is important to note that the city has been contacted by realtors within the last few weeks who have reported that Mr. Neuweg was still actively offering/showing prospective buyers the Satchmo’s/Fritz & Franz business as available for sale stating that he will provide an assumable lease.
We thank you in advance for your review of the contract history above. Please let us know if we can assist you with anything else.
Kind regards, Zeida C. Sardinas Asset Manager
Wonderful blog! I found it while surfing around on Yahoo News.
Do you have any tips on how to get listed in Yahoo News?
I’ve been trying for a while but I never seem to get there!
Thanks
Write more, thats all I have to say. Literally, it seems as though you relied on the video to make your point.
You clearly know what youre talking about, why waste your
intelligence on just posting videos to your weblog when you could be giving us something enlightening to read?
I am not a F&F customer but live very close to the restaurant. If the inside is anywhere as dirty as the patio, I would not eat there. The patio area is an eyesore. After reading the above article, I don’t blame the city for wanting to move on!
Asking questions are genuinely fastidious thing if you are not understanding anything completely, but this article provides fastidious understanding yet.
Isn’t it always the same. The lawyers fight in court and present facts that are manipulated to support their case. Manipulation is not a bad word and it all depends on how witty you choose your words. What I read is the tenant stepped up to take on a failing lease and made a successful business. The community and people liked the place and admittedly one would think a new bathroom would be nice. But then again, it’s great compared to most European breweries bathrooms where it’s traditional a very cold and dull place. The part I am not sure about is why would tenants invest big on a leased property. Shouldn’t the landlord make improvements?
As for the payments. Don’t we all negotiate contracts and make those enforceable. I have to ask why the city would be repeatedly fail to collect dues and even pay for trash removal back to the business. And wait 20 years to separate in a dispute.
For me it’s simple since there is an interest by the tenant to continue the business that from what I know was confirmed in a timely call to the city. Propose terms and make them enforceable. Ask for a deposit or security and get moving forward. Let FF sells if he wants to and hand over the terms to a new tenant. As for the rent it seems to high at $54 / SF and that’s why there is so much empty properties on and around Miracle Mile. This property address is not generating foot traffic but it’s a destination. I believe it will be very hard to make this location successful with a new restaurant without a destination character.
The city ended up doing a nice job Agathe country club.
Keep the business stable and don’t overdevelop the city beautiful.
I also want to suggest to the many notes I see here. Keep it easy. Don’t attack the publisher for helping get details and making it political. Don’t be jealous of Harald building a million dollar home in Austria. Chances are if you own a house in Coral Gables it’s $2 million.
Why doesn’t the city sue Satchmo’s Blues Bar and Grill/Fritz & Franz Bierhaus and Harald Neuweg for all the $$$?
Subpoena all the bills from all the vendors (especially the beer supplier) he got, estimate for all the big major games (CL and WC games) the $20 cash/person he charged from the beginning, come up with a total and get those 5% plus interest back? We all know he built a million+ dollar house back home in Austria. Fair is fair and right is right (and wrong is wrong).
The information provided in the City’s response is quite compelling. I am not sure that Fritz & Frantz would have an equally as compelling rebuttal. I would love to see something similar for the recent landlord – tenant disputes such as Burger Bob’s, le Park, and the Coral Gables Country Club. Perhaps the City is merely holding tenant’s feet to the fire when it comes to leases. It is critically important that City Administrators exercise their fiduciary responsibility in service to the tax payers!
PAUSE! Rewind… What happened here? Did your first post fail, Mr. Baños? Did the City force your hand into revealing the actual facts about this whole situation?
Allow me to summarize for everyone… Your narrative has failed. Everything we, the residents, needed to know about this issue is right here before our eyes. The best part is you have to accept the embarrassment of attempting to deceive us. The city saw right through your antics and exposed you. And you had no choice but to post this article. But even then, you’re trying your utmost best to save face by noting that you’re going to publish the tenant’s perspective in another post. Maybe you should stop before you hurt yourself further or others and let someone else reach out to the owner of FnF to get their response. You clearly cannot maintain an impartial stance on this issue (or any for that matter).
I applaud the City Asset manager for taking the time to respond with this information. The city does have a fiduciary responsibility to us as residents to uphold tenants to lease terms and ensure city owned properties are providing the best possible return on investments. The information above tells a much clearer story on this situation. Read closely folks, even if you have to read it a few times.
Oh and Mr. Baños, do us a favor and put your campaign endorsements on your mailers next time. Quit hiding behind the “Gables Insider” brand and just kick off your campaign already. We’d love to see how that unfolds.
The lesson to be learned….from this issue and others such as Burger Bob’s etc., the city should NOT be in the business of property management. The taxpayers lose a lot of money because of poor controls. Unacceptable.
Fritz & Franz is a unique part of Coral Gables culture. Let’s hope the parties can work it out.
Appreciate the detailed response from Coral Gables city officials regarding the Fritz & Franz Bierhaus lease renewal. The historical account sheds light on various challenges, underscoring the complexity of the situation and the need for a thorough evaluation.
Thank you for the thorough reporting Javier. I understand that the younger generations generally prefer a summary with no more information than can fit into a 60-second video, but plenty of other residents prefer to get all the information. If you want to appease everybody then perhaps give your best 1-paragraph summary at the beginning.
I really like F&F: besides being a great place to watch the cup games, it’s the best Bavarian food I’ve had in Miami. But the city needs to make money one way (charging market rents where it can) or another (even more taxes on owners and residents).
I look forward to reading F&F’s side of the story.
How can a tenant get away with not abiding by the terms of the lease for so long? This is costing us, the taxpayers, money. I don’t want to make “donations” to a private for-profit business. I am furious at Fritz and Franz AND at the city for not managing our resources more effectively. Tenants who are not paying their below-market rents, and not abiding by safety codes, should be out immediately.
Based on the information outlined it would appear that the current Tenant should be notified that they have been in default of the lease, and therefore any Buyer seeking an assumption of the lease terms would not be considered. Furthermore that an eviction notice is forthcoming unless they vacate.
In my many years managing, leasing and selling properties I have been involved with Tenants that are dead beets. This appears to be one of them.
Based on the information outlined it would appear that the current Tenant should be notified that they have been in default of the lease, and therefore any Buyer seeking an assumption of the lease terms would not be considered. Furthermore that Ena eviction notice is forthcoming unless they vacate.
In my many years managing, leasing and selling properties I have been involved with Tenants that are dead beets. This appears to be one of them.
Thanks for providing correct information.
Awaiting the response from the tenant.
OMG! Could this newsletter get any more long winded (translation: boring). I get that it may be important to some but could you please give the abridged version!
The topic of percentage of gross sales due as rent is a contentious one. This not really addressed in the article & probably the main reason major problems with both Harald & the Country Club Operator. It happens at malls where landlords try to squeeze the merchants. The Department Stores in turn squeeze the people with corners within the department stores and even confiscate their merchandise. The Big Department/ Anchor Stores for the most part pay very little rent. The small mall kiosks get the shaft. Dog eat dog world. Everyone pretending to do poorly to save on payments & take advantage of each other. High taxes & Insurance are the banes to businesses. Reason for high rents, empty spaces, unaffordability & misery. No stopping them: government & insurance companies. They’ve got the Power!
It is time to let that dead beat go away! Delinquent rent payments, work without permits? how was that allowed to happen? Would anybody else get away with it? Hell NO!
Please keep Fritz and Franz the best soccer pub in Miami.
While we haven’t seen your article on F&F’s response to the city’s statement, this information does highlight a problem I have seen on many issues in our city. Residents start to voice their support or objection to something without having all the facts.
City is doing what is best for all of us who have never missed our tax payments!
Sayonara Fritz & Frans, unless you step up and win an RFP!
Not a pleasant story re F&F. Await their side of the situation. Reminds us of Burger Bobs. Hope they can justify continuing
the Bierhaus. JB
not pulling permits, not paying rent. other than that “a good tenant”. yeah, right. get rid of this guy! its a 20yr torture story. can you imagine any of us not pulling permits not paying rent what would happen? if the City offers $50PSF space at $30 and hires a good leasing broker, dozens of much more viable tenants will line within 2 wks. Move on!
Not a good neighbor. The noise it generates lowers the quality of life for abutting residents. F&F’s roping off of a public park and charging admission to it is one for the ages.
Too bad Mike Mena loosened the noise ordinance.
The first article I supported Fritz. Today I say get rid of this tenant. Few can get away not paying rent for so long. Shameful.