by Peter Bodley
More steps have been taken by the Coon Rapids City Council to relieve the negative financial impact the Main Street reconstruction project has had on business at the Harvest Grill Restaurant and Event Center.
Located in the new Bunker Hills Golf Course Clubhouse, the restaurant opened at the same time as the clubhouse in late June 2011 under a lease agreement with the city of Coon Rapids, which built and owns the clubhouse.
But Anoka County’s Main Street reconstruction project from Crane Street in Coon Rapids to Ulysses Street in Blaine, which began in September 2011 has included road closures, has hit business at Harvest Grill hard.
Road closures include the segment from Avocet Street to Foley Boulevard, which is the entrance to Harvest Grill, from November 2011 to at least August this year, when the road project is scheduled for completion, according to the design-build contract approved by the Anoka County Board last year.
Day-to-day business at the restaurant has been severely affected by the road construction not so much weddings, according to Coon Rapids City Manager Matt Fulton.
Part of the problem has also been project detour signage, which members of the council have said has not been effective in pointing the way to Harvest Grill and the golf course.
Fulton said city staff have been in contact with the county in an effort to upgrade the detour signs.
Some detour and “way finding” signs have been placed in appropriate spots to help guide drivers to Bunker Hills, he said.
“We are hoping to continue to work with county representatives to improve on these signs as the ones that were placed are smaller and less descriptive than we had hoped.”
Meantime, the council has approved three changes to the lease agreement with Harvest Grill to try and ease the financial issues.
The first amendment had the city purchase the Harvest Grill kitchen equipment for $185,000 in two payments, the first of which was $100,000 and was made immediately.
The second lease amendment saw the council agree to move up the $85,000 second payment, which had been scheduled to take place at the end of this year, and make it right away.
At the same time, negotiations continued on other financial mitigating measures for the Harvest Grill.
Earlier, this month, the council unanimously agreed to a third amendment to the least agreement, which cut the annual $252,000 lease payment in 2012 to $100,000.
As well, the council has agreed to put on hold until 2013 the lease requirement that 2 percent of gross sales go to the city.
In addition, the city will also defer past rent due and utility payments from 2011 in the amount of $50,791 until Jan. 1, 2013 and a $21,000 security deposit due by Jan. 1, 2012 has been eliminated.
But the amended lease does state that if the tenant “fails to pay the monthly rent as scheduled, the city may declare a default” in the lease.
According to Fulton, the $100,000 is guaranteed minimum rent and net income exceeding the newly negotiated monthly payments in the lease will first retire the deferred 2011 rent and second accrue to the city as additional rent.
“If 2012 business levels exceed expectations, the city benefits by receiving all excess net income over $100,000,” Fulton said.
The original lease provisions will go back into effect in 2013 when the Main Street reconstruction project will have been completed, he said.
“The restaurant and event center are anticipated to be very successful after 2013 when Main Street is reopened,” Fulton said.
The changes to the lease are “to assist the business get through the construction business interruption,” he said.
Indeed, the Harvest Grill restaurant and banquet center will continue to be open to the public throughout the winter months and the entire year, Fulton said.
Staff is also considering hiring an outside consultant, with experience in the restaurant business, to monitor the Harvest Grill operations and ensure that the tenants are meeting their financial obligations to the city, according to Fulton.
In addition, the city has had several outside people independently review the Harvest Grill business plan and they have concluded there is no reason why the restaurant and banquet center can’t be successful once the road project has been completed and the road closures are over, Fulton said.
Harvest Grill owners Jason and Kim Hines of Pot Luck Catering signed the original lease with the city in September 2010 before the road closure impacts of the Main Street project were known, he said.
The cost to the city from the lease changes will be taken from the clubhouse budget in the city’s facilities construction fund, where money still remains after all the project costs have been paid, Fulton said.
There are no property tax implications, he said.
According to Hines, banquet business has also been impacted by the road closures.
None of the funds provided by the city will be used at his other locations, including Plymouth where he is planning to open another Harvest Grill restaurant, Hines said.
Hines told the council at a recent work session that he is committed to the Bunker Hills Clubhouse and the city of Coon Rapids.
Peter Bodley is at [email protected]