“From the very beginning of discussions for building the new pier, Shawn and I have tried tirelessly to meet and discuss the future of the diner. We do not know how or when the Surf Diner was eliminated from even being considered a tenant. Very serious misunderstanding,” Bill Howard
The Surfside Beach pier was severely damaged by Hurricane Matthew in 2016. Wind and water damage from Matthew tore off the entire end of the pier. Leaders voted to replace the current wooden structure with a concrete base, which will give the pier more durability.
The federal government eventually agreed to contribute $9.5 million, which will cover most of the upgrade. The new pier will also be 10 feet higher than the old one, giving it more protection from storm surges.
The new build will cause business interruption for Horry County Councilman Bill Howard and his Atlantic Restaurant Group. The Atlantic Restaurant Group leases the pier from the Town of Surfside Beach.
Rebuilding the pier created a need for a legal amendment to the existing lease between the town and Horry County Councilman Bill Howard’s restaurant group.
According to current Surfside Beach Town Councilman Randle Stevens, “In 2012 Town Manager Jim Ducket signed the original lease on the pier for 20 years of consecutive five year renewal periods. In 2017, then Town Manager Micki Fellner renewed the lease up to its next renewal period which ends beginning 2023.”
The extension of the lease in 2017, with the town’s full knowledge that the pier needed rebuilding, could now create a myriad of legal issues for the town. Several lawyers we spoke with stated that the lease could have been terminated in 2016 because of issues relating to an “act of God” caused by the storm.
However, as Stevens points out, “The restaurant itself was never damaged nor needed to be closed because of the storm. It was the end of the pier that needed to be closed.”
Town leaders agreed, however, that a new concrete pier was in the best interests of residents. Demolition of the pier is expected to begin in the next 90 days.
Pier lease amendment stalled
Bill Howard and town leaders have hit an impasse on a lease amendment.
Howard delivered the following letter and “agreement expectations” to each Council person this past September 24th.
It can be seen in it’s entirety below via SCRIBD, we highlight the following portion of the letter signed by Bill Howard and the restaurant manager. The letter was written in ALL CAPS.
From the very beginning of discussions for building the new pier, Shawn and I have tried tirelessly to meet and discuss the future of the diner. We do not know how or when the Surf Diner was eliminated from even being considered a tenant. Very serious misunderstanding.
In the AGREEMENT portion delivered to each council member, Howard states, “Below is a list that we need to agree upon before signing the amended lease.” THE CITY WILL PROVIDE:
*Storage for our F.F.E.
* Various chase, holes or curbs for electrical, mechanical and plumbing
*Sewer and water to building
*All city permits will be paid by city
*600 amp service to our space
*Heating and air to our space
*Gas line to our space
*Foundation for posts for front deck roof and plans for those post to us to build a roof or awning over the deck
*Elevator with back door access to both floors. The city will maintain the elevator (service if needed and keep clean)
*Stainless steel cable rail for all restaurant decks
*All expenses paid for us to work with architects to coordinate our remodel
*2 parking spaces for loading and unloading.
*All allowable space for signage, location for CO2 and oil tank, an allowance of doors and windows of our choice, and all requirements (not covered here) necessary for tenant up-fit.
“He’s playing hardball,” said Stevens. “He wants an arm and a leg. We would probably agree to giving him a few toes.”
EXHIBIT D – What Howard is willing to pay
The lease between the city and Howard’s group is a triple net lease. A triple net lease (triple–Net or NNN) is a lease agreement on a property whereby the tenant or lessee promises to pay all the expenses of the property including real estate taxes, building insurance, and maintenance.
Because the property is owned by the town, Howard pays no commercial real estate taxes on the restaurant. He is required by contract, however, to stay open year round.
Said former Town Councilwoman, Mary Beth Mabry, “I felt Bill Howard, representing the Atlantic Restaurant Group. got a fair and equitable lease when it was initially negotiated.“
TOWN AND COUNTY SUIT
As Howard negotiates with the town, Surfside Beach joined a $60 million dollar lawsuit filed by the City of Myrtle Beach this past Spring against Horry County. The town is currently suing Horry County over a $41 million annual Hospitality Tax local municipalities claim was extended illegally in 2017. The town of Surfside Beach is no longer paying Horry County that tax. The town now collects those hospitality fees and keeps them internally in town.
The suit only adds conflict and controversy to an already dramatic issue.
“He got a sweetheart deal when he first signed up,” added Stevens.