Draft Minutes City Council Work Session Meeting Held in the Downing-Gross Cultural Arts Center – Banquet Room 12410 Wickham Avenue Tuesday, September 22, 2020, 3:15 PM MEMBERS PRESENT: Mayor McKinley L. Price, DDS, Councilwoman Sharon P. Scott, MPA, Councilwoman Tina L. Vick, Vice Mayor Saundra N. Cherry, D. Min., Councilman Marcellus L. Harris III, D. Div.; and Councilman David H. Jenkins MEMBERS ABSENT: Councilwoman Dr. Patricia P. Woodbury OTHERS PRESENT: Cynthia D. Rohlf; Collins L. Owens; Darlene Bradberry; Mabel Washington Jenkins; Joye Thompkins; Lisa Cipriano; Cory Cloud; Susan Goodwin; Florence Kingston; Derek Perry; Steven Meade; Doreen Kopacz; Karen Witherspoon; Sheila McAllister; Craig Galant; Jered Grimes; Alan Archer; Ralph Clayton; David Freeman; Eoghan “Owen” Miller; Kim Lee; Cleder Jones; Josh Reyes; and Zina Middleton I. Seafood Industrial Park Lease Update City Manager Rohlf introduced Ms. Florence Kingston, Director, Department of Development, to provide an update on the Seafood Industrial Park Lease Expirations and Market Opportunity (a copy of the presentation, “Seafood Industrial Park Lease Expirations and Market Opportunity Briefing, September 22, 2020,” is attached and made a part of these minutes). Ms. Kingston reminded that during the Capital Improvement Plan (CIP) presentation City Council was informed that additional information would be briefed on the Seafood Industrial Park (SIP) Lease expirations and market opportunity. She noted the SIP had been a very important City asset for over a century-providing jobs and revenue. It was the largest municipally-owned working waterfront in Virginia, handling over half the value of seafood in Hampton Roads. The briefing was on an opportunity to grow and solidify the SIP, which also tied in well with Choice Neighborhood Initiative (CNI) plans. The Seafood Industrial Park parcels 17, 17A and 1A would expire, with no renewals remaining on the current leases. Ms. Kingston advised that Parcels 17, 17A and 1A, made-up the northern end of the SIP harbor (see slide 2, attached and a part of these minutes). All three (3) of the parcels were leased in 1980 by Harbor Cruises and the properties were used for parking and vessel moorings for a tour boat and fishing charter business until the business went bankrupt in 1993. She shared that Mr. Ed Shield of Ashland, Virginia, was an investor in Harbor Cruises and acquired the leases in the Harbor Cruises bankruptcy proceedings. Mr. Shield continued the leases under two (2) trade names: Harbor Cruises and The Shield Group. By the late 1990’s, the tour/fishing business was no longer functioning, and all three (3) of these parcels, while under the control of Mr. Shield, had been subleased to two (2) businesses. Harbor Cruises and The Shield Group had no operating business in the SIP since the late 1990s, but had continually subleased these parcels since the 2000s, and had a documented history of Page 1 of 11 Draft negative lease issues. Mr. Shield had been notified that no new lease or hold over tenancy would be considered and that he should vacate the premises upon expiration of the current leases. Ms. Kingston informed that Parcels 17 and 17A, located on Terminal Avenue, were separate leases but functioned as a combined property with no improvements. Parcel 17 was City-owned with approximately 186 feet of concrete bulkhead mooring. Parcel 17A was owned by the Commonwealth of Virginia, and through a VDOT Land Use Permit, the City could lease the property for limited use, and had access to Parcel 17 bulkhead from Terminal Avenue. The current lease with Shield would expire November 14, 2020. She reiterated that Parcels 17 and 17A leases would expire concurrently on November 14, 2020, and Parcel 1A lease, would expire October 31, 2020. Ms. Kingston indicated that the Economic/Industrial Development Authority (EDA/IDA) was excited to report that the City had received interest in both of the lease areas from different user groups. First, she shared the interest in Parcels 17 and 17A. Lockwood Marine had been the approved subtenant for Parcels 17 and 17A since April 2011, and had requested to lease these parcels for five-years from November 15, 2020 – November 14, 2025, to continue its marine transportation business. Lockwood operated a heavy marine transportation job with three (3) barges and numerous cranes, and serviced the Port of Virginia along with other US Ports. Lockwood separately rented two (2) additional moorings from the City in the SIP Outer Harbor and has had a positive relationship with the City and SIP dating back to the 1990s. The EDA/IDA were recommending a direct lease with Lockwood Marine, as it would support the Virginia Port Authority (VPA) and increase City revenue through additional mooring fees not present in the older Harbor Cruises lease. Ms. Kingston advised that while transitioning to the other side of the SIP, Parcel 1A was an elongated parcel along Jefferson Avenue, which made up the East and North end of the SIP. Within Parcel 1A, there was a severely deteriorated building with no value facing Jefferson Avenue once known as “Ye Ole Crab Shack”. Parcel 1A had been subleased since 2001 to Old Point Packing. Old Point Packing was also the direct lessee of SIP Parcels 2 and 3 that would also expire in about a year. She shared that Old Point Packing owned several fishing trawlers and up until several years ago packed scallops and fish at Parcel 2. Very little seafood activity had been observed on Parcels 2 and 3 in the past two (2) years. Along the east concrete bulkhead of Parcel 1A, the subtenant, Old Point Packing, had allowed an independent trawler company D.B.A. Fernandez Scallop Company to moor Fernandez vessels and utilize part of the Parcel 1A property to outfit and maintain these vessels engaged in the scallop and shrimp fisheries. However, like Shield/Harbor Cruise, Old Point Packing had documented negative lease issues with the City, and had been issued notice that the Shield Group lease and Old Point Packing sublease would not be extended. Ms. Kingston shared, with the existing lease and sublease ending October 31, 2020, Fernandez had requested to lease, for five-years, the portion of the land and usable bulkhead that Fernandez had been occupying through an agreement with Old Point Packing. The area was outlined in blue on the map (shown on slide 3, attached and a part of these minutes). She noted the following: o Fernandez had a 30-year history within SIP landing scallops in the park and sells their seafood products to SIP tenant B & C Seafood. o Fernandez employed 23 full-time and five (5) part-time/seasonal employees. 2 Page 2 of 11 Draft o Through its lease, Fernandez would commit to demolish the current building that was severely deteriorated with a lease credit for the demolition and would construct a new workshop facility in nearly the same footprint, resulting in an increase in taxes to the City. o A new five-year lease with Fernandez would require a separate mooring agreement for use of the bulkhead, not part of the older Harbor Cruises lease, also resulting in increased revenue to the City. Ms. Kingston advised that the third and final new leasing opportunity was in the yellow area on the map (shown on slide 3, attached and a part of these minutes). The remaining area of Parcel 1A and its wooden piers outlined in yellow would only accommodate small vessels due to water depth and pier construction. A group of seven (7) watermen had been operating in this area through an agreement with Old Point Packing for over one decade. The watermen harvested crabs in the summer and oysters in the winter. The group, known as Lucky Dog Crab and Seafood Company, LLC, was made up of fathers, sons, brothers and fellow watermen. Ms. Kingston indicated that Lucky Dog Crab and Seafood Company, LLC (Lucky Dog), represented the largest collective of blue crab watermen on the lower Chesapeake Bay and employed a total of 21 watermen. Lucky Dog had requested the area outlined in yellow to continued operating and have space to service their fishing gear. Lucky Dog understood the City’s future plans for a Seafood Market/Community Kitchen as part of the CNI plan and would cooperate fully as plans proceed. They would lease the area on a year-to-year basis. A proposed lease with Lucky Dog would be for one-year, with four (4) possible one-year renewals, at the City’s option until the City needed the area for the planned Market. Lucky Dog would commit to shared parking in the leased area, as well as, access for the City as plans and designs are sought for the City’s future Market project. Lucky Dog would also commit to maintaining the dock planking on these older piers and hold the City harmless for use of the piers until such time as the City may replace moorings and/or terminate the lease with Lucky Dog, should a lease be approved by Council. She shared that Lucky Dog was excited about the changes coming to the North end of the harbor and hoped that future plans might include them continuing to keep their vessels here and possibly become vendors or suppliers for the planned Market. Ms. Kingston summarized, by reconfiguring Parcel 1A into two (2) new separate parcels, (Parcel 1 and Parcel 1A) and leasing to these two (2) companies: Fernandez and Lucky Dog, the City would preserve the employment offered by these businesses, increase City revenue of $18,680 per year and taxes with new leases and improvements, and preserve seafood landings within the park, which would play a very important role as a market, restaurant and kitchen if the green area comes to fruition.