By Ryan Gueningsman
A little more than three years ago, the City of Delano entered into a lease agreement with Bob and Sandi Holt of the Juke Box Restaurant to be the anchor tenant of its Rivertown Commercial building.
At that time, the city recognized the Holts’ involvement in the restaurant as instrumental to the success of the establishment.
Delano City Administrator Phil Kern said at a special city council workshop Wednesday night that Bob and Sandi Holt had to take out life insurance policies on themselves in the amount of $300,000 each as part of the lease, in the event something would happen to them, thus hindering the success of the Juke Box Restaurant. The $300,000 would be payable to the City of Delano.
Kern said the Holts have allowed the policy to lapse, with its payments being just over $500 per month. The policy had lapsed as of Oct. 8.
“How many other insurance policies do we have that are protecting our interests?” Mayor Joe McDonald asked. Kern said the city pays a lot in insurance, but does not have another policy similar to this.
The council discussed contacting the insurance company to see if the policy can be reinstated, being it lapsed in October, and if it can, to pay for it so it is brought up to date.
“We cannot let the taxpayers’ interests go unprotected,” said Council Member Larry Bartels.
Council Member Brad Hotchkiss felt the city needs to meet with the Holts to bring the policy current. He added he was having a hard time understanding the situation, noting that if the Holts or the restaurant don’t make it, the city’s investment is still there in terms of the building.
“Our investment doesn’t go away,” Hotchkiss said.
The council voted to have city staff contact the Holts, and then if necessary, the insurance company, to see if the policy can be reinstated. It was noted the intent is for the Holts to reinstate the policy, but in the event they are unable, the city would. Council Member Holly Schrupp voted against the motion.
At a Delano City Council workshop May 27, members of the council heard at that time the Juke Box was eight months behind on rent payments to the city, and several months behind on utilities.
Rent payable to the city at that time was $4,960 per month. Since the Holts had fallen behind with the rent, the council approved that rent would be accepted in the amount of $954 per month, plus 5 percent of sales over $70,000 in the previous month.
The balance of unpaid rent will be due March 1, 2009, in lump sum or renegotiation at that time, according to the minutes from the workshop.
Following the meeting Wednesday, McDonald said the city sees this as an investment, and wants to ensure its success.
“We just see this as a particular investment,” McDonald said, noting the city wants to ensure it is diligent in its duties to the taxpayer.
“We can’t go back in time what’s done is done,” he added. “We need to ensure the success and security of this business so our investment isn’t lost. I think that’s the responsibility we have at this point, to secure the investment of the taxpayers.”
McDonald said he, along with previous mayors and city council members, has worked hard to vitalize the downtown area.
“That was important to the citizens of Delano in the survey that was done several years ago,” McDonald said. “One of the important things was a thriving downtown, and that’s one of the reasons I got involved in politics, was to ensure our downtown didn’t completely die out.”
“We have an obligation to ensure that all businesses in town succeed to the best of their ability,” McDonald added. “Because of the unique situation where we own the building, it is even more important we ensure the success of those businesses inside it.”
McDonald said the city wants to ensure all businesses in the city succeed.
“We are pro-business, and we’re willing to help out our local businesses when needed,” he said.