Rent dispute over: Lake Worth Beach Commission decides the future of Benny's on the Beach

After weeks of uncertainty, Benny’ on the Beach has secured another decade at the William O. Lockhart Municipal Pier in Lake Worth Beach, where the iconic restaurant first opened in 1986.

The commission voted 4-1 to approve the long-term lease renewal, with Vice Mayor Christopher McVoy casting the dissenting vote and calling for more research on the fair market rate for Benny's pier location. Commissioners Kim Stokes and Reinaldo Diaz, who previously voted against the renewal, said the latest version of the agreement was more ideal than the last.

The debate surrounding Benny’s lease renewal is centered on how much rent the restaurant should be paying for its city-owned building. The issue of what constitutes a “fair market rate” divided both commissioners and residents.

During the commission meeting on April 18, commissioners voted on a lease renewal that would have increased Benny’s rent by about 30% in the first year. It resulted from months of negotiations between Benny’s and the city, but the rate was still lower than several nearby businesses, a sticking point for the commissioners who voted it down.

Mayor Betty Resch and Commissioner Sarah Malega said pressing the restaurant for more money was poor form when inflation and economic uncertainty were on the rise, and when Benny’s is operating an older, high-maintenance building.

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Turning down the restaurant's lease renewal sent a message to other restaurants that Lake Worth Beach wasn't business friendly, they said.

But Diaz, Stokes and McVoy said it was unfair that Benny's on the Beach enjoyed a rate lower than nearby businesses for the past decade, despite having a prime oceanfront location.

During last month's meeting, the three commissioners said that Benny's should pay at least the same per-square-foot rate as businesses in the nearby Casino Building, allowing the city to put more money into its most valuable assets – Benny's among them.

Benny's has paid a base rent of $32.69 per square foot, or about $240,000 a year, since securing its most recent lease in 2013.

That’s compared to the $47.70 per square foot, or about $64,000 a year, paid by the pizzeria and the T-shirt shop down the road, across the street from the beach. Those figures are from last year and the nearby businesses also pay a 3.5% annual increase in rent, something Benny’s has avoided until now.

What is Benny's on the Beach's new lease agreement with Lake Worth Beach?

The agreement approved on Wednesday runs through Jan. 11, 2033, and includes the following rate increases:

• Benny’s will pay $44 per square foot in the first year, an increase of about 35%.

• The rent will increase to $47 per square foot in the second year.

• The rate again jumps to $50.35 per square foot in the third year.

• The remaining years will include the same 3.5% annual increase paid by nearby businesses.

“There’s a certain fear in my heart to sign a lease, whether you believe it or not, where it doubles after 10 years, where it’s 65% more than we’re paying right now,” Benny’s owner Lee Lipton said after the vote. “But we believe in it, and we believe in this city.”

New agreement follows protests, petitions, billboards and offers to take over the historic restaurant

Lipton — who operates the restaurant alongside his sons, Dylan and Max, and his executive chef, Jeremy Hanlon — said the very public push for a lease renewal was both stressful and heartening.

After the commission shot down the previous version of Benny's lease, a "Save Benny's" campaign emerged in the days that followed, including protests, online petitions and even a billboard over Interstate 95.

“What I really learned was how much Benny’s is loved," Lipton said. "I was amazed at what we saw. I was amazed at the staff pulling together, my family pulling together.”

Lake Worth Beach commissioners weigh in before voting on Benny's new lease

Meanwhile, a completely different movement was happening behind the scenes. At least half a dozen people reached out to the city and offered to take over the pier location if Benny's negotiations fell apart.

One offer came from a New York restaurateur who offered to renovate the building, increase the base rent and retain the current staff. He also offered to share a percentage of any revenue above a certain amount with the city.

McVoy said on Wednesday that commissioners have no information on the gross receipts generated by Benny's each year. And with other restaurants willing to share a percentage of their profits, he felt it was worthwhile to keep researching the issue before locking the city into another long-term lease.

"It concerns me that the city does not respect itself and its prime asset enough to conduct a proper businesslike negotiation," McVoy said. "Every restaurant professional I've talked to has emphasized that standard practice is a base rent plus a percentage of gross receipts."

Diaz said it was hard to nail down the true value of Benny's pier location because there were few restaurants in Florida that sit directly on the water at a public beach. And while more data would be helpful, including the restaurant's financials, he felt the latest agreement was a step in the right direction.

Stokes agreed, noting that she was happy to see Benny's ease into alignment with the rate paid by nearby shops.

“I’m really glad that we’ve been able to find common ground with the tenant," she said. "It’s been a bit unfortunate that this negotiation turned into a bigger show than it needed to be, because our city’s intent was always to negotiate fairly and not to push Benny’s out."

Wednesday's meeting was short and largely joyous, a stark difference from last month's meeting, when Lipton told commissioners to either approve the lease agreement or "evict us."

“Thank you for not walking away," Malega said to Benny's owners, who sat in the audience. "Thank you for continuing to keep 200-plus people employed in our city and for being a good community partner.”

Giuseppe Sabella is a reporter covering Boynton Beach and Lake Worth Beach at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach him at gsabella@pbpost.com. Help support our journalism and subscribe today.

This article originally appeared on Palm Beach Post: Lake Worth Beach commissioners end Benny's on the Beach rent dispute