On the night before voters would decide its next mayor, the Daphne City Council met Oct. 5 and introduced the development of a new Whataburger on Lavender Lane. While seemingly insignificant, the proposal differs from most fast food developments in that the city would be the restaurant’s landlord.
According to the proposal, the city would grant a 30-year lease to the franchise to build on city-owned property on U.S. Route 98 between Lavender Lane and The Wacky Shrimp. In turn, Whataburger will pay between $100,000 and $147,177 per year in escalating payments as the lease matures.
After the property was cleared earlier this year, city officials told Lagniappe it was in preparation for a transportation project and would not address any plans about commercial development.
The city also leases commercial property at Jubilee Square on U.S. Route 90, but Councilman-elect Steve Olen, who will be sworn into the District 2 seat in November, said there “are compelling reasons why the city should not approve the proposed ground lease with Whataburger.”
“First, the city of Daphne is not and should not be in the business of developing property and entering long-term leases with a fast-food restaurant,” Olen said. “That’s not what the city’s public service to its citizens is supposed to consist of. In addition to that, if the city were to lease property to Whataburger, it puts the city in direct competition with private, local businesses who would have an opportunity to sell or lease their own property to Whataburger.”
Olen complained the proposal was only released Friday and the 28-page lease represents a “very complicated financial transaction.” He expressed concerns about the 30-year term of the lease, stipulations that would require the city waive its rights to oppose changes to conceptual plans, and the amount of work the city is required to do to the property before Whataburger can build on it. Further, the proposal does not disclose details about real estate brokers who may be involved or the commissions they may earn.
“Being asked to digest all that in a couple days’ notice on a plan that involves tying up a valuable and substantial piece of property for 30 years, and it involves significant dollars,” Olen said. “Not to mention, tomorrow we’ll have a new mayor and a new City Council and this is a major transaction to be taking up at the very end of this term and it shouldn’t be done … it’s a bad deal.”
Council President Robin LeJeune — one of two candidates in the mayoral runoff elections along with Steve Carey — acknowledged “there has been concern” about the lease, so the resolution would be tabled until it could be discussed by the Buildings and Property Committee or the council work session next Monday.
Mayor Dane Haygood agreed with the decision, but in response to Olen, said the council has been aware of the proposal “for over 18 months” after it started with a letter of intent, and expenses on the property were budgeted in 2020.
“At the end of the day, with that arrangement, the city was looking to monetize an asset that was not being used,” he said, adding the city wants to preserve ownership of the property for future public use. It is indeed a complex lease … but when the council is comfortable with that, I think it is a unique driver for the city.”
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