Future of Benny's on the Beach uncertain as residents, city commissioners debate the rent

LAKE WORTH BEACH — Benny's on the Beach opened at the Lake Worth Beach pier in 1986 and became a county landmark in the decades that followed. Now the iconic restaurant is facing a possible closure as residents and commissioners debate the need for a rent increase.

After negotiating with city leaders over the last several months, restaurant owner Lee Lipton agreed to a lease renewal that would increase his rent and bring him more in line with the lease agreements at surrounding businesses. The move came after residents and several Lake Worth Beach commissioners demanded the restaurant pay a fair share for its city-owned property.

The proposal divided public commenters Tuesday, with some calling for an even higher rent increase to account for Benny’s prime oceanfront property, and others criticizing the attempt to raise costs for a business that drives countless visitors to the area each year.

Celebrity sighting in Lake Worth Beach: Gordon Ramsay stops in at Benny's on the Beach

More oceanfront favorites: Best waterfront restaurants in central Palm Beach County

Star by the sea: Rocker Bon Jovi visits Benny's on the Beach

Commissioner Sarah Malega and Mayor Betty Resch supported the lease renewal, but Vice Mayor Christopher McVoy and commissioners Reinaldo Diaz and Kim Stokes wanted more information before approving a long-term agreement. A better deal was possible, they said.

The conversation seemed to infuriate Benny’s owner, who stood before the commission and delivered a fiery speech that ended with an ultimatum.

“Benny’s on the Beach is probably, arguably, the best thing in the goddamn city of Lake Worth. If it’s not the best thing, it’s in the top three,” Lipton said, noting that he employs about 200 people and pays hundreds of thousands of dollars in taxes.

“You vote on it tonight,” he continued. “If you vote no, you know that’s the end for me. I’m not renegotiating the lease at this point. … Evict us and that’s it, or let us stay. Because I’m telling you, that’s it. I’ve had enough.”

As the current agreement neared its expiration, the commission voted in February to extend the lease by three months, giving the city time to negotiate with Benny’s.

And on Tuesday evening, the city attorney, Glen Torcivia, recommended the commission extend Benny's lease for another six months, giving everyone “a little bit of cooling off time” before they make a final decision.

“Obviously, there’s not consensus here, and the lease expires in a month,” the attorney said.

But the restaurant owner urged commissioners to vote on the full lease renewal, which amounts to nearly 10 years, and the mayor granted his wish. The renewal failed with a 3-2 vote, with Diaz, Stokes and McVoy dissenting.

Lipton quickly left the room.

“Thanks very much, commission, for killing a business of the city,” the mayor said.

While the commission voted down the most recent version of Benny’s lease renewal, they did not take action to evict the restaurant, which now remains in limbo for the remaining month of its existing agreement.

It remains unclear how, if at all, Benny’s and Lake Worth Beach will salvage their relationship.

How much rent does Benny's on the Beach pay?

The restaurant’s base rent of $32.69 per square foot — or about $240,000 a year — has remained the same since 2013, when Benny's entered its current lease.

Despite its prime location, the restaurant pays a lower rate than restaurants and retail shops in the Casino and Beach Complex across the street, a sticking point for critics. Benny’s current lease is also devoid of the same annual rent increases that other businesses pay, according to a study commissioned by the city.

The study by Anderson Carr, based in West Palm Beach, outlined the rental agreements at four area businesses. The numbers were up to date as of August:

• Benny's on the Beach pays a base rent of $32.69 per square foot, which equals about $240,000 a year.

• Mamma Mia's Pizzeria pays about $47.70 per square foot, or $63,531 a year.

• Kilwins Chocolates pays $34.07 per square foot, or $45,383 a year.

• Lake Worth Tee Shirt Co. pays $47.70 per square foot, or $64,301 per year.

Aside from Benny's on the Beach, each of the businesses also pay a 3.5% annual rent increase to account for inflation.

The proposed lease renewal would have increased Benny's base rent from less than $33 per square foot to $42 in the first year. That number would increase to $44 per square foot in the second year.

In the remaining years, the rent would jump by 3.5% each year, the same annual increase paid by neighboring businesses.

Benny’s on the Beach becomes a divisive issue

The issue divided commissioners and residents who spoke at Tuesday’s meeting. Several people said Benny’s on the Beach was important to the city’s economy and that its lease should be renewed, ensuring it remains a destination.

Others argued that the beach — not Benny’s — was the destination, and that any business would thrive in that location.

“While I don’t want Benny’s to be unfairly charged for rent, having a bad deal, I do think the city should get a fair share,” resident David Simms said. “It’s good that we’re raising their rent to something reasonable, but it’s still, from the numbers I’ve heard, it’s still less than other properties on the beach.”

Stokes said she wanted a consultant to handle the negotiations — someone with expertise in complex finances and lease agreements. She also said Benny’s should at least pay the same per-square-foot rate as businesses in the nearby Casino.

“I don’t think this is the best deal we can get,” Stokes said.

McVoy offered similar comments: “I think many people would be in agreement that the property that’s right on the water is probably a bit more valuable as a business location than the Casino Building.”

Diaz, the third dissenting commissioner, said he wanted more details on Benny’s finances and how much traffic it brings to the beach. He also wanted more input from neighboring businesses and residents.

“I hear the concerns that Benny’s does bring traffic to the beach but, realistically, I still want to see the reasoning and data behind that,” Diaz said. "I think people come to the beach because it’s a municipal beach and those are becoming endangered in Florida."

Conversely, Resch and Malega were quick to defend the lease renewal and the value that Benny’s brings to Lake Worth Beach.

Malega said the proposed rent increase amounts to more than $6,000 a month and was fair for the city, especially considering the rising cost of food, which forced other restaurants to close in recent history.

“I’m not going to be part of a commission that tries to strong-arm a business owner in the middle of a food crisis and inflation,” she said.

Resch then defended the increase that Benny’s agreed to in negotiations with the city manager and city attorney.

She said the proposed rent increase for Benny’s was still slightly less than other per-square-foot rates in the area because, compared to neighboring businesses, Benny’s pier location was "not the same quality of building” because of its age and maintenance needs.

The mayor also addressed complaints from some residents that Benny’s receives 100% of the revenue from admission to the city-owned pier. The business was doing Lake Worth Beach a service, she said, by handling the daily management of the pier and bait shop.

“I believe that this is a good deal,” Resch said.

And for the owner of Benny’s, it was the only deal that made sense. Lipton said he already had to worry about the cost of taxes, utilities, employee salaries and now the increased rent proposals, all while navigating sales that are “basically plateauing.”

“I don’t even want to say this in public, but what would happen If we left?” he said. “Who would you get? Duffy’s? Rocco’s Tacos? Who would you get?”

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: Is Benny's on the Beach restaurant closing in Lake Worth over rent?