Sunset Lounge management 'in limbo' after CRA board can't decide on Vita Lounge deal
West Palm Beach officials this week rejected both a plan to continue — and discontinue — negotiations between the city's Community Redevelopment Agency and the group of local Black officials hoping to manage the Sunset Lounge.
The pair of 3-3 votes from City Council members, who, along with Mayor Keith James, double as the CRA's board of directors, leaves the agency unclear about its next steps. The votes also appear likely to again delay the reopening of the 1920s supper club, which the city has already spent $20 million to purchase and rebuild.
A spokeswoman for the city said the CRA's board will hold a special meeting to discuss the issue further. Precisely what would be discussed at that not-yet-scheduled meeting remains unclear.
"So, basically, we are in limbo," James said after Wednesday's votes.
CRA Executive Director Christopher Roog, quickly exiting City Council chambers after the meeting, was asked where things stand now.
"I don't know," he said as he walked away.
Roog's frustration mirrored that of officials with Vita Lounge, the group of Black officials who won their bid to manage the Sunset, which was the cultural hub of the mostly-Black Northwest community before falling on hard times and closing in 2016.
City officials have said the lounge could be reopened in time for the Christmas holiday season this year. But ending negotiations with Vita and initiating a new process to find another management company would upset that timeline.
Vita had hoped the Monday, June 10 meeting would bring some finality to the long and winding road the group has taken since it won the Sunset management bid two years ago.
CRA board members had given the two sides until May 22 to produce a proposed agreement, which would be approved or rejected during the meeting.
Why West Palm Mayor stands by his argument against Vita managing the Sunset Lounge
Several board members made it clear they would be prepared to order the CRA to terminate negotiations with Vita if such an agreement was not reached. That appeared to be where things were headed as the meeting began because Roog reported no agreement had been reached.
Roog's presentation then highlighted what he and James have argued is the primary problem with Vita's bid — its weak financial foundation.
Roog said Vita's financial projections show it would have $5.5 million in expenses during its first year of operations, including $2.9 million in staffing and wage costs.
The $5.5 million in expenses would be offset by $4.4 million in projected revenue. A $50,000 contribution from Vita and $445,337 from the CRA would leave an operating loss of $590,355 after the lounge's first year.
That there would be a loss didn't surprise city officials; they've long anticipated that the Sunset would be a money loser for at least its first year. However Vita's anticipated expenses and the fact that it would be making only a $50,000 contribution were major points of contention for James and Roog in assessing the group's financial viability.
The CRA has $4.8 million in reserves, and James said all of it and more money would have to be set aside to ensure that the city had the funds to handle the Sunset's costs.
"It goes back to the numbers," James said in explaining his opposition to finalizing a deal with Vita. "I just don't think it's a wise move, a good move, from a fiduciary responsibility to totally wipe out the CRA's reserves for this purpose."
Vita disputed Roog's description of its financial projections. And Darren Cummings, who would be Sunset's general manager, said it's not logical to ask a management group to personally invest substantial sums of money into a facility it would not own.
The CRA owns the Sunset and would get any profits it generates, though Roog has said the agency would share some profits with Vita as an incentive for effective management. That, Roog said, is why groups that enter into the type of agreement the CRA was negotiating with Vita come to the table with more of its own resources.
Is Vita officially out of the running to manage the Sunset Lounge?
Tony Brown, former Riviera Beach CRA executive director and now an advisor to the Vita group, said the CRA was not taking into account the resources Vita was already laying out, including $400,000 in professional fees, $300,000 in the value of its liquor license and $200,000 to build out an auxiliary kitchen, which the group said is necessary because the Sunset's current kitchen is too small.
"You can start over," Brown told CRA board members. "You can terminate negotiations. You'll still have the same problems with your facility that Vita has outlined in their negotiations with your staff."
Vita's hopes to manage the Sunset were kept afloat by Commissioner Joseph Peduzzi, who was among those who had said he would support ending negotiations if an agreement was not reached by May 22.
Peduzzi, however, said the fact that Vita's financial projections were crafted in concert with a CRA consultant convinced him that the group is not solely responsible for them.
He joined commissioners Shalonda Warren and Christy Fox in voting for a continuation of negotiations toward a management agreement and then against a motion to terminate negotiations.
James and commissioners Christina Lambert and Cathleen Ward voted against continued negotiations with Vita and then in favor of a motion to terminate negotiations.
The 3-3 ties meant both motions failed.
"We're in limbo, which is unfortunate because I'd like to see the Sunset get up and running at some point," James said. "I think we have a duty to our taxpayers to move this thing along, up or down."
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Wayne Washington is a journalist covering West Palm Beach, Riviera Beach and race relations for The Palm Beach Post. You can reach him at [email protected]. Help support our work; subscribe today.
This article originally appeared on Palm Beach Post: West Palm board undecided on whether Vita should manage Sunset Lounge
