WEST PALM BEACH city commissioners, rejecting an earlier city staff directive, have agreed to negotiate a new lease that would allow Subculture Coffee to continue brewing on Clematis Street for another five years.
The commission’s decision on June 13 is a positive step for the future of the popular coffeehouse, a 500-block fixture since opening in 2014. Two months ago, the city attorney informed Subculture that its option to exercise a lease extension had expired — meaning Subculture would no longer have a home on Clematis Street when its current lease expires Oct. 23.
Commissioners, however, want to give Subculture another chance.
“We have a successful business in the 500 block that is paying rent and is successful,’’ said Commissioner Christy Fox. “If we put it out to RFP, there is no guarantee we will find another business that’s successful.’’
While Subculture owner Rodney Mayo said he’s happy commissioners agreed to negotiate, he isn’t saying thanks a-latte just yet.
Mayo, a downtown business owner who made a brief effort to challenge Mayor Keith James in the recent election, said he is worried city officials will employ hardball tactics and insist on terms with steep rents and unfavorable conditions.
Subculture is paying the city $28.59 a square foot under terms of an extension signed in 2018. At the workshop June 13, city staff indicated Subculture can expect its rent to rise to at least $40 a square foot, which the city said is the low end of Clematis Street market rates that go as high as $60 per square foot.
Subculture “is in a pretty valuable space on Clematis Street, but that's just indicative of how well the city is doing and the investment we are currently seeing,’’ said Chris Roog, executive director of the city’s Community Redevelopment Agency.
Roog offered no comparisons or explanation during the workshop of how those market rates were determined.
In an interview after the workshop, Mayo, who owns 10 downtown businesses and is familiar with real estate trends, said he thinks a reasonable market rate for the 500 block is $30 to $35 per square foot.
“I’m happy they agreed to negotiate,’’ he said. “But I believe they have the potential to be unreasonable.’’
Commissioners didn’t sound unreasonable June 13 when discussing Subculture’s future in the coffeehouse’s city-owned home at 509 and 505 Clematis St.
“Trying to start over with a new business now would be difficult,” Commissioner Christina Lambert said. “The business that’s here has a longstanding following.”
Other commissioners questioned the circumstances that led the city attorney in April to tell Mayo that his option to exercise the extension had expired six months earlier.
Mayo was required under the terms of the lease to notify the city at least a year before the lease expired of his intent to extend it. That condition was put into the lease to give the city ample time — an entire year — to find a new tenant and avoid the space sitting empty for months, officials said.
But October 2022 came and went without Mayo exercising that option, which he admits was an oversight on his part. And the city, for its part, apparently has done nothing since October to find a new tenant.
When Mayo’s attorney reached out to the city in April about extending the lease, the city attorney told him the option had expired. At the time, Mayo said he thought the lease refusal was the latest example of political retaliation for daring to challenge James in the March mayoral election.
The election was never held becauseJames successfully sued Mayo and got him kicked off the ballot. A judge agreed with James’s contention that Mayo wasn’t qualified to run because he doesn’t live in West Palm Beach.
In the weeks after the judge’s ruling, James directed city officials to end two other leases that benefited Mayo, shutting down both an Artist Alley next to Subculture and the popular weekend street closures on the 500 block. At the time, Mayo wondered if the Subculture Coffee lease would be next on the city’s retaliatory chopping block.
He said his fears came true when the city told him in April his lease option was no longer available.
James has denied that the city’s decisions to end the various permits and leases were politically motivated.
As strong-mayor, James cannot vote on the lease; only the City Commission can, but James can vote to break a tie.
After months of behind-the-scenes negotiations, the Subculture lease extension was added to a commission workshop June 13.
Some commissioners sought clarification on why Subculture’s renewal option was disqualified.
Lambert asked Deputy City Attorney Nancy Urcheck if the city keeps track of leases that are coming up for expiration.
“Yes, we do keep track of leases,’’ Urcheck said. “We do have a system for keeping track and notifying when they are coming up so that we don’t kind of end up with something expiring. At least we do our best to make sure that doesn't happen.’’
Lambert replied, “So … this one came to us now due to other insinuating factors and timing?’’
“Well, at the time we didn't think it was necessarily our responsibility to tell a tenant that their option was going to expire, but we did know it was coming up in October,’’ Urcheck said.
James added, “And once they dropped the ball, if you will, their lawyer started sending letters (in April) saying he wanted to renew and that’s when our lawyer said no.’’
City Administrator Faye Johnson said the city is not responsible for giving tenants a heads-up about deadlines in their leases.
“They are the tenant in the city’s property. If it's their intent to renew, that obligation falls to them, as prescribed in the lease that they notify us within that time period. If they do not, we proceed accordingly,’’ she said.
Commissioner Cathleen Ward asked what, if anything, the city did between October 2022 and April to find a new tenant for the space to replace Subculture.
“I don’t know what we were doing, but at some point we were going to come to the commission and say, ‘Hey, this is where we are. We have to make a decision because we got a lease that expires at the end of October,’’’ James said.
“I don't know if we had a certain deadline in mind — our plate’s been pretty full trying to run this city – but it was going to come to us at some point. (Because) we built in a year of flexibility doesn't mean we have to start as soon as the year passes. This is only June. It expires in October.’’
James reiterated that the city “did nothing wrong here. We did not fail to meet any type of notice obligation. The lease is the lease.’’
If the city fails to hammer out a new deal with Subculture, the two city-owned storefronts where the coffee shop has operated for the past nine years could sit empty for months while the city scrambles to find a new tenant. (Subculture opened in 2014 at 505 Clematis St. and expanded a year later to an adjacent space at 509 Clematis St. Since then, Mayo has opened coffeehouses in Jupiter, Palm Beach Gardens and Boca Raton, and he’s planning one soon in Delray Beach.)
Mayo said he is trying to be cautiously optimistic that the city will agree to the terms of a fair and reasonable lease.
“This is not ‘Yippee, we won,’’’ he said of the city’s decision to negotiate. “This is just step one.’’
This video shows the commission’s entire Subculture discussion, starting at the 1:01:00 mark
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Joe Capozzi is an award-winning reporter based in Lake Worth Beach. He spent more than 30 years writing for newspapers, mostly at The Palm Beach Post, where he wrote about the opioid scourge, invasive pythons, the birth of the Ballpark of the Palm Beaches and Palm Beach County government. For 15 years, he covered the Miami Marlins baseball team. Joe left The Post in December 2020. View all posts by Joe Capozzi.