It’s hard to compete with the Government

There has been a question about what kind of deal Art Chin and Jerry Gillotti had on their spaces in the Transportation Center.

Now, it appears that a new tenant is getting a “sub-prime” lease from the city- reputed to be around $2 a square foot (extremely low).

Reported in the Dayton Business Journal:

An Asian restaurant,  Sa Bai, is opening in the space that formerly housed Chin’s restaurant in the Dayton Transportation Center complex on Jefferson Street. The restaurant and lounge will be open for lunch and dinner seven days a week, and late on weekends.

The casual dining restaurant will be owned and operated by Chanaka DeLanerolle, a restaurateur with several restaurants in the Cincinnati area, including Mt. Adams Fish House, Teak Thai Cuisine and Sushi Bar, The Celestial Steakhouse, Incline Lounge and Longworth’s.

DeLanerolle signed a five-year lease for the space. He plans to invest $250,000 on renovations.

Sa Bai, which will employ about 30 people, is scheduled to open at the end of August.

Sa Bai will feature a casual to upscale feel, with a sushi bar and lounge. The menu will be similar to one of DeLanerolle’s Blue Ash restaurants, Apsara. It will feature a mix of soups and salads, curries, rice and noodle dishes and stir-fry.

The 5,700-square-foot restaurant also will have outdoor seating.

via New restaurant planned for downtown Dayton – Dayton Business Journal:.

The Dayton Daily News has the entire press release and the lease:

For the remaining seven months of the first year, through June 30, 2010, the restaurant will pay $2 per square foot, or $6,750 over that period. Over the remaining four years of the original term, rent will continue at $2 per square foot, or $11,572 a year.

via http://www.daytondailynews.com/blogs/content/shared-gen/blogs/dayton/taste/entries/2009/06/24/new_asian_restaurant_coming_to.html

If I was the owner of Thai 9, I’d be a little ticked-off about having to compete with someone paying an annual rent less than my monthly mortgage (estimate). Or, if I’m Coco’s, which is trying to sell their successful location so they can rehab another business in Dayton.

This is another example of corporate welfare by government, forcing taxpaying businesses to compete on an uneven playing field.

Thoughts?

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31 Responses

  1. bill June 24, 2009 / 7:30 pm
    Its hard to compete with the government because they are using our tax dollars…to compensate for their incompetence. I do believe, there is no time like now, to start looking for people who are driven, passionate, and have a reasonable amount of intelligence…..To manage what is left of our government.
    Someone who is ready to lead by example….and stop bastardizing our system.
    Know of anyone????
  2. Civil Servants are People, Too June 25, 2009 / 1:12 am
    Let’s see… one of our problems is the shortage of businesses downtown.  Now here’s an empty space with (probably) no debt service to worry about,  a competitive market with high vacancy rates, and a multi-million dollar convention center that needs more street life  around it to help attract events that bring money to the region.   

    It looks like the City is supporting an entrepreneur with an affordable lease rate, creating revenue during a budget crunch, and creating a stronger Fifth Street corridor.   So that is really only a problem for the other landlords.   For everyone else, it is a win-win situation. 

    So the real question is, why not?    Consider the alternative – should the  City charge more rent than necessary and discourage an entrepreneur from investing in Dayton?   Should they pass up an opportunity to improve the City’s budget?   Should they ask him to take his $250,000 investment somewhere else?

    Also, how is an affordable lease for a small business from Cincinnati equal to corporate welfare?  If that’s the definition, then you might as well give up on helping businesses altogether.   No loans, no grants, no training, no infrastructure,  no public improvements.  How does that make Dayton more competitive?  How does that make downtown a better place?  

    Finally,  I’m pretty sure Thai9 will do just fine.  

  3. David Esrati June 25, 2009 / 6:17 am

    @Civil – please go take econ 101 and learn about the rules of supply and demand. Need to know why Hara Arena turned into a dump- look at the Nutter Center.
    It’s pretty obvious you have zero clue about what a “level playing field is”- or care.
    How would you like to play a game called “Business” where the ref spots the other team, from Cincinnati, 100 points before the game begins- and the difficulty in scoring goals give soccer type scores- not basketball ones?
    You want to “attract business” yet- your actions amount to doing it at the expense of others who are not only paying your high tax rates (the second highest income tax in the region- plus the “DDP” levy for the SID)  to get what most consider substandard delivery of services.
    Stick to trying to pick up the garbage, plowing streets and supplying water, police and fire services- as business men- civil servants: FAIL

  4. Gene June 25, 2009 / 8:22 am
    Good for the city – they are finally learning how how to play the game. They should have persuaded them into another theme though, we have plenty of “Asian” themed places – all of which are decent, if not good to great.
    The city has incentives for minorities and others to start businesses, why not a restaurant the would actually be in DT Dayton. And they are putting in $250k, slightly more than any other business.
    Anything to get businesses into DT is worth it at this point. I am tired of seeing vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces after vacant spaces……………………………………………………………………………………………………….
    …………………………………………………………………………………………………………
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    after vacant spaces after vacant spaces after vacant spaces…….
  5. Allison June 25, 2009 / 8:47 am
    When my employer,  a small local office of a Fortune Global 500 company, was unceremoniously kicked out of the 40 W. Fourth Street building so that they could rent our suite to Premier Health Partners (offering us unimproved, as in a concrete box with no walls) space in the bldg, if we paid for the build-out, which we had already done once and had no intention of doing again), we had every intention of renting another suite downtown. With all of the empty office space available (even then, in 2005), we could not find a single, comparable, space that had terms acceptable to our attorney. The 333 Bldg. wanted us to agree to continue paying rent if the building burnt down or was destroyed by terrorists. 130 W. Second St. wouldn’t rent us any parking spaces (we needed 4) – because “a larger tenant might want to move in and they might want parking”. WTH?  We looked at countless downtown buildings with 2 different realtors, before deciding to look “outside the box” – or outside downtown, as was the case. We landed in a suburb and never looked back. We didn’t want or need any incentives from anyone – just take our rent check! Good riddance downtown.
  6. Gene June 25, 2009 / 9:12 am
    DT spaces want a billion bucks for rent, bc they somehow think it is valuable. Well, it will only rent spaces if the prices are right. DT needs to get a clue. I think they want a ghost town so it can become a movie set rather than fill the space and try to be successful. This is what you get when you have politicians and landlords that really don’t understand the business climate in Dayton.

    DT leaders think they are owed business presence. Folks, it 2009. We can work from home on a global scale. Get a clue.

    They did the right thing with the restaurant. Any new businesses is great at this point.

  7. Jeff June 25, 2009 / 7:12 pm
    “DT spaces want a billion bucks for rent, bc they somehow think it is valuable…”

    That downtown has a 30%-40% vacancy rate (not including vacant buildings that have been taken off the market) and the Kettering Tower is about to go into bankrupticy should tell y’all how “valuable” downtown is. 

    Not very.

  8. Gene June 25, 2009 / 7:59 pm
    30 to 40% – really? If i was on the $64,000 question, I would have said………….70%. I would have lost.

    Here is an idea. How about lower the rents on ALL spaces, fill them up with a 2 or 3 year contract, and once the DT area becomes thriving again you can charge a little more. NOT A LOT MORE.

    People who own these spaces try to retire off each rental. It is like paying $8 for a Bud Beer.

    Get a clue, Owners. Charge 70% less and you will have 95% occupancy. But then again we know the make up of those who own those places and run DT. You call it what you want, but moving away from DT has benefited a lot of families.

  9. Tim June 25, 2009 / 11:33 pm
    @David Esrati–I was reading the posts here and I thought that Civil brought up some good points. In your response to his post, you berated him and you did not answer his questions.

    Why was that necessary?

    It doesn’t promote a healthy discussion of ideas that could lead to something bigger and positive for this city and region.

    Also, am I to understand that a civil servant cannot be a successful businessman or woman? If that is true then, according to you, that businessmen fail as civil servants.

    Looking forward to your response.

    P.S.– I worked at Hara Arena in the early 80’s. It was a dump long before the Nutter Center came into being.

  10. David Esrati June 26, 2009 / 9:45 am

    @Tim-
    If you continue with this- empty space- needs filled, taxpayers should subsidize the rent- why don’t we just help every business in the city of Dayton by dropping the city income tax to 1.75% and make us competitive with the suburbs? Instead- Civil servant thinks it’s ok to subsidize the new guys rent- which can allow him to charge less than the existing businesses- and contribute to them suffering.
    As to Hara Arena- yes it was dump before Nutter- but, it wasn’t financed with tax dollars at all. Why didn’t the taxpayers give the Wamplers $3million to do the upgrades like Greene County did to the Nutter to put ice in? Because that, would have been the same kind of welfare that you are suggesting for the Chins space.
    Government can help- with easier regulation, simpler tax collection, better services, maybe even cheaper parking in the transportation center garage for the OD guests- but, to subsidize ONE business? That’s the problem.

  11. Tim June 26, 2009 / 9:53 am
    @David Esrati–  Thank you.
  12. Gene June 26, 2009 / 11:00 am
    Drop the city income tax to .33% and get rid of 80% of the worthless services the city claims it does, then you will see Dayton go in the right direction.
  13. Civil Servants are People, Too June 27, 2009 / 1:23 am
    If the building is paid for and the rent covers the City’s cost of maintenance, it’s not really a subsidy at all.    Similarly, if I own a rental property with no mortgage, I can rent it out for whatever rate I wish and attract tenants with a lower cost of living.   I am not obligated to charge a “market” rate.  So the subsidy argument is a red herring. 

    From a business perspective (if that is our point of view),  when a long vacant space is filled with a paying tenant, that’s a good start.   When the tenant puts $250k into the space, that’s a bonus.  When that rental income exceeds cost, that’s good business.  

    Often, such as with Kettering Tower, the landlord pays too much for a building and has to charge high rent just to cover the mortgage.   If they can’t pay the debt service, the result is foreclosure.   That’s bad business.

    So therefore, if we are judging the City based on a “business decision” then the benchmark  should be a “profit” to the taxpayers.   If the rent is paid and costs are covered, then profit will be achieved by the landlord.   Jobs are created as well.  The City and the taxpayers win.   Good business.

    Alternatively, we can consider that their occupancy may add further value by attracting more people to the Convention Center and the other nightlife destinations in the Oregon District.   The things that keep people downtown today will bring them back for more tomorrow, and the rising tide will lift all boats – as the saying goes.   This would seem to be the essence of so-called “economic development”.

    And so, the laws of supply and demand will actually create  increasing demand for the delicious cuisine of Thai9.    (My Econ101 teacher told me so many years ago, thank you.)     
    Generally, this is why investment is a good thing for cities.   The Greene would not be as attractive with half as many tenants, and neither would downtown.   We need more investment downtown.   If the City made that happen, that’s good business too.   The alternative is protectionism which actually stifles job growth.  (Econ102)

    Besides, a little competition is good in a free market.   If the metaphorical referee needs glasses, do you quit the game or try a little harder?  

    PS.   If you can drop the tax rate and still balance the budget while providing improved services, you will make a lot of people very happy!   I will look forward to that day.  Please tell us how it could be done.

  14. David Esrati June 27, 2009 / 7:44 am

    So Civl-
    by the same standard- Brothels bring business to NV, as do casinos? Why not put them right next to the convention center? I’m pretty sure both would pay well above market rates?
    Hmmmm- that would bother you, wouldn’t it.
    Your argument sounds great, until you realize that just because the building is “paid for” that you can go low on rent- doesn’t work for private enterprise. You see, the City looks at a full building and will raise their rent- taxes, on you.
    Unfortunately, your arguments about putting in $250K and also employment- have been done- over and over- and guess what, people lie. BGH got $125K grant for “equipment” and promised jobs- but now the moneys gone, they are smaller than before and the taxpayers, well, it’s civil servants like you, who make excuses to us.
    If this is really the case- put the $250k in escrow- we pay for the “improvements” and have him provide a security bond guaranteeing payroll- or the rent goes up.
    The taxpayers/government shouldn’t be in the real estate business. Nor, should they be venture capitalists, or in “economic development”- they should be in the service to all business.
    Police, fire, water, parks and rec- and I also believe in the gas and electricity business- screw the privatization of “public utilities” it hasn’t worked that well.
    We’re going to disagree here- but, when you have to work in the real world, I hope you don’t ever have to compete with government, which never thinks about the consequences of their actions, since ultimately, they believe they will always have a job, revenue, and a license to do anything they want, no matter what the consequences are.

  15. Gene June 27, 2009 / 9:04 am
    Liberals love to subsidize poor unproductive people yet hate to help people who start businesses and employ people.

    It is like liberals are jealous or upset with the fact someone may  actually be successful in business. Liberals are a GD MF Joke when it comes to business affairs.

  16. Civil Servants are People, Too June 27, 2009 / 7:22 pm
    “You see, the City looks at a full building and will raise their rent- taxes, on you.”

    If you mean property tax, the assessed values are controlled by the County.  If you mean local income tax, that rate is applied to everyone regardless of quality or occupancy of their building.   So I don’t really understand this comment.

    On the unrelated topic of casinos,which is another red herring, I actually would be interested in seeing a downtown casino.   The casino investors would probably do a lot better in the polls if they allowed cities to compete for their casinos, instead of pre-determining the locations.  But I digress.

    The escrow idea is intriguing except that means another $250k “subsidy” if the City has to make the improvements anyway – so I don’t quite understand the benefit of that possibility yet.   I would be interested in exploring that concept.

    The notion that “people lie” seems somewhat cynical and does not seem to be a good basis for public policy from a politician.  However, I completely agree that any business receiving an incentive should be absolutely held accountable for their promises.   I imagine the problem comes when the company goes under, and there is nothing left to collect.

    An interesting discussion, regardless.   Thanks to you.

  17. David Esrati June 27, 2009 / 10:02 pm

    @Civil-
    I totally agree that if the voters were asked to approve gaming/casinos/gambling- for urban areas- or in a plan where the licenses are sold to the highest bidder- instead of being awarded to racetrack owners, a specific developer- etc. we’d have gaming in Ohio.
    And yes, property taxes are a county thing- but, to the property owner- it doesn’t matter who they are paying- it’s still a tax. And if I got to have a say- we’d only have one government- UniGov/regional government- so the issue is moot.
    As to the promises of $250K investment- I also remember Mandalay entertainment promising to employ DPS students at the concession stands- etc.- only to see those jobs handed over to “charity” to avoid having to deal with workers comp, payroll, taxes etc. We’ve also seen companies like GM demand tax breaks for “clear coat paint lines” only to see the plant leave town anyway- in the meantime, executives took our tax dollars and pocketed them with their exorbitant salaries.
    The promise of performance means nothing- if there are no penalties. $2 a square foot rent is handing our tax dollars over to a private individual- in fact, I’d almost guarantee that if worked out- the cart vendors on Courthouse Square are charged more than that per square foot.
    It’s anti- business to subsidize one, while making the others suffer.
    The city doesn’t have to make improvements to the space- the tenant does. I just read that “Smashburger” which is going in across from the Dayton Mall put $600k into their space- now, how would you feel if you were them- and then had the city give a break to Fuddruckers to open next door? Do you get it yet?

  18. Gene June 27, 2009 / 10:17 pm
    Where, in writing, did Mandalay say they would employ DPS students? Why DPS kids….. why not anyone who is qualified for the job?

    Honestly, I think that is BS type on your part DE.  It was never said by Mandalay, but may have been said by the Dayton “think-they-know-it-all” citizens who think it is ok to make shit up.

    What if a Centreville or Oakwood or Beavercreek kid wanted to work there? Lord knows they would not have half the excuses of the DPS kid.

    Complete and Total BS. And, if it is true, then shame of Mandalay for using words that were specific to DPS students. Either way, BS statement and/or impossible and inconceivable to guarantee work to a kid by virtue of where they attend school. Unreal.

  19. David Esrati June 27, 2009 / 10:24 pm

    @Gene- it was announced as the deal cincher by then Mayor Richard Clay Dixon, in chambers at a commission meeting. I was there. If the DDN site was able to be searched- or the commission records were online in a machine readable, ADA compliant format- I’d be able to pull it up.
    When I have more time, I still plan to post about the practice of letting “Charities” slave for proceeds from concessions- it is a total scam.

  20. Gene June 27, 2009 / 11:09 pm
    If you are right (and I believe you), it was BS from Mandalay then….. sorry to call you out on it, but you have to admit that any business making such promises regarding who they would hire (ie DPS students) is almost inconceivable. What business would publicly say that? You would have shit for brains if that was your PR with the community………

    I did not intent to say you lied (yes, it came off that way) but I am just in absolute jaw dropping ” how stupid a company could be” for making that comment/statement/promise. Who works like that?

    Again, sorry……… That is all I need to know about Mandalay. And, yes, the charity angle is always bs. They do it all over the USA, and it seems to be a big “scam.”

  21. Gene June 27, 2009 / 11:15 pm
    Did MANDALAY say it, or was it Clay or one of the faces in the crowd that sorta got a rumor started…….. you know what I mean, a girl or guy sitting in the room saying,” this will be great for Dayton. And the stadium can employ DPS students to run the concessions……”

    Little rumors and thoughts are expressed by people all the time…. I just can not believe that a business would make such a stupid comment/promise………. Then again, we have millions of people who worship a child molester, so how much do I really know? (nada is the answer.)

  22. David Esrati June 28, 2009 / 7:56 am

    @Gene
    Clay Dixon wasn’t going to sign off on the deal. They needed his support- he said it was the concession that moved him over (remember, he was a DPS employee at the time).
    In reality, the whole deal was tilted toward Mandalay. However, they do put on a show worth for our dimes– I mean dollars.

  23. Liz June 30, 2009 / 1:25 pm
    I heard the city asked the tenant to consider some other cuisine for the restaurant, but he insisted on Asian.  Not that this addresses your concerns;  just thought it worth mentioning that they apparently at least had the presence of mind to realize they were placing two similarly-themed restaurants 2 minutes walking distance apart.
  24. Gene June 30, 2009 / 3:33 pm
    I know what would be a big hit in this town……

    Big German Beer Hall wit Food.  And the music…… and real biergarten, not a parking lot.

  25. Jeff June 30, 2009 / 9:11 pm
    ^
    Sounds like someone visited the Hofbrauhaus in Newport.  But yeah, why aren’t there any German restaurants in Dayton?   You have to go to Cincinnati for German food.
  26. David Esrati June 30, 2009 / 9:59 pm

    German restaurants: the Amber Rose on Valley is as close to German as it gets around here, although L’auberge serves an amazing wiener schnitzel at lunch. Charlies Imports on Troy street has a selection of German groceries in the back.

  27. David Esrati June 30, 2009 / 9:59 pm

    German restaurants: the Amber Rose on Valley is as close to German as it gets around here, although L’auberge serves an amazing wiener schnitzel at lunch. Charlies Imports on Troy street has a selection of German groceries in the back.

  28. German guy July 18, 2009 / 1:45 am
    Don’t forget the Liederkranz-Turner next to Stivers.   They do German-themed events just about every weekend.   Great food and cheap beir.
  29. Valerie August 14, 2009 / 5:47 pm
    ….and, two weeks before the end of August projected opening,  there have been no visible signs of construction or any other activity at the building, not even a “Coming Soon” sign.
  30. David Esrati August 14, 2009 / 9:43 pm

    @valerie-

    Thanks for the reminder on this-, I’ll bring it up soon. I have a feeling we just did another Wayne Wyoming Kroger deal- with a one sided contract- and no real upside for the taxpayers.

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