The Key West Bight Management District (Bight), an assembly of 160 locally owned and operated businesses officially described as “commercial marina and upland tenants” that line the waterfront areas of downtown Key West, is under pressure. Pressure from the City of Key West that could prove very worrisome to many of the over 1000 Bight jobs. Is there a solution to saving these businesses and jobs, continuing the Bight as a vibrant, rewarding and desired waterfront business community – Yes.  Will this solution be implemented in time – Not if the City continues on its present path.

Who Governs the Bight

The Key West Bight Management District is 8.8 acres of real property and submerged bay bottom land and is commonly called the Historic Seaport at Key West Bight. The Bight is governed by The Key West Bight Management District Board (Board).  The Board is defined in the City’s Municipal Code, Division Ten, Sections 2 – 546 thru 2 – 554. The Key West City Commission created the Board in June 1993 and granted the Board’s seven appointed members with having the power and duty to oversee the management, preservation and development of the city's property at Key West Bight for the best interest of the city and its citizens.  At the Board’s monthly meetings (Open to the Public) the Board approves the sale and transfer of properties and develops the strategies to keep the Bight both financially sound and as a safe, diverse and viable attraction area for tourists and local Key Westers.

The City of Key West (City) is landlord to these 160 businesses; restaurants, pubs, charter boats and watersports, Ferry Terminal and tenants, retail, museums, etc.  There are no head shops, no offensive T-shirt shops, no hustle shops, no strip joints.  Many are “start-up” and one-of-a-kind businesses that give aspiring and seasoned entrepreneurs a shot at being their own boss. These 160 businesses have a Key West Bight Preservation Association.  The Association appoints one of its members to serve as a non-voting liaison to the Bight Board.

These 160 businesses purposefully maintain a “Key West flavor” in history, appearance and character.  Preservation is a fundamental element of the Mission Statement of the Bight Association.  The Bight is intimately involved with Key West-based and focused Community and Charity fundraising events, many of which receive national press coverage; Memorial Day Minimal Regatta, Lighted Boat Parade, Wreckers Race, Sister Season, Conch Republic Days, etc.

What could be better – small, personalized businesses run by Key Westers that employee over 1000 wage earning residents of Key West. These are charter boat Captains and mates, wait staff, retail clerks and salespersons. These 160 businesses regularly pump over $400,000 in rent per month into the City coffers and present a critical and reliable stream of revenue for the City.

Show Me the Money

The Board drafts its own budget and submits this proposed budget to the City Commission for approval. The budget shall include all anticipated expenditures of the Bight for all of its projects during the upcoming fiscal year, including operating expenses, capital outlays and reserve requirements. The Budget is broadly divided into two categories; (1) Capital Improvements and (2) Reserves and for FY 2020/2021 was proposed at $12M for Capital Improvements with approximately $3M in Reserves. 

Capital Improvements incorporate a look to the future and are scheduled to occur over time so the Bight always presents a safe and positive business environment for owners, employees and patrons. A sort of rolling multi-year plan. Very smart. The Reserve is designed for immediate use for the Bight in an emergency; among which are, damages from storms, fire, etc. and has historically been maintained around $3M. Therein is the problem.

As you might guess, like much of the downtown Key West business district, business at the Bight has been spotty.  The lack of tourists (tourists provide 80% of Bight income) and limited support from locals has prevented many of these 160 businesses from making steady rent and viable wages.

As of September 1, 2020, the City position on rent was/is:

• April 2020 was abated - free. (Note:  The Board’s request for May abatement also was denied by the City)
• May and June 2020 rent is 100% deferred. (Note:  The Board’s request for June and July 100% deferred was denied by the City)
• July rent was required in full
• August and September rent is due at 75% of the designated lease rate with 25% deferred.
• October thru December are full rent until determined otherwise
• Deferrals expire December 31, 2020 with all deferred rents from 2020 due in January 2021.  Tenants have the option of paying portions of the deferred 2020 rents with their regular 2021 rent depending on the time remaining on their existing lease; i.e., a tenant with, for instance, 24 months remaining on their lease must add at least 1/24 of the deferred 2020 rent to their monthly 2021 rents, a tenant with, for instance, 15 months remaining on lease must add at least 1/15 of the deferred 2020 rent to their regular 2021 rents, etc.

The Resolution that covers the above items in greater detail is seen in the September 1, 2020 City Commission meeting, Minutes, Item 9, Resolution 20 – 172.

As you might imagine, few of these 160 businesses will have months of deferred rent available to pay on January 1, 2021.  For many, regular rent is hard enough to make.  Some businesses are staying above water yet many owners have cut employees, hours and their own take home pay in order to survive.

Solution - What About the Reserves?

The Bight tenants had amassed and maintained over $3M in Reserves. Why not use some of the Reserves to cover lost rents from 2020? This is an emergency, is it not?  Not quite. The City has decided these $3M in Reserves belong to the City, not to the Bight.  Even though rent from the 160 businesses created the Reserves, the City has decided the Reserves do not belong to the tenants and that the City has sole discretion in how the Reserves will be used. In fact, all of the over $3M in Reserves have been spent by and/or are earmarked for use according to the preferences of the City.

During each of the three 2020/2021 budget reviews presented to the City Commission; July 6/7, July 22/23, and Sept 9 (see Agenda, Page 2, FY 2020 - 2021 Budget Summary of Changes and Updates - All Funds), money was identified to be taken from the Bight Reserves for City purposes.

• July 6/7 transfer $1.75M – (Directed to the City General Fund for Operational Support)
• July 22/23 transfer $750K – (Directed to the City General Fund for Operational Support)
• Sept 9 transfer $400K - (Directed to the City for further transfer to the Key West Housing Authority.  This obligation was not noted in either of the July Budget drafts.)
• Sept 9 transfer $275K – (Directed to the City General Fund to cover “lost revenue”)
• Total transferred $3.175M
• Balance in Reserve for the Bight $0.00.  No safety net for the Bight.

Therefore, using the Reserves to cover the months of deferred rent, or for any unforeseen emergency in 2021 or 2022, is not possible. The burden of rent and unforeseen emergencies will be carried fully and solely by Bight businesses and workers.

Question:  If the $3M in Reserves created by Bight tenants does not belong to the Bight tenants, then why should the Bight tenants pay into a Reserve?

Conclusion

Recently, two well-meaning, knowledgeable and well-respected friends of mine told me the government of the City of Key West (and the County) has the number of employees that it does not so much to care for the permanent residents of Key West (or County), but because of the number of tourists that come our way.  As such what appears to be bloated staffing, staffing that consumes 81% of City revenue, is not the case at all. I was surprised.

I thought tourists came to the Keys to have a good time.  I had no idea so many tourists bothered to call the Planning Department, the Building Department, the Parks and Recreation Department, Human Resources, Transportation, Parking, Land Use, Environmental, Floodplain Management and the scores of Committees and Boards that shelter so many family-connected staffers.

2020/2021 Budget Drafts that were reviewed at Commission meetings through the summer identified only nine jobs lost in the City of Key West government since March, three from retirement and six whose jobs were associated with the no longer welcomed cruise ships.  The private sector has lost hundreds probably thousands of jobs – so far – and the City is down nine.

The City is increasing fees across the board, has used valuable Reserve Days to maintain City payroll and is making a grab for every piggy bank they can corner.  The 2020/2021 Budget that was approved on September 21, 2020 (see Agenda, Page 2, FY 2020 - 2021 Budget Summary of Changes and Updates - All Funds, Slide 31) forecasts the creation of 8 General Fund Reserve Days by the end of the fiscal year.  This equates to over $1.2M. (It cost $152,000 per day to run the City. Eight Reserve Days x $152,000 = $1.2M).  Convert excess fees and unforgiven rents into Reserve Days that can later be spent making payroll for City workers. Meanwhile, other than one day in April that City workers worked without pay, not a City employee has lost even a nickel in pay or benefit.

Bight tenants had spent years building an emergency savings account (Reserve) of over $3M.  The City emptied the Reserve for its own 2020 purposes. Bight businesses and their many workers, many hanging by a thread, have earned and deserve greater rent forgiveness for 2020 and a fresh start in 2021.

If you have any comments or questions, please contact me here.

Good luck.

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