The good news is that Cafe Europa will be staying right where it is – in the city-owned Cultural Center building on Davie Street.

The bad news is that the city wasn’t completely honest about why Jakub Pucilowski, who owns the restaurant, had to go through a request for proposal (RFP) process, which opened the lease up to anyone who wanted to bid on it.

I was told that putting leases out for an RFP when they expire was the current policy of the city. The example given was the Gillespie Park grill. When that lease and the renewals had expired, the space was put out for an RFP. According to city officials, this policy would allow competition for spaces that the city leased and was fairer than negotiating a new lease with the current tenant.

However, the lease for the coffee shop Dolce Aroma in the Bellemeade Street Parking Deck expired in January 2018 and was renewed with an increase based on the consumer price index, which appears to be the more common city practice according to city documents.

I was told that the lease payment for Cafe Europa had not been renegotiated in 18 years. That is not true. The lease was raised according to the city’s policy at a rate in accordance with the consumer price index. Also, in 2014, when John Rudy sold the business to Pucilowski, it was discovered that the city had never signed the current lease for Cafe Europa. So since 2009, Cafe Europa had been operating without an enforceable lease.

The city claimed that the fact that the lease hadn’t been renegotiated in 18 years was why the rent payments were too low, as if that was somehow the fault of Cafe Europa. However, the city had the opportunity to raise the rent in 2014, since a new lease had to be drawn up. Why was the rent payment far below what the city in 2018 thought was appropriate? Because in 2014 the city decided that it was appropriate.

In an email from Greensboro Engineering Manager Ted Partrick to Assistant City Manager David Parrish dated March 11, 2014, Partrick states, “Using the total lease payment (indoor and outdoor) and the floor area of the restaurant interior, the rate is $8.04/SF. That would be around 20% less than we would expect in the area. However, in 2009, the uncertain economy and our interest in keeping the building occupied would have been incentives to stay with a modest rental amount. With our new lease, we can adjust the rates in 2018 as we would have with the current agreement.” So the decision was made by the city not to raise the rent in 2014, but it also sounds like the city is counting patio space that can only be used during warmer months the same as actual restaurant floor space.

It’s also worth noting that if the city had signed the original 2009 lease, the renewals would have extended to May 31, 2018, but with the new lease signed in 2014, the renewal was cut short to expire Jan. 31, 2018. The owners at the time Rudy and Pucilowski, didn’t object to the shortened lease, but since the lease had previously been renewed without an issue, they had no reason to believe that five months under the old lease might make a difference.

As far as how the rent payments were determined for the 2009 lease, the city has no idea. In an email dated March 11, 2014, from Kathy Rauch, a real estate broker with the property management division of the City of Greensboro, she states, “I have no idea how the rates were determined. There are no notes in the file.”

At a recent forum on the proposed parking decks, which will have retail on the ground floor, Councilmember Nancy Hoffmann was asked why the city wasn’t going to manage the retail space. Hoffmann said, “The City of Greensboro is not a very good landlord.”

In the case of Cafe Europa, that has certainly proven to be true. The reason the whole issue with the lease came up in 2014 was because the ABC permits for Cafe Europa had to be renewed and they couldn’t be renewed because Cafe Europa didn’t have a signed lease.

Cafe Europa could have insisted on a new three-year lease with two renewals at that point, except the city, by not signing the lease, had Cafe Europa over a barrel. Without ABC permits the restaurant would go out of business and without a signed lease the owners couldn’t get ABC permits, so to stay in business they had to agree to whatever the city proposed.

The emails also note that because of the time constraints and the fact that a new seven-year lease would require City Council approval, the city couldn’t have a new lease approved in time for Cafe Europa to renew its ABC permits, so Cafe Europa was forced to accept whatever the city offered because the city had not signed the original lease.

There was a lot of talk during the RFP process by city officials that somehow Cafe Europa had been taking advantage of the city, but the documents tell a different story. The city, through its incompetence, had been taking advantage of Cafe Europa.

So while the lease payment may have been lower than what restaurants in downtown Greensboro were typically paying, it was a conscious decision by the city because of the state of the economy to not raise the rent four years ago.

Another point about Cafe Europa that was never mentioned is that what Rudy, the founder of Cafe Europa, leased 18 years ago from the city was an empty room. Everything the customer sees – from the mahogany paneling and banquettes, to the fountain on the patio – was built and paid for by Rudy, not by the city.

As far as leases for city property go, it’s difficult to discern a consistent policy. For instance, the building at 338 S. Elm St. was given a 40-year lease on 11 parking spaces in return for spending over $100,000 to up-fit the building. There are a lot of businesses and restaurants next to and across the street from this city-owned parking lot that would be interested in leasing parking spaces for 40 years from the city. In fact, many businesses downtown would be interested in such long term leases because the value of their property would increase if they had dedicated parking spaces that went with them, but according to a request from the city for public documents, 338 S. Elm is the only business in downtown that was given this type of long term lease for parking.

Considering how the request for public documents was fulfilled by the city, it is entirely possible that other businesses have such leases, but they were not provided.

Judging from the vast difference in the length of time for the leases – 40 years to two years – and whether they are renewed or not, it appears the real city policy is to handle each lease however the city wants to handle it.

The true story of why Cafe Europa was forced to go through the RFP process when an extremely similar lease for Dolce Aroma in the same time frame and in the same area was simply renewed may not be known for a while. However, it’s not due to city policy.

The backstory is that Cafe Europa got caught up in politics. The city for whatever reason wanted to remove the man who was leasing the Gillespie Park grill. So the city invented a policy of putting leases out for an RFP. The first time the RFP was advertised, the owner of the grill was the only one who responded. So rather than granting the lease to the only respondent, the city issued a second RFP and found someone else to lease the grill.

It appeared that was the plan for Cafe Europa, but the city went one step further and gave the lease to Greensboro Downtown Parks Inc. (GDPI). The chairman of GDPI board at the time was Cecelia Thompson, who was romantically involved with Assistant City Manager Chris Wilson, who made the decision to give the lease to GDPI.

It’s a pretty sweet deal for GDPI. It gets the lease payments but the city continues to maintain the property, which is the only property in the Cultural Center building managed by GDPI.

If the city had turned over the management of the Cultural Center building to GDPI, that would have made more sense. Whether or not the relationship between Thompson and Wilson had anything to do with this arrangement, it has the appearance of a conflict of interest. It would have been a much better move to get City Council approval. It seems odd that the City Council has to approve a seven-year lease but the lease can be turned over to an independent nonprofit without City Council approval. Perhaps that’s another city policy.

One difference between Cafe Europa and the Gillespie Park grill is that Cafe Europa has a lot of vocal, active supporters that include some members of the City Council. If in fact those involved in creating the RFP process had someone lined up to take over Cafe Europa, the decision was made that the political price would be too high.

Regardless, it’s not a good way to do the city’s business. It’s difficult to find someone who can successfully run a restaurant at any location. According to national figures, 80 percent of new restaurants fail in the first six months. The city found this out with the Gillespie Park grill, where the new restaurant manager the city finagled in there didn’t last a year.

When the city finds a restaurant manager who can make a location work, the smart business move is to renegotiate the lease, not put the whole deal up for grabs.

Looking at the leases provided by the city, what the city ordinarily does is renew the lease with an increase based on the consumer price index. It would actually be a reasonable policy, and the city could save itself a lot of time and trouble, if it kept to that policy.

Parisian Promenade at Bicentennial Garden