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Proposed Resolution Terminating Lease With Hernando Beach Marine Group, Inc., for Real Property Located at 4340 Calienta Street, Hernando Beach, and Electing to Retake Possession Thereof
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BRIEF OVERVIEW
Factual Background
As the County Commission is aware, Hernando County (the “County”) leases to the Hernando Beach Marine Group, Inc. (HBMG or the Marine Group), approximately 1.8-acres of land that is located at 4340 Calienta Street, Hernando Beach, Florida 34607-3101 (Parcel #: R07-423-17-0000-0020-0020; Parcel Key: 594654) (the “Parcel”). The County and the Marine Group executed into the current lease agreement on March 1, 1982 (the “Lease”). The Marine Group then constructed a two-story building on the Parcel and sublet a portion of the property upon which its subtenant constructed a telecommunications tower. The parties subsequently amended the Lease twice, but neither of those amendments are germane to this agenda item.
Paragraph 3(C) of the Lease requires HBMG to “maintain in effect throughout the term of this lease comprehensive public liability insurance covering the premises and its appurtenances in the amount of $100,000 for bodily injury of any one person, $100,000 for bodily injury in one occurrence and property damage insurance in the amount of $25,000. Such insurance shall specifically insure Lessee against all liability imposed by law, and shall insure both Lessor and Lessee.”
In the early 2020's disputes arose between the County and the Marine Group on several issues related to the Lease. Amongst those issues was the Marine Group’s failure to maintain insurance on its leasehold as required by Paragraph 3(C) of the Lease.
The County Commission considered how it wished to resolve its ongoing disputes with the Marine Group over the Lease during its meeting of February 28, 2023. After the Commissioners reviewed its available options, Commissioner Hawkins made a motion that proposed a settlement which included a requirement that the Marine Group obtain the required insurance, and then provide the County’s Risk Manager with a certificate of insurance, on or before midnight on May 30, 2023. The County Commission then approved Commissioner Hawkins’ motion unanimously.
The Marine Group responded by filing a lawsuit against the County on June 27, 2023, in which it sought, amongst other relief, a declaration that it was no longer required to insure its leasehold. The court, however, entered an order on October 16, 2023, in which it completely dismissed the Marine Group’s lawsuit against the County.
On October 19, 2023, then-Assistant County Attorney Kyle Benda provided the Marine Group with written notice that it was in breach of Paragraph 3(C) of the Lease as it had failed to maintain the required insurance policy, and notified the Marine Group that it could cure the breach by providing the County with a new certificate of insurance within 120 days of the letter.
The Marine Group, instead of curing its breaches of the Lease, appealed Judge Vergara’s ruling to the Fifth District Court of Appeal. The 120-day cure period ended on February 16, 2024.
Then-Assistant County Attorney Benda, in a letter dated February 23, 2024, again notified the Marine Group that it was still in breach of Paragraph 3(C)’s insurance requirement and provided the Marine Group with another 120 days in which it could cure the breach. This second cure period expired on June 22, 2024.
The Fifth DCA affirmed Judge Vergara’s ruling in favor of the County in an opinion dated June 28, 2024.
The Marine Group is still in breach of Paragraph 3(C)’s insurance requirement.
Termination of the Lease
Paragraph 3(D) of the Lease states, in pertinent part, that “if there is default on the part of Lessee in the performance or observance of any of the ... covenants or agreements hereof to be observed and performed by him [sic], and such default continues for a period of 120 days after written notice of such default being given by Lessor to Lessee ... Lessor at any time thereafter shall without demand or notice, which are hereby waived, have full right, at his [sic] election on 30 days' notice to enter on the premises and take immediate possession thereof .. Thereupon, from the time of such entry, this lease and all rights herein granted shall become void to all intents and purposes whatsoever, and all improvements made on the premises shall be forfeited to Lessor, without compensation therefor to Lessee."
The proposed resolution invokes Paragraph 3(D) by immediately terminating the Lease and notifying the Marine Group that it has 30 days in which to vacate the premises.
FINANCIAL IMPACT
Matter of policy.
LEGAL NOTE
The Board has the authority to adopt the proposed resolution pursuant to Fla. Stat. § 125.01.
recommendation
RECOMMENDATION
It is recommended that the Board approve and authorize the Chairperson’s signature on the attached proposed resolution.