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The Reef Cape Coral LLC was given until Friday to pay more than $1.4 million or the city may elect to terminate its agreement for the management and operation of the Jaycee Park concession area and food truck court without further notice.
The notice of default, sent by City Attorney Aleksandr Boksner and dated Tuesday, asks for the outstanding balance owed the city promptly, noting that failure to pay the total owed will result in the city proceeding with "all of its available remedies" provided in the contract.
"With this letter they have until 5 p.m. Friday to come up with this money and we will see," Councilmember Laurie Lehmann said Thursday morning. "We will see if in fact they do. I know they have three letters of intent from three different lenders to come up with this money. Not only do they have to come up with the $1.3 million, but also all the fines and interest, which is another $66,000, and hopefully they will."
She said if they do not pay the money by Friday she believes the contract is legally terminated.
"I am sure Council is going to have to get involved, to what extent I don't know," Lehmann said.
Cape Coral City Council next meets April 2. She said it's about taking it one step at a time and waiting to see what happens.
"Hopefully it will all go as it needs to and work itself out and everything will be cool," Lehmann said.
The city attorney's office sent the letter to The Reef Cape Coral LLC -- Stephen Soloway and Michael Amato -- on March 18 due to their "default for failure to make committed investment upfront payment and opportunity to cure" for Jaycee Park.
Soloway said he received the correspondence from the city via email Thursday but had not yet received the letter.
Regarding the city deadline he said, "I don't know if we've worked past it. I don't that we haven't, either."
As to meeting it he added, "It's not humanly possible."
Soloway said he and Amato will be at next Council meeting to address any available options.
The city letter is intended to put the LLC, with which it is partnering for the commercial component of the redevelopment of the park at the end of Beach Parkway, on legal notice.
"This correspondence shall serve as formal notification, pursuant to Section 19.2 of the Concessionaire Agreement between the City of Cape Coal, Florida, and The Reef Cape Coral LLC for management and operation of Jaycee Park concession area and food truck court, that The Reef Cape Coral LLC is in default of its contractual obligations under the same for failure to remit the committed investment upfront payment of $1,370,488, plus late charges and interest, as of the date on this letter," City Attorney Aleksandr Boksner's letter states.
The letter also states that The Reef Cape Coral LLC was legally required to make the upfront payment "no later than 60 days following the complete execution of the concessionaire agreement and the related comprehensive agreement for the delivery of the Jaycee Park improvements between the city and Fortress Secured, LLC. It must be without dispute that the agreements were formally executed on Sept. 10, 2024, and the 60-day period for remitting the upfront payment expired on Nov. 9, 2024."
The city acknowledged The Reef Cape Coral LLC letter around Dec. 17, 2024 that outlined many concerns over the "significant discussion about potential changes to the park project plans" by some of the city council causing "uncertainties and substantial risks to The Reef Cape Coral LLC's investment in this project," resulting in the request of a 90-day extension of the upfront payment and acknowledging the late fees and penalties.
"While the city did not specifically respond to your Dec. 17, 2024, correspondence, the mayor and city council reaffirmed the city's commitment to fulfilling its obligation under the comprehensive agreement and the concessionaire agreement, which action was formally accomplished with the ratification of Resolution 40-25, on or about Jan. 22, 2025," the city letter stated. "More importantly, even recognizing the 90-day extension that was requested through the Dec. 17, 2024, correspondence to the city, that period formally expired on March 17, 2025."
The total amount owed is $1,370,488 plus $50 per day in late fees and interest at 18% per annum – $66,912.29.
Councilmember Joseph Kilraine, who has advocated for the city to allow the process to play out so as to make sure it is on solid legal footing, said that has now reached the end point: If the funds are not remitted by 5 p.m. Friday, the contract is null and void.
"I understand the importance of a healthy balance of doing business in the city, most importantly keeping the city and residents protected from potential costly legal jeopardy," Kilraine said.
Adhering to the terms of the contract is important, both as a message for others entering into agreements with the city and for the residents, he said, adding in this case he believes the city has lost nothing.
"Under the current economic uncertainty I believe this is a win for the city and for the folks who have concern over the Jaycee Park project,” Kilraine said.
The letter concludes with "as set forth in Section 19.2 of the concessionaire agreement, the city may elect, without further notice or demand, to terminate the concessionaire agreement if the amounts due and owing are not paid within three days after this written notification of default. Should there be a failure to remit the total outstanding balance owed to the city, the city shall proceed with all of its available remedies as set forth and identified within the concessionaire agreement."
-- Reporter CJ Haddad contributed to this story.
Editor’s note: This story has been updated to include comment from Councilmember Kilraine received after the deadline for The Breeze print edition.