Vita Lounge attorney: West Palm Beach mayor should play by the rules to open Sunset Lounge

I want to respond to Mayor Keith James’s opinion piece, renewing his efforts to deny the management contract for the Sunset Lounge to Vita Lounge, the winner of the request for proposal by vote of the Community Redevelopment Agency.

When the mayor lost the July 2022 CRA vote to award Vita the right to negotiate, he had Vita disqualified and then sought to expedite the award of the RFP to his selected proposer, Mad Room, contending the $30,000 monthly expense to maintain unoccupied Sunset required expedited contracting. The mayor’s violation of non-solicitation rules, however, disqualified Mad Room. After the mayor expended city resources in eight months of litigation, the court decided his disqualification strategy was unlawful, requiring the CRA to negotiate in good faith and awarding Vita $1.2 million in attorney’s fees.

Future of West Palm Beach'sSunset Lounge should hinge on facts, not personal beefs

Having lost in court, the mayor has now orchestrated the violation of the court’s order by hiring a consultant to re-start the already completed RFP and then fabricating objections that the consultant himself cannot justify. Vita obtained judgment in May 2023; however, the CRA did not offer a draft contract until Jan. 4, 2024, only after Vita filed a contempt motion. Thus, the CRA has not been negotiating for nine months, as argued.

When the CRA was ready to forge a new path with Vita, the mayor blocked that path by creating a tie vote to prevent the contract; however, the mayor has no vote on the CRA Board; he can only vote to break a tie, not create one. The mayor’s intransigent opposition to Vita, the winner of the CRA vote, belies the mayor’s assertion that he is a steward of city finances or resources; the Mayor has caused the CRA to incur over $1.2 million in attorney’s fees (not including the CRA’s own fees) and $825,000 in expenses and the Sunset Lounge to sit vacant.

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The mayor is ignoring the RFP, the City’s own consultant, and generally accepted accounting principles. He argues that Vita’s proposal includes only a $50,000 investment from Vita, while requiring the CRA to fund $1.5 million for the opening. The RFP specified a management contract, not a lease or joint venture; as the CRA owns the Sunset Lounge, the RFP specified that the CRA would fund the capital improvements and start up costs. Vita will onlyreceive a management fee and a bonus once the profit target accruing to the CRA is met.

Asserting that the CRA must budget a $5.4 million loss, without off-setting projected revenue, is wrong; GAAP specifies recognizing projected revenue with projected expenses, requiring a shortfall of only $590,000 to be budgeted. In responding to a question from CRA Board Member (Joseph) Peduzzi, the CRA consultant agreed that this shortfall was reasonable; he had negotiated the budget.

Year Two profits of $700,000 will offset Year One losses, which include start up costs of $3.5 million, that will not be incurred in Year Two. Thus, Commissioner Peduzzi exercised financial acuity in voting for Vita.

The mayor purports to base his opinion on “fiscal facts and not human feeling”; his “fiscal facts” are fictions, unsupported by the RFP, GAAP or the CRA consultant. As to his feelings, I will not opine but history shows he has caused the city unnecessary expense and delay in reopening what we can all agree is a community treasure that now lies dormant.

The CRA can only move forward when the mayor stands aside and stops his campaign of depriving Vita of the opportunity to restore the Sunset Lounge to its former glory, a decision already made by the lawful CRA members and upheld by court order. Vita should not have to get another court order.

F. Malcolm Cunningham, Jr., is the attorney for Vita Lounge, LLC.