WILMINGTON — Downtown’s Dock Street Oyster Bar closed its doors Saturday evening after 21 years in business amid a public dispute between its owners and landlord over rent.
The dispute offers insight into how certain subsidies offered during the Covid-19 pandemic can butt against the business needs of property owners. Many small business owners across the country have been able to survive because of federal pandemic loans, local grants, and rent deferments.
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One local print shop owner said she may have closed if she wasn’t offered a deferred rent option. On the other hand, property owners face their own cash shortfalls, as more tenants can’t pay monthly bills, or seek delays and reduced rates.
The closure of Dock Street Oyster Bar shows how the economic pressures of the pandemic can affect the landlord-tenant relationship.
In a Friday morning Facebook post, co-owner Steve Maillard said the decision to close came after the building’s owner, Charlie Samos, chose against renewing the lease agreement.
“It is with profound sadness that after almost 22 years and 1.3 million dollars in rent that our Landlord Charles Samos has decided to put us out of our lease at #12 Dock Street,” he wrote in the post. “He also stated he was going to sue us for the rent deduction he willingly gave us in June.”
Hours after the post, Samos said Maillard’s public comment didn’t tell the full story. According to Samos, the original lease, signed in the beginning of 2010 — a year after the investor bought the building — outlined future, periodic rent increases of 3.5% in exchange for a $50,000 contribution toward necessary renovations.
“He backed away from that deal,” Samos said. “And that was around 2010 — now we’re sitting in 2020. During that time, there hasn’t been a single dollar of increase to his rent, not one single dollar, because it’s so difficult to deal with him.”
He sent Port City Daily the original lease and several lease extensions dating back to the original contract, signed in January 2010. The agreement shows the first year’s rate at $4,700, increasing 3.5% per year and hitting $5,390 in January 2014. But it appears Samos never increased the rate; in 2016, he and Maillard signed a two-year extension at the original rate of $4,700 a month.
In 2018, another two-year extension finally increased the rate to $5,160, but this included $4,700 in base rent, plus $460 in monthly flood insurance that Samos said his tenants agreed to pay for.
According to both parties, Samos and the two owners met last June and agreed to a temporary reduction of monthly rent, dropping it from $5,160 to $2,700 to help the restaurant survive the Covid-19 pandemic, which had closed restaurants across the state since mid-March. Both Samos and Maillard said the agreement was not expressed through a written contract, but each provided different interpretations of what was agreed to verbally.
Samos said they agreed to treat the rent deduction as part of a future repayment plan, a move he said is common for landlords and tenants during uncertain times. When business was good again, they could begin repaying the remaining balance, according to Samos.
“That’s total bullshit,” Maillard said of the discussion of a repayment plan. “You can put me on a lie detector on that one.”
Maillard’s Facebook post made the rounds throughout the weekend, attracting hundreds of shares and comments from old customers, many expressing sympathy and sadness because of the closure.
According to Maillard, he hopes to reopen at a different location in the future.
Samos purchased the restaurant’s portion of the two-story brick building in 2009 for $900,000, according to county land records. At that point, Dock Street Oyster Bar was in its 10th year of operation — and in the middle of what would become a 20-year streak winning Encore magazine’s annual “Best Oyster Bar” award.
He was adamant that during the June meeting with his tenants, he made clear the rent reduction was a loan, not a gift.
“I absolutely tell all my tenants: ‘Whatever we agree to is temporary. Whatever I reduce it to, eventually, we gotta figure out a way you can pay me back the difference.’ That’s what I tell them, and that’s what I told [Maillard and his partner],” Samos said.
In October, Maillard wrote in an email to Samos, “[T]hank you for all the help with rent this summer or we wouldn’t have made it this long.”
He said they had gone from pulling in $40,000 in weekly revenue to $40,000 a month, and spent $100,000 over the last year just to stay open.
“At this point, with our lease expiring at the end of October and unless we can come up with a mutually satisfying agreement, we are going to have to vacate,” Maillard wrote.
He outlined two options to remain in business: buying the building from Samos or closing the restaurant from November to mid-March on a reduced or suspended rent.
“There is no way we can survive a winter downtown right now,” Maillard wrote.
Samos said he was willing to listen and work something out, although he was against Maillard’s suggestions.
When they met again the first week of October, Samos agreed to two months of free rent during the upcoming slow winter season, according to both parties. Additionally, Samos said he offered reduced rent for February and March before going back to the original rent of $5,160 in April. Maillard said they could pay $4,200 a month, which Samos confirmed he would consider.
After the meeting, Samos received another email, sent October 2.
“I wanted to thank you for our meeting the other day and really enjoyed our conversation,” Maillard wrote. “We truly appreciate the fact of you being concerned enough to try to keep us in the space. With that being said, I went back and was crunching more numbers and with all the uncertainty of the future, I would like you to consider once the concessions expire to put us in the $3,500 range with the lease.”
“And I said, ‘This guy never knows when to stop,’ Samos said. “He never knows when to step back and think about what we’re trying to do here. So, I said to myself, ‘I need to get rid of this guy.’ You can’t deal with him.”
Ultimately, Samos said the decision to not renew the lease was because, through their relationship, Maillard tried to corner him into making certain decisions.
Maillard strongly disputed this claim. He also said he repeatedly struggled to convince Samos to repair certain issues with the old building.
“The roof leaked the last four to five years,” Maillard said. “We were putting trash cans underneath.”
In an email Maillard sent to Samos sometime in the spring of 2019 — which included a signed lease extension for the amount of $5,160 to be paid monthly until the end of October 2020 — he complained of the building’s condition and argued for a longer lease. He said the restaurant received a score of 92.5 from the county’s health department, the worst score ever received during its 20 years of operation.
“We would love to put money into your building but cannot do that unless we come to an agreement on a longer term lease,” Maillard wrote. “As a business man I am sure you understand this.”
Ultimately, Maillard said he named his landlord in the Facebook post when announcing the closure last week because he wanted to be honest with longtime customers.
“I’m not looking for a battle, but I’m also going to tell the truth … Downtown’s dying. It’s going to be a ghost town this time next year. We will not be the only person to fall downtown,” Maillard predicted.
As for any possible litigation in the future, Samos at first said he was not aiming to sue his tenant.
“But I will ask him to pay the rent he owes,” Samos said.
He paused and added, “Let’s put it this way: I’d have to say that’s up in the air. I’d rather not say something I’m unsure of.”