Last Monday, the City Council struck down a motion to reconsider the failed transfer of a lease necessary to facilitate the $8.5 million sale of the Breeze Inn from current owner Juris Mindenbergs to prospective buyers Elliott Jackson and Toni Strauss. Though owned by Mindenbergs, the 100-room hotel sits on a 1.6-acre parcel of city-owned land under a lease set to expire in 2035. While the sale of the business could proceed regardless of the lease’s status, continued operation would require Council to approve a transfer of the agreement from Mindenbergs to Jackson and Strauss under their company, ZPA, LLC.
The initial denial came at Council’s Jan. 9 meeting amid a flurry of public opposition to the deal, with many Breeze employees appearing to express concerns over Jackson’s plans for the future of the hotel and restaurant. A number of testimonies cited concerns that the Breeze would cease year-round operation, that employees would be mistreated or underpaid or lose benefits.
At the following Council regular session on Jan. 23, Council Member Mike Calhoon brought the matter back for reconsideration, and the dais heard an outpouring of support for the transfer, largely from business owners concerned that denial would constitute a dangerous anti-business precedent for the city. After the motion failed the 5-2 margin required for reconsideration, a visibly angered Jackson took the podium for citizen comments before leaving Council chambers, accompanied by Strauss and the couple’s representative in the sale, Coastal Heritage Properties Broker Ristine Casagranda. After their departure, Council Member Randy Wells introduced a laydown outlining a number of ongoing code noncompliance issues at Jackson’s other businesses, issues that served as the basis for Wells’s original vote against the transfer.
“From ongoing fire and safety failings, for not maintaining fire extinguishers, fire suppression systems, restaurant hood ventilation, emergency exits, proper emergency lighting, and not following building code permit requirements,” Wells said in his closing comments, “even the basic code of maintaining the snow and ice on sidewalks around these locations hasn’t been done consistently if done at all. These issues are not at just one or even two locations, but each location.”
Wells’s complete laydown documenting the infractions can be viewed with the online version of this story on the Journal’s website, www.SewardJournal.com.
On Tuesday, Jackson spoke to the Journal in an effort to publicly address the community’s concerns, including those outlined in the laydown.
“The unfortunate part about this, in my opinion, is we really did not get a chance to be heard,” Jackson said. “Trying to defend yourself in three minutes, and the additional five at the end, which I was a little bit irritated at – it wasn’t the proper way to do this, for the most part.”
Jackson began by explaining his absence from the Jan. 9 meeting, noting that he assumed approval would have been a matter of course.
“We thought this was a regular routine exercise, where the city was just voting on – Do we pay our bills? Do we have good credit? And is it going to be an ongoing concern, being a hotel-restaurant-bar, and stay open year-round?” he said. “All three of those things were a no-brainer to us, so we’ve never had a problem paying the city. We’ve always been on time. We actually have a leased property.”
Jackson explained that he is already a tenant of the city, currently operating the nearby Alaska Seafood Grill under a city-owned lease similar to that of the Breeze Inn. He went on to add that the Grill is open year-round, for reasons he claimed the Breeze Inn would also remain open through the winter.
“We’ve had a lease with the city for quite a while,” he said. “We don’t make money on the Grill during the wintertime. We leave it open because there’s not enough options in Seward to eat in the wintertime. Plus, some of our employees really need the year-round job, so basically, we do it for those two concerns.”
Jackson added that the Breeze’s year-round operation and other employee concerns could not have been addressed in a company-wide forum until the sale had been finalized.
“When you’re buying a business, you can’t go in and talk to the employees, of course, because it’s not your business yet,” he said. “I wish we’d had the opportunity to discuss with the employees, ‘Hey, this is what we’re going to do. This is going to be the changes. We’re not going to change not being open 365 days a year. We’re going to keep the benefits.’ There was just a lot of rumors of how we were going to make these changes, but we did not have permission from Juris to talk to the employees, and that’s unfortunate because a lot of this might have been avoided.”
Foremost among employee concerns, Jackson addressed his plans for the current staff’s future with the hotel.
“If I had to stress one thing, it’s, ‘Hey, you should have given us a chance, because what we really want to do is create a strong community and watch you guys grow alongside with the company.’ There’s a lot of room for advancement with us… You can only grow as much as your employees will allow you to grow, and you have to have your employees grow with you… We have to have good employees that want to grow with us, and that’s extremely important, and the way to do that is literally making employees owners.”
Jackson explained that his long-term exit plan involves leaving the businesses in the hands of employee-owners upon his eventual retirement. Addressing concerns by citizens on Jan. 9 that he could potentially sell all his businesses to a cruise ship company, Jackson expressed a desire to see ownership of all his businesses remain local.
“I can’t emphasize enough that I really don’t want to see large corporations come in on our town,” he said. “I don’t think that’s the spirit of Seward. It needs to stay local.”
Jackson also addressed concerned over his reputation for his past treatment of employees.
“I used to be a hockey coach,” he said. “Hockey players are coached a lot different than employees for the most part. I have done nothing but learn and grow for the last 15 years that I’ve been in business, and if you don’t learn and grow, well, you go out of business… You’ve got to learn and you’ve got to grow, and that’s all there is to it.”
To illustrate his commitment to employees, not just of his businesses, but of other businesses around town, Jackson noted the recent establishment of a 40-unit housing complex he and Strauss recently purchased to shelter up to 160 area workers at peak tourist season.
“We have a housing crisis in Seward,” he said. “The 40-plex has really helped out. We actually did 25 rooms last year for other businesses, and it really helped those businesses house people. It’s also for us, of course, but it was the largest purchase that we’d made up to that point in time, and we knew we had to do it, just because housing is such an issue in Seward. The next stage for us to do is a ten-to-twelve-plex with a two-bedroom, one-bath situation. That’s already in the works because I think our town really needs it. Our biggest challenge, of course, is the land.”
Regarding the past failures to plow his businesses’ sidewalks cited in Council Member Wells’s laydown, Jackson stated that a prior misunderstanding had been corrected, and that he has since secured a private contractor to provide the service in the future. To address the council member’s collected records of ongoing code violations, Strauss interjected.
“Regarding all the fire inspections that were highlighted, it’s disappointing that any follow-up inspections apparently were just ignored,” she said, “because we get inspected every year at every business, and everything has to get repaired within a short timeline, and then they come back and reinspect. If we didn’t pass these, we wouldn’t get our business license. We would get denied for our liquor license. To make it sound like we don’t care about health and safety and we don’t address the issues that are brought up is completely inaccurate.”
Specifically with regard to compliance issues facing the Van Gilder Hotel, Jackson stated that on purchasing the building, he and Strauss inherited many previously-unenforced code infractions from the previous owner, and that bringing the building into code while retaining its historical integrity has been a long process but is now well underway.
“We had to find a historical architect first,” he said. “We basically had to come up with a game plan, worked it out with the city. Now we’re rolling forward and we’re going to make the Van Gilder work, but we’ll probably never turn a profit on it. But it’s a historical piece for the city, and we think we really need that.”
As to the future of the Breeze Inn, Jackson said that plans for a harbor-facing facelift are already underway.
“Our intention is do something that really makes it pop,” he said, “and then the hotel itself we really want to paint, so those two things were in the works. We already have a contractor working on that to get it done if we get the building closed.”
To summarize, Jackson and Strauss said that they’ve always strived to invest in the community, whether through local causes or as an extension of their own businesses, noting that their hope is that, if approved, their purchase of the Breeze Inn will serve as another milestone in their commitment to that investment.
“Elliott and I have worked our businesses super-hard,” Strauss said. “We’ve endured a lot of self-sacrifice. We don’t live like we have money. We live very frugally because all of our funds have gone back into these acquisitions, and now we’re at the point where we’re fortunately at the point where we can buy the Breeze, but that’s not been because anybody’s gifted us anything. We’ve worked hard for it.”
For questions on further plans for the Breeze Inn or any business in the Seward Hospitality Group, write to firstname.lastname@example.org.