The city of Rye is appealing a ruling that gave tax-exempt status to a beachfront restaurant on public land in Rye Town Park.
The city is heading to the state Supreme Court”™s appellate division looking to overturn a lower court”™s June 2013 ruling that said Seaside Johnnie”™s restaurant should be taken back off Rye”™s tax rolls since it is on parkland and offers a public use.
Seaside, owned by the company Starfish Grille Inc., opened in 2000 but operated tax-exempt until 2010 when the city”™s assessor revoked its tax-free status and began issuing annual property tax bills on the basis the restaurant was a private, for-profit enterprise.
The case has pitted the city against Rye Town, a separate municipality sharing the same name. The town and city jointly own Rye Town Park, which is run by a commission that includes elected officials from both municipalities. Seaside”™s lease says that the owners of the property, not the lessee, are responsible for any taxes on the property. By taxing the property, the city was effectively putting itself on the hook for a portion of the restaurant”™s tax bills.
The park commission approved Seaside”™s lease, which runs through 2016, and also has oversight over aspects of the operation such as menu pricing and uniform approval.
The restaurant is paying just under $100,000 a year as part of the deal to operate the restaurant and two concession stands in the park. It also has been offering catering services, a fact that the city believes strengthens the argument the restaurant does not offer a public benefit.
The city filed its appeal Jan. 23 and the town filed a response last week. The appellate court is expected to schedule oral arguments in the spring or early summer, Town Attorney Paul Noto said.
