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Agreement reached on waterfront restaurant; Set to open next spring inside Naval Park

A full-service restaurant is set to open on the city's waterfront next spring, nine months after the partners behind the project were prepared to welcome customers.

Partners Michael Shatzel and Jason Davidson plan to open their still-unnamed dining establishment inside the Buffalo & Erie County Naval and Military Park by next April.

The Erie Canal Harbor Development Corp. would spend $200,000 in state funds to build the restaurant, and the partners would invest up to $100,000 on tables, chairs and other items.

"It's exciting being the first. And location, location, location is the key to a successful restaurant, and I don't think you can ask for anything better than this," Shatzel said at a news conference held Friday afternoon at the museum to announce the restaurant deal.

Mayor Byron W. Brown, the restaurant partners and officials from the museum and the development corporation reached the agreement following weeks of negotiations. It still must be approved by the Common Council.

The delay in opening the restaurant, long desired by Erie Canal Harbor visitors, came after Brown raised objections over how to build and finance a restaurant at the Naval Park.

"Complicated transaction -- a lot of moving parts -- but everyone was committed to making sure that this worked," Brown said.

Shatzel owns Cole's Restaurant and the Blue Monk "gastropub," and Davidson owns Waterline Cafe and is part-owner of Fables Cafe in the Central Library.

The partners haven't picked out a name, but Shatzel said the restaurant will have a nautical theme that fits its waterfront location.

It will have 20 to 25 employees to start, with prices of $12 to $17 for an entree that place it between the low-cost Hatch Restaurant and the upscale Templeton Landing, he said.

The restaurant will be open year-round, with 40 to 50 seats.

They hope to open by the end of the 2011-12 Sabres season, preferably by early April.

Shatzel acknowledged it will be harder to bring customers to the waterfront in the colder months, but he does hope to draw in Sabres fans and employees of nearby businesses.

"Winter's going to be an obstacle for us, but I'm pretty positive we will beat it and be successful," Shatzel said.

Shatzel and Davidson were one of three vendors to express interest earlier this year in building a restaurant at the museum.

Officials at the cash-strapped Naval Park thought a restaurant would provide a "long-awaited revenue stream" for the museum, as Chairman Donald Alessi put it.

The downtown waterfront has hot dog and hamburger stands, including one that opened this season, but no full-service restaurant.

Shatzel and Davidson were the only one of the three vendors who responded to a request for proposals from the Naval Park who said they could meet the July 1 opening day target.

The development corporation was expected in April to approve spending $200,000 on the restaurant, and Shatzel and Davidson were ready to begin construction by May 1.

However, Brown, who wasn't involved in the request for proposals process, put the brakes on the project.

He said he wanted to protect the interests of the city's taxpayers, who cover the $130,000 annual utility bill at the nonprofit museum. The Naval Park also doesn't pay rent to the city.

The Buffalo News in late June reported on the restaurant standoff, which drew criticism from Rep. Brian Higgins, D-Buffalo, among others.

In the following weeks, the various agencies and the restaurant partners forged an agreement on a host of financial and logistical issues.

"It may have taken a little bit longer than everyone hoped, but we got it done," Alessi said.

The Naval Park agreed to give up a section of its first-floor exhibit space for the kitchen and dining space for the restaurant, which also will take over an outdoor seating area behind the museum.

Under the agreement, the Naval Park will receive base rent and a percentage of the gross revenue generated by the restaurant. Later, the city and, eventually, the development corporation, will begin receiving a share of those revenues.

The $200,000 from the development corporation will pay for construction of the restaurant space, kitchen equipment and related costs, Shatzel said.

The restaurant partners will pay for everything from silverware to bar stools, a cost Shatzel estimated at $60,000 to $100,000, plus the establishment's utilities.

Officials at Friday's news conference defended the public funding the project will receive, saying it goes toward one-time capital costs while the restaurant owners must shoulder the ongoing operational costs.

"We're just trying to be a catalyst to help them get started because they are taking this risk, they are pioneers," said Jordan Levy, chairman of the development corporation.

The restaurant is subleasing the space from the Naval Park, which leases the museum from the city. Under the terms of the sublease, the city owns the restaurant equipment.

If the restaurant goes under, the city would retain the equipment and be able to invite another vendor to take over the space, Brown said.

"This has been structured in such a way that it protects all parties," the mayor said.

The sublease is for three years with an option for a five-year extension. The Common Council and the development corporation board still must sign off on the agreement.