He signed an agreement, so why is the owner of this popular Biloxi restaurant suing the city?
McElroy's attorney,
"We are asking the court to rule as void that portion of the lease that requires Mickey to pay back to the city the insurance proceeds that he used to rebuild the Harbor House restaurant after it was destroyed by Hurricane Katrina," Hengen said.
City officials disagree.
"Years ago, McElroy's signed a long-term lease to use this city property," said
McElroy went before the
During that time, Hengen said, McElroy continued to pay the
The restaurant was damaged again during Hurricane Nate in October and McElroy paid for the repairs. At the end of the lease in 2040, the building will belong to the city, Hengen said.
The 45-page lawsuit contends that McElroy was in "a desperate financial situation" when terms of the lease were being renegotiated and he had to take what was offered by the city or risk losing his lease on the property.
McElroy built the original restaurant and added onto it several times over the 25 years before Hurricane Katrina. New flood regulations required that he rebuild 29 feet above sea level, which increased costs and provided much better views of the water, the
The
McElroy used the insurance proceeds to rebuild, and Hengen said, "As it stands now he's paying rent but its cost and value are far more than the insurance that he received. And he paid for all of it through loans he is paying back," he said. "So our position is they're being double paid -- the insurance proceeds pay back that is part of the lease and the rent that he's also paying. Not to count the other loan payments that he's making."
Under the amended lease, rent was set at
The lawsuit asks that McElroy not be required to pay the fees for using the insurance proceeds or for deferring the rent for five years, which totals about
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