Ever the alert businessman, Penrod saw the storm clouds gathering and made preparations. In December 1988 he opened the doors to his new club, Penrod's on the Beach. But this time it was Miami Beach, and the club was a mega-monster -- a four-million-dollar, three-story-tall party complex complete with multiple bars, swimming pool, and direct access to the beach at the foot of Ocean Drive in the city's South Pointe neighborhood.
Three years earlier Penrod had struck a deal with Miami Beach, which owns the property, officially designated as parkland. He would build the structures in exchange for a 40-year lease. The city, in turn, would receive a share of his gross revenues -- three-and-a-half percent of everything sold inside the club and up to twenty percent of the money generated outdoors on the sand -- from the club's back door to water's edge. (The latter consisted of food and beverage sales and rentals of chairs, umbrellas, and other beach gear.)
Almost immediately the club was a hit, and just as quickly it attracted a small army of enemies among nearby residents who could handle the neighborhood's crackheads and petty thieves but who were not ready for Penrod's rowdy crowds, loads of beer, and really loud music.
Nearly fifteen years later South Pointe has been transformed. Gone are the crackheads, pushed out by developers who built skyscraping condominiums and sold them to wealthy new residents who now live within easy earshot of Penrod's. The club has also been transformed. Gone are the beerheads and wet T-shirt contests. They've been replaced by the upscale Pearl restaurant, the casually glamorous Nikki Beach Club, and the moneyed young patrons drawn to both, including a healthy smattering of A-list celebrities. (The music is still loud, but now it's DJs instead of rock bands.)
As part of this metamorphosis from cheese to chic, which began slowly in 1997 and hit full stride in the last three years, Penrod did extensive remodeling, and not just to his building's interior. The sandy area at the rear (between the club and the dunes leading to the beach) was transformed from open space dotted with volleyball courts and beach chairs into Nikki Beach Club, enclosed by lush landscaping and a fence, and featuring a unique assemblage of nightclub amenities: chickee huts, lounging beds, full-size Indian teepees, and free-standing bars placed strategically in the sand.
Nikki Beach, as the club is known to habitués, has become quite popular, especially on Sundays, when the party begins in the afternoon and swells with crowds throughout the night and into the early-morning hours. In Nikki Beach, Jack Penrod and his family have struck South Beach gold. Unfortunately for them, it has been illegal from the first day.
It may not be shocking to learn that Miami Beach city bureaucrats haven't frequented Nikki Beach Club, which probably explains why they only recently learned that its mere existence violates numerous provisions of Penrod's lease. The fence, the thick landscaping, the chickee huts and teepees, the Sunday-evening doormen and admission charge, the very idea of an outdoor nightclub -- all of it was illegal and all of it took city administrators by surprise. They had no idea what Penrod had been up to, despite Nikki Beach's prominence.
It was bad enough that parkland had been enclosed and converted to private use, but the fact that it was now a nightclub -- with liquor, music, dancing, and crowds -- made matters worse. South Pointe residents' anger over excessive noise from outdoor clubs had recently prompted the city commission to adopt an ordinance prohibiting any new outdoor venues south of Fifth Street, a move fiercely opposed by the Beach's entertainment industry.
So Penrod now finds himself in a pickle. If he wants to continue operating Nikki Beach, and if the city wants to continue benefiting from its income, the lease agreement must be amended. But because it is parkland, the city's charter requires voter approval. That prospect would be sure to unleash the wrath of Penrod's condo-dwelling neighbors. Nonetheless he is pushing to have the city commission, at its July 30 meeting, approve a measure that would appear on the November ballot.
Jack Penrod declined comment, referring questions to his lawyer, Ronald Fieldstone, who boasts that the unauthorized club is a gem. "From an aesthetic point of view, Nikki looks awesome and is very appropriate for the area," he says, adding that relatively few noise complaints have been leveled against his client.
City Manager Jorge Gonzalez acknowledges that he learned of Penrod's outdoor remodeling only this past September. "Over the years, Penrod has been allowed to use the area behind his building," he says. "He's planted all these trees, beautified the landscape, put in a nice walkway. All of a sudden this doesn't look like a public park. It looks like a private establishment."
According to Gonzalez, even if voters approve a new lease that allows Penrod to continue operating Nikki Beach, he'll have to make some substantial adjustments. For one, the business will have to change from nightclub to restaurant, in compliance with the recently passed ordinance banning new outdoor nightclubs throughout South Pointe. "What does that do to the viability of Nikki Beach?" Gonzalez asks rhetorically. "That is something Penrod has to figure out."
In addition, Penrod should expect an increase in the city's cut of his revenues. "Penrod would like to give us three-and-a-half percent [from Nikki Beach]," Gonzalez says. "I would like fifteen. So we need to figure out a number in between -- maybe seven or eight percent." In the meantime Gonzalez has ordered Penrod to remove the fence, portions of the landscaping, and other objects until the issue is resolved. "He's agreed to do that," the manager says. (A recent inspection of Nikki Beach suggests that Penrod has yet to heed the order.)
So why didn't the city simply shut down the illegal business? "Under the letter of the law, one might argue that it should be closed down," Gonzalez admits. "But our approach was to tell him what he needs to do in order to stay open." And, of course, to continue pumping money into the city treasury.
