A longterm operating proposal for the city’s overnight homeless shelter was dead on arrival Tuesday, pulled from the agenda by Key West City Manager Jim Scholl before the city commission could weigh in.

The Southernmost Homeless Assistance League’s (SHAL’s) proposal to construct a new Keys Overnight Temporary Shelter and continue operating the facility for 10 years on a $1-per-year lease was pulled because a lending agreement in the lease would’ve put the city in an “inappropriate” position, Scholl said.

Part of the agreement stipulated the city would provide the collateral needed for SHAL to obtain a $1.1 million construction loan, a move that would’ve required a public referendum and other approvals to be deemed legal, Scholl said.

“We have restrictions as a municipal government that are different than a lot of…other bilateral contractual agreements,” he said.

Scholl recommended the city split the construction and operation aspects of the project and solicit public bids for the construction of a new facility, which was generally supported by the board although no official vote was taken.

“We need to separate the project into individual parts and find a way to move forward,” Scholl said.

Putting the project out to public bid would provide needed government transparency, Commissioner Billy Wardlow said.

“I, for one, think it should go out for bids … just like any other city project,” he said. “What we’re doing right now, I don’t believe there’s transparency.”

Plans remain in place to construct the new facility on city property at the former Easter Seals site, as the city remains under obligation to move the current KOTS from its current location.

A 2013 settlement agreement from a lawsuit brought by nearby condo owners at Sunset Marina stipulated the city make “a good faith effort” to move the facility and Monroe County Sheriff Rick Ramsey has repeatedly expressed his desire for the shelter to be moved away from the neighboring county jail and sheriff’s office.

Commissioners Sam Kaufman and Margaret Romero brought up several issues with the proposal despite its tabling, including questions over capacity, on-site services provided and funding.

The proposal requested $745,000 in funding from the city for fiscal year 2017-18, up more than $300,000 from its 2016 budget.

Kaufman recommended combining the construction with an upcoming affordable housing project slated for a neighboring parcel in an effort to reduce costs.

“The costs of the construction may actually be less if all (the construction) is done as one project,” he said.

The city managing operations of the facility was also brought up by Kaufman and subsequently panned by Mayor Craig Cates and Commissioner Jimmy Weekley.

It would be an “absolute nightmare” for the city to manage KOTS due to the expertise needed and added payroll costs associated with staffing the facility, Cates said.

City staff will begin drafting requests for public proposals to construct the facility, Scholl said.

The board also approved the first reading of an ordinance that invokes the “zoning in progress doctrine” to place a 270 day moratorium on medical marijuana activities within city limits.

The moratorium affects “dispensing facilities and medical cannabis activities” and will allow the Key West Planning Board time to hold public hearings and draft new land use regulations on the growing, cultivation, dispensing and distribution of medical cannabis, according to interim Planning Director Patrick Wright.

The city will not accept applications for business tax receipts, licenses or building permits for dispensing facilities during the moratorium, according to city documents.

The moratorium will not restrict authorized doctors from prescribing medical cannabis, Assistant City Attorney George Wallace said.

In November, state voters approved a state constitutional amendment allowing doctors to prescribe marijuana for medical purposes. The amendment went into effect Jan. 3 and the state Legislature has six months to promulgate rules and nine months to implement them.

Other Keys municipalities have issued similar moratoriums, including Monroe County and the city of Marathon.

The ordinance was unanimously approved but will require a second reading at the next board meeting before taking effect.

sunger@keysnews.com