The owner of two downtown Keene businesses has defaulted on his lease of a city-owned space, and the city manager asserts he owes more than $9,000 in back rent and costs related to the condition he allegedly left the property in.

Ashley “Ash” Sheehan — the proprietor of Taco Odelay and Modestman Brewing, both on Main Street — signed a two-year lease for the back half of 12 Gilbo Ave., last June. But Sheehan left the space in August, he said. And because he didn’t properly notify the city or terminate his lease, he’s still responsible for the contract terms, according to City Manager Elizabeth A. Dragon.

He hasn’t paid rent for the space since July and owes the city nearly $6,000 for seven months of lease payments, and charges will continue to accrue for every month the space goes without a new tenant, Dragon said.

City staff also allege that, when Sheehan removed his equipment from the site, he did so improperly and caused damage to mechanical and electrical systems. Costs for cleaning and repairs have reached $3,275 so far, Dragon said.

“We will be looking to collect all back lease payments as well as reimbursement for charges that we’ve incurred, whether it be cleaning or repairs in the space for us to be able to re-rent it,” she said.

Legal action would be a last resort, she noted.

Sheehan acknowledged Thursday night that he owes back rent. Regarding the allegations of damage, though, he said he “had professionals paint the space and I had professionals remove the equipment.” He declined to comment further on that topic.

While explaining the circumstances that led to his departure of the space in August, he also conceded that he’s made mistakes.

“I mean honestly, I take most of the accountability. I’m not really blaming them. I feel like I should’ve communicated better,” Sheehan said. “I intend to contact the city ASAP and see what resolution we can come up with.”

Sheehan and a business partner launched Taco Odelay in 2014 in the Gilbo Avenue space. Sheehan kept his lease there when the restaurant moved to Main Street a couple years later.

Dragon said Thursday that he was a great tenant who always paid on time, but toward the end of the prior lease, the space was mostly used for storage.

With his lease set to expire at the end of April 2019, Sheehan asked for a renewal, pitching a plan for a restaurant linked to the Main Street brewery he has since opened. He ultimately signed a two-year lease, effective June 2019, that included two crucial stipulations: that he open a restaurant within 90 days, and keep its restrooms open to the public during business hours — a concession to another group’s request for public bathrooms downtown.

But emails between Sheehan and the city, obtained through a public-records request, show he expressed dissatisfaction less than two months after signing. He told Andy Bohannon, the city’s facilities director, that he “made the mistake” of not letting his attorney review the lease before signing it. Sheehan was also concerned that the bathroom’s equipment couldn’t handle the volume of public traffic, and argued the city should invest in renovations.

Though he initially intended to open a restaurant there, Sheehan said several factors over the summer made him reconsider. The plan was to use the Gilbo Avenue space as a commissary kitchen for a food truck that would serve his brewery, but after buying his truck in August, he realized it had the necessary equipment and he would not need a separate kitchen.

He also said the proposed arts and culture corridor, which was in the early conceptual phase last spring, began to take shape and seemed more likely to affect that building. Though city staff discussed the possibility and included a provision in the lease to terminate the agreement if the premises “are required by [the city] in any development project,” Sheehan said it gradually felt more and more foolish to invest in a space that could be taken over or demolished in a couple of years.

In October, the city’s accounting office sent multiple emails to Sheehan, asking for rent payments for August, September and October.

At a meeting later in October, Sheehan told Bohannon he didn’t plan to stay in the space. Given the food truck confusion, Sheehan said his hope was that the city would let him out of the lease and forgive his back rent, since only a few months had passed and he was opening another downtown business. He said Bohannon was sympathetic and suggested he submit something in writing to the council that explained the situation, though the facilities director didn’t promise anything.

When Sheehan failed to follow up, the city changed the locks on the building Nov. 15.

Records indicate Sheehan ceased written correspondence with city staff after a tense email exchange with Bohannon in late December, when the facilities director alleged the space was damaged and “in a filthy condition” when city staff recovered it. In those emails, Bohannon also accused Sheehan of taking kitchen equipment that belonged to the city. Dragon said the equipment in fact belonged to Sheehan, and the misunderstanding has since been clarified.

Sheehan admitted Thursday that he should have communicated better with city officials and said bluntly that he hasn’t made it the priority it should be.

“I’ve made some mistakes, because it’s hard to navigate all this,” Sheehan said, referring to the hurdles he’s faced in opening his brewery. “So I just wanna make it right.”

Though Sheehan hasn’t paid rent at 12 Gilbo Ave. since July and his agreement mandated that he open a restaurant by Sept. 1, an official notice of default wasn’t sent for another two months. Dragon said the city’s preference wasn’t to end the lease, so staff tried working with Sheehan to help him stay in the space.

Despite the money due to the city, Dragon said she doesn’t regret renewing the lease, noting that Sheehan is an established business owner making significant investments on Main Street.

“I think it was the right thing to do to give him a chance,” she said. “… If I had to do it over again, I would still do it.”

Holding off on enforcement and giving him time to try to resolve it informally was the best decision, she said, “just knowing that he was really under the gun to get the brewery up and running.”

Though the city has spoken to a few prospective tenants for 12 Gilbo Ave., the lack of kitchen equipment has made the space less desirable for many businesses. Dragon said the city has no plans to outfit the suite with new equipment due to the costs.

Sheehan said he wants to rectify the situation as soon as possible.

“I appreciate the five years that the city was my landlord over there, and I’m gonna do everything in my power to make it right.”

Sierra Hubbard can be reached at 355-8546 or at shubbard@keenesentinel.com. Follow her on Twitter at @SierraHubbardKS.