MADEIRA BEACH — Fantasy Planet, a retail shop that sells mostly T-shirts and tourist-related items, as well as ice cream and other goods, has been a major tenant at John’s Pass Village for more than 20 years. Its long-term lease agreement with the city expires in September, and commission members had a lively discussion of its renewal at their July 1 workshop. The property’s future as a gift shop in the Village appears anything but certain.

City Manager Jonathan Evans said Fantasy Planet currently pays the city about $114,000 a year, under the terms of the lease. That has not included a payment for utilities, which had not been specifically included in the lease agreement, Evans said.

If the commission decides to renew the lease, Evans said city staff is recommending an annual escalator of the lease payment in line with increasing property values in the area, and including utility costs.

“That sounds like a pretty fair deal,” said Commissioner Doug Andrews. Andrews said any attempt to collect past utility costs, as was also recommended, would be “fruitless.”

Other commission members questioned whether there were better uses for the property, and wanted to look at options.

“There is another option,” said Mayor Maggi Black. “We could consider selling it.” Evans said that would require voter approval, which “could be tough.”

Commissioner John Douthirt said the city’s Comprehensive Plan says nothing about being a landlord, but talks about “continuing to look for opportunities for public land acquisitions, conservation and preservation.”

“If we sell the (Fantasy Planet) property, then took the money and bought a piece of property on the beach, we could use it as a parking lot, and the parking meter revenue would help pay off the debt to buy it,” Douthirt said.

“That would open up the beach and provide more access for the public, rather than another high-rise,” he said. Douthirt noted there were several beachfront properties currently on the market.

Commissioner Deby Weinstein said she would like to see the Fantasy Planet property “turned into green space.” “This is one of the last opportunities to make that possible,” she said.

As to a lease extension, Weinstein said she could go for a two- or three-year lease, with a 5 percent increase in the lease payment.

Andrews wrapped up the discussion by saying he liked Douthirt’s idea of “swapping the (Fantasy Planet) property out for a better property on the beach” that would be turned into a parking lot.

“That would accommodate more tourists. The Fantasy Planet does not draw tourists,” Andrews said.

Fantasy Planet owner Moshe Asyag said he has a right to renew his lease for five years. He also said he would like a 10-year renewal.

“I’ve been there 30 years,” he said. “This is my retirement. I need at least 10 years. But a five-year option is final. It’s part of the contract.”

Attorney Ralf Brookes said the city is not obligated to a five-year lease renewal, as Fantasy Planet owner Asyag claimed. A lease extension would need to have the approval of both Asyag and the commission, Brookes said.

Black said the commission will consider several options for Fantasy Planet, “Tear it down, sell it or continue the lease.”

Evans said he would get a commercial appraisal of the property that could aid the commission in making a decision.