Morphing from fading police building into a brewpub or
restaurant may be in the cards after all for the 1960s former bank
building on Monterey Road and West Main Avenue.
Morphing from fading police building into a brewpub or restaurant may be in the cards after all for the 1960s former bank building on Monterey Road and West Main Avenue.
City staff has recommended that, when the subject returns at this Wednesday’s council meeting, El Toro Brewing Co. be selected to enter into a 120-day exclusive right to negotiate (ERN) and must meet key milestones for performance.
Council could choose to follow the recommendation; it could decide that a competing proposal from Page Holdings has a better chance for long-term success or it could choose neither and go back to the drawing board and see what other options present themselves.
El Toro proposes a restaurant where beer – and soft drinks – are brewed on site, with a stage, live bands, TVs and games; Page proposes a quieter, family-directed restaurant with a beer focus.
“The city may want to slow down here and take another look at the options,” Rick Page said.
Rich Bergen, a co-owner of downtown’s Rosy’s at the Beach, objected Wednesday to the council considering giving the building away, a rumor reported in last Tuesday’s Times, and suggested that it be sold to a commercial developer for retail space.
“This playing field is not even,” Bergen said. “We want to keep an eye on this.”
Bergen later presented council members with a list of shops and stores he thought would enhance the downtown. That list included attractive high-end stores such as Sur La Table and Williams-Sonoma (cookware stores), Papyrus, Trader Joe’s, The Gap and Baby Gap and others presently no closer than Los Gatos.
Councilwoman Hedy Chang weighed in on what selling the building for actual money might mean.
“We may need that money to help pay for the library,” said Chang. Council is currently looking high and low to find an additional $8 million or so to fund a new library and, as RDA money, the project’s price could be added to that fund.
Both Geno Acevedo for El Toro and Page for Page Holdings presented separate concepts and broad financial arrangements to the City Council last Wednesday, and both offered less for the building than council had originally hoped, Acevedo, $650,000 and Page, from no money to $500,000 depending on other arrangements. A $150,000 figure mentioned as the Acevedo offer in the Tuesday, Jan. 13 edition of The Times was incorrect.
City staff had hoped for $1 million.
The staff recommendation, written by Garrett Toy, director of Business Assistance and Housing Services (BAHS), edges council toward El Toro and entering into an Exclusive Right to Negotiate (ERN) agreement with some fairly rigorous milestones to meet.
El Toro estimates the reconstruction costs to be $1.2 million, with a total of $1.8 million, including land/building purchase price and a contingency.
“Failure to meet the key milestones would result in the termination of the ERN,” Toy’s report said.
Acevedo said if costs get too high he would look into buying used restaurant equipment, something he has already started to do as a matter of choice. The brewer said he looks forward to bidding on brewing and restaurant equipment Jan. 26, when the now-closed Stoddard’s brew pub in Campbell goes on the auction block.
“The possible cost differences (according to architect Reid Lerner, who did the original reconstruction estimates) are in the tens of thousands, not the hundreds of thousands,” Acevedo said. “And they should be within the cushion of contingency.”
Page, a city Parks and Recreation commissioner who planned to lease the renovated building to three “brewmeisters”, Ron Erskine and Craig Kennedy of Coast Range Brewery and Bob Stoddard of Stoddard’s Brewpub in Sunnyvale and formerly Campbell, said he would need to spend $2.6 million in reconstruction costs and offered a series of three options, with and without RDA assistance.
Whatever price the city gets for the building will not help the looming $800,000 gap between income and outgo in the 2004-05 city general fund budget, but it would help the Redevelopment Agency, according to City Manager Ed Tewes.
“The building is owned by the RDA and any money from the sale would go to the agency,” Tewes said Monday.
The two funds cannot be mingled.
Page said the council could, of course, sell the 1960s building at Monterey Road and West Main Avenue for commercial space and bring more money into the city treasury but that would stray from the council’s vision for the downtown.
“This proposal realizes the downtown Vision/Redevelopment plan,” Page said. Acevedo agreed.
Councilman Greg Sellers said he was leery of giving the building away.
“The public will ask us why not why we chose a particular concept,” Sellers said, “but why we took a city asset and took that direction. But we still want to ensure long-term success.”
Acevedo said Monday that he was pleased with the staff’s decision (assuming that council agrees with the report).
“We were pretty confident all along,” Acevedo said. “There were times when we got frustrated but I think it will happen.”
Page said he took the news calmly and is happy for the Acevedos.
“I wish Geno and Cindy all the best,” Page said on Monday. But he worries, along with city staff, that El Toro’s renovation numbers don’t add up. He spent the weekend going over his numbers again and doesn’t see where he could offer more.
“There’s a serious imbalance between the cost of improvement and the commercial rental rate in Morgan Hill,” he said, explaining why he had to offer so little for the building. “But I think the milestones (to be imposed) make good public stewardship.”
Page said that the building’s renovation and upgrade would cost so much that the end result would be worth less than purchase and renovation costs – and no bank would offer a loan large enough to satisfy the city’s estimated value, said to be $1 million.
Acevedo said, if El Toro gets the contract, and if he gains control of the building by June or July, the brewpub should be open, he hopes, by November or December of this year. While he was the general contractor on the original brewery on Hill Road, he would not fill those shoes in this new project.
“But I’ll be involved,” he said.
“Whichever project they choose, they can’t fail,” Page said Monday. “That corner is so important to the downtown. This project sends such a huge message to future franchises who might want to locate downtown. The city should maximize their chances for success.
The brewpub issue is last on the council’s agenda for the Wednesday meeting that starts at 7 p.m. The meeting will be broadcast live on cable Channel 17. Council chambers are at City Hall, 17555 Peak Ave. Details: 779-7271.
