Casino Dock Café’s future is still uncertain after current owners backed out of previous negotiations.
AVALON — Catalina Island’s sole municipality put out a call for bids to interested parties capable of building a new restaurant at the local fuel dock after the original vendor withdrew.
Avalon city officials published a Request for Proposals (RFP) on March 10, hoping to attract a vendor to take over the responsibility of leasing, constructing and operating a restaurant on the pier in Avalon. Vendor bids must be submitted by April 14, according to the RFP.
The RFP follows the Armstrong’s retreat from building a new Casino Dock Café. Russ and Jenny Armstrong, owners of the café, were negotiating lease terms with the city in October 2016 following a temporary closure due to renovations. The Armstrongs decided to back away from negotiations when then realized abiding by the city’s terms was not worth the financial risk.
“They want someone to build the building and then start paying top-line rent, triple the lease. It’s ludicrous. I have never heard of that before. I don’t know of any businesses that build a building for the landlord and then start paying rent on it,” Russ Armstrong told The Log.
Capt. Alison Osinski, a boater, business owner and resident of Avalon, agrees with the Armstrongs.
“If you were a business person, why on Earth would you sign an agreement on that, to be responsible for building the building and pay so much for rent? It was a terrible deal. If I were the Armstrongs I wouldn’t have taken that deal either. It was smart of them to say no,” Osinski stated. “I certainly hope that Jenny and Russ come back, because we liked their restaurant.”
The challenge, according to Russ Armstrong, is getting Avalon officials to understand the financial hardship of paying maximum rent in addition to financing construction of the café.
“It’s been a real challenge dealing with the city,” Russ Armstrong stated. “I am not ashamed to say that I think that part of the problem with the city is that I don’t think that the city council fully understands how business operates. I think they’re under the impression that you have a business, a restaurant, and the money is just rolling your way. I just don’t think they understand the overhead and the challenges of owning a business.
“I feel the new city manager has a thorough understanding of business and how business works and the margins. I feel that the city manager thinks that it’s not exactly equitable to ask the tenant to build the building. The city manager, I think, he is in our court but he doesn’t get to vote,” Russ Armstrong continued.
Osinski had a different perspective on the situation with the city.
“I know part of this is the city has got a huge cost with this as they have got to pay the Island Company. The Island Company owns the land that it’s attached to and charges enormous amount of money,” Osinski stated. “I don’t think a lot of people are aware of that.
“We all know who the greedy party really is. It’s the Island Company. If they want these things to succeed, they really got to be helping the city more,” Osinski continued.
The cost of construction is just too high for the city’s budget, as The Log previously reported.
“The decision to have the lessee pay for the building was made prior to my arrival. I assume that the City Council did not believe that funds were available to do so,” Avalon’s City Manager David Jinkens told The Log. “In addition, if the city did so the cost of the building would increase I am told by 30 [percent] because of the requirement that the city pay prevailing wages. The city of Avalon does not have funds in its existing budget to pay this cost.”
“The lease for a small piece of property is $50,000 in the first year rising to above $130,000 in five years. I understand that the city’s previous lease payment before the dock and fuel station was rebuilt was approximately $25,000 annually,” Jinkens answered when The Log inquired about how much the city has to pay the Island Company.
Despite not being able to come to an agreement with the city, the Armstrongs are still planning to submit an RFP.
“We are fighting for the Casino Dock,” Russ Armstrong stated. “We are participating in the RFP…it will not include building the building for the city. It is a requirement [in the city’s RFP], but we are going to participate in it anyhow. I am not convinced they will find someone to build a building for them with no way to recoup the building part of the investment.”
The RFP states a competent vendor will be expected to pay for the construction of the building as well as sign a 15-year lease with two 5-year options at a minimum cost of $4,000 per month or 8 percent of gross receipts (whichever is higher).
“The space to be leased both inside and outside the restaurant is approximately 2,000 square feet. The lessor will be required to build and pay for the building shell and make interior improvements at his/her cost and convey title to the building shell to the City upon its completion,” the RFP states.
Three candidates would be selected for an interview with city officials; the interviews will be conducted the week of April 21, according to the RFP.
Avalon city staff hopes to have a vendor to begin work by May.
Interestingly enough, the Armstrongs are losing out on another dining establishment. The lease they have on Portofino was not renewed, with the restaurant scheduled to shut down in October.