Café Campesino wants to stay, or sell if it can’t, but the city won’t allow either

The trouble has been trying to make such a labor-intensive product profitable enough to do more than just eke out a living. As a kiosk, the café’s lease is with the Santa Cruz Redevelopment Agency (RDA), a subsection of the city government that takes in its own revenues for the purpose of attracting and maintaining a lively business sector. The strings attached to kiosks are that they stay open as much as possible throughout the year, and offer something creative and unique. While Campesino has the second requirement nailed, they have taken some unauthorized time off, most recently to tinker with their business plan in order to cut some costs without sacrificing quality. They cleared a three-week break in summer 2007, but wound up taking four weeks to make changes. That break yielded a notice of default on December 6, 2007, from Richard Wilson, Santa Cruz city manager.

Before taking this break, the owners also quietly explored an option to sell the business, with full knowledge of the RDA. In the default letter, Wilson noted, “You have discussed the option of selling Café Campesino to allow you to move on to other endeavors. As long as the proposed buyer/tenant meets the standard criteria and obtains approval from the city, this option would be considered and recommended for approval.”

The exploration of a sale was also spurred by a letter from the RDA’s redevelopment manager Marty Ackerman (who sometimes serves as a sort of business consultant to city lessees) dated Aug. 15, 2007, in which she stated, “Unless they are able to radically change the food they serve, I don’t see that they can survive, and I believe the benefit to them of a longer lease will be the ability to ‘sell’ it to a new tenant … the city is not obligated to put them in that position.”

Nervous about the lease default and the letter from Ackerman, Torres and Levin made their attempt to sell more public, figuring that their beloved business’s days were numbered. With nothing but marginal profit to show for their six years of hard work, the pair hoped to at least recoup the $40,000 they invested in purchasing the lease from the previous kiosk tenant, and perhaps a little extra for the costs they bore in refurbishing the formerly shabby kiosk with a sink, new floor, custom cabinets, extra storage, and track lighting.

Lease sales are not unusual with kiosks, and the pair even received tacit approval to explore a sale from Julie Hendee of the RDA in a March 31, 2008 letter. “If you are in process of negotiating the sale of your business by Sept. 16, 2008,” she wrote, “a month-to-month extension, not to exceed six months, will be granted to allow sufficient time to complete the sale transaction.”

The pair did find a buyer, who went before city council, but was denied. According to Martin Bernal, the assistant city manager, “The concern about the buyer was that it was a completely new business that wasn’t proven and owners who hadn’t had much experience, which meant a little more risk involved.” After the buyer was rejected, the RDA reversed its position on allowing a lease sale. In a letter in Café Campesino’s file dated May 22 (and only given to the owners when they requested it specifically), Bonnie Lipsomb, the new executive director of the RDA, wrote, “Based on the information received from the potential buyer, staff does not recommend an assignment of the remaining four months of the lease to the potential buyer, but recommends that it is in the best interest of the city to advertise the upcoming availability of the kiosk for lease in September.” In other words, the RDA wants the city to allow Campesino’s tenancy to expire so it can start afresh with a new pool of applicants. The owners of the café would receive nothing.

“The lease is due to expire,” says Bernal. (Lipsomb was unavailable for comment at press time.) “They’ve chosen not to extend it. They’ve never said they wanted to. What they want is to sell to another party. Certainly the city didn’t initiate any of this. We’re more like a landlord than a business owner. It’s not that the city doesn’t want them to recoup, but the way they propose it is a dilemma to the city. We want to open it up because we want to make sure there’s a business that will work going forward.”

He adds, “I’ve not heard that anyone’s concerned about [Campesino]. They’ve always thought it was a good business and worth having. Nobody was looking for change.”

When I relay this message to the owners, they are surprised. “They’re playing with our minds and our lives,” says Torres. “All we want is to stay and have the same rights as everyone else.”

“We would love to just stay open,” says Levin, who adds that while the menu changes from last summer’s refresh of the business plan didn’t work out, cost-cutting measures that emerged made a return to the old menu more profitable. “All we’ve done is work honestly and openly with the city, letting them know what’s going on with us every step of the way, and we feel like we’re getting the opposite of help for that.”

“How can I trust their words?” Torres adds. “My trust is wounded.” 

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