City of Antioch vs. Humphrey’s – A Whale of a Tale of Competition and Inconsistent Treatment
Tuesday, August 7th, 2012– Analysis –
By Allen Payton, Publisher
Humphrey the whale would be shedding a tear if he knew what was happening to his namesake restaurant in Antioch.
Humphrey’s on the Delta restaurant has been in the news, lately, due to some back rent owed to the city of a little over $48,000, because the city owns the land upon which the restaurant sits, as well as the filing of Chapter 11 bankruptcy in order to reorganize their finances, to avoid foreclosure and remain in business.
Let me first state, Humphrey’s is still open and in business, and owner Eva Romero and her new partner Samir Rohayem plan to keep it that way.
But the question is how did Humphrey’s get here? Well that’s the whale of a true tale of competition and inconsistent and unfair treatment by the City of Antioch, over the past 10 years.
A little understanding, first. The city has an incentive to make sure Humphrey’s is successful. Why? Because their rent is based upon a flat rate or a percent of gross sales, whichever is greater. So the more business Humphrey’s does over a certain amount, the more money paid to the city.
Let’s go back to 2001 when the City Council chose to go into direct competition with Humphrey’s, when they approved construction of the Lone Tree Golf & Event Center’s new banquet facility.
Up until that point, Humphrey’s was the only place in town where you could hold a seated event for up to 300 people.
The Lone Tree facility was originally planned to be a 150-seat banquet hall at a cost of $3.6 million. Instead, the City Council at the urging of then Mayor Don Freitas, approved a 300-seat, $4.8 million facility. Then with construction cost overruns of $900,000 that figure increased to $5.7 million.
The city loaned that $900,000 to the golf course, but the first payment of $48,379 wasn’t required until this year.
Once the new facility was open at Lone Tree, city, Chamber of Commerce and other events started being held, there instead of at Humphrey’s where they all had been held in the past.
Then the city chose to go into the restaurant business, again. This time with the Downtown Restaurant Incentive Program, in which they had $500,000 in redevelopment money to give to two restaurants.
They ended up granting $300,000 to help Bases Loaded open on G Street, which offered a full bar, food and live musical entertainment, just like Humphrey’s does. Now they’re struggling to stay alive, too.
At the time I argued that whatever the city did for a new business, they need to offer an equal benefit to existing businesses that the new one would compete with.
Instead, the city spent $20,000 on a consultant for Humphrey’s who told them three things, two of which they did: 1. change the staff uniforms, 2. make changes to the menu, and 3. spend $500,000 to $750,000 to fix up the place. The Romero family didn’t have that kind of money for improvements.
All they asked from the city was a new sign at the end of L Street at 2nd Street so people would know that Humphrey’s was there, since the trees in the marina parking lot had all grown up and now block the view of the sign on the front of the restaurant.
Then along came the new Antioch Community Center at Prewett Park which can also hold sit-down, catered banquet events for 220 people in one room and as many as 1,000 in the gymnasium. So, not only was the City competing with Humphrey’s, again, they’re now in competition with Lone Tree – which is owned by the city but operated by a nonprofit board of directors.
City staff recognized that, in their report to the City Council on February 10, this year, when they pointed out the challenges facing Lone Tree – “loan debt, downturn in the economy, creating a larger event center facility desired by the community leaders, the new Antioch Community Center.”
In that same report, staff pointed out that Lone Tree was in arrears almost $542,000 in payments on the loan for construction of the facility.
I don’t fault the golf course board. It was the Council at that time that strapped the board with a much larger debt than was planned or manageable.
But if they can’t make their loan payments, the city’s General Fund – which pays for police – has to pick up those costs.
Fortunately, according to one board member, they have made all the payments required by the city, this year. That included a $281,000 loan payment reducing the amount in arrears to about $260,000 and a $74,055 payment on the loan for the parking lot improvement, reducing that balance to either $74,055 or $148,110.
However, that doesn’t include the approximate $850,000 remaining from the loan for construction cost overruns.
The Prewett Park Fund, for both the new Community Center and Antioch Water Park, received a subsidy of almost $300,000 in this past year’s budget from the city’s General Fund. So that tells me unfortunately, they’re not making it on their own, either.
So now there are three facilities competing for the same banquet room rental business – which needless to say has dropped off dramatically since 2008 – and two of them are owned by the city, and all are struggling. One council member said the city now rotates events among the three.
Another shot from the city was the replacement of the Marina Park with the new Boat Launch Facility. Why? Because people would use the park for weddings then have their receptions at Humphrey’s, afterwards.
Finally, the latest shot was when the Council voted against changing the name of L Street to Marina Way or Parkway, as has been in the city’s Economic Plan since 1996. Humphrey’s address would have been 1 Marina Way or Parkway. The signs on the freeway would have provided permanent marketing for the waterfront and the road. Currently Humphrey’s address is 1 Marina Plaza, but there are no signs with that name on it and is confusing.
Yet the city is coming down hard on a 70-something, Hispanic female and longtime Antioch business owner and resident, over $48,000 in back rent.
Eva Romero attempted to sell the business two years ago, but she claims when the managing partner of the LLC defaulted on payments, she had to take the restaurant back.
She really doesn’t want to be in the restaurant business any more. She wants to retire.
One council member said it was because Romero filed for bankruptcy protection, the city was done dealing with her. They’ll be happy to negotiate with a new owner on the back rent. But not with Romero, because he doesn’t believe they can due to Humphrey’s being in bankruptcy.
Something smells about this entire situation, and it’s not from the fresh fish served at Humphrey’s or from a whale.
The City Council needs to work with Romero and her new partner, and let Humphrey’s deal with their creditors and stay alive until they can find a new buyer. It’s only fair after all the competition the city created for them.
