Developer seeks RDA help; council wants specifics
As work on a restaurant continues on the first floor of the
historic Pendergrass Hotel at San Benito and Fifth streets
downtown, city officials are considering lending the building owner
redevelopment agency money to restore the 83-year-old
structure.
In 2003, the council rejected a proposal to lend Lantz $1
million in redevelopment funds to renovate the building, noting how
he lacked an adequate plan.
Developer seeks RDA help; council wants specifics
As work on a restaurant continues on the first floor of the historic Pendergrass Hotel at San Benito and Fifth streets downtown, city officials are considering lending the building owner redevelopment agency money to restore the 83-year-old structure.
In 2003, the council rejected a proposal to lend Lantz $1 million in redevelopment funds to renovate the building, noting how he lacked an adequate plan.
Preservationist Tim Lantz, who bought the structure in the early 2000s after Union Bank vacated its ground floor location, has been in talks with the Hollister Redevelopment Agency on financing improvements to the four-story building.
It is at least the second time that Lantz has requested financial assistance from the RDA.
Development Services Director William Avera this week told the City Council, in its role as the RDA board, that Lantz wants to return the building to its original design by reversing previous remodeling efforts that have “changed the character and the original use of the structure.”
Among those plans are removing fill-ins that were constructed to help with the seismic strength of the building – including reopening a former entrance to the building on its Fifth Street side, where Union Bank had an ATM.
With work on The Pendergrass Restaurant ongoing and expected to be complete within two months, the issue of city funding for the building’s renovation has surfaced again.
Avera sought council input on helping to fund work that initial cost estimates say will cost $220,000 just for the structural component.
Reopening the Fifth Street entrance to the building, Avera said, would provide “good, nice, visible access.” He noted how there is private investment in the renovation of the building, with the owners of The Pendergrass Restaurant spending more than $100,000 on a commercial kitchen.
The council was presented with three options related to the building: offer no subsidy beyond what is available through the RDA’s facade improvement program, which offers up to $20,000 in funding; consider approving a dollar amount larger than the program offers because of the size and location of the building; or enter into an owner participation agreement in which a loan would be made and repaid over a number of years.
The RDA entered into such an agreement with the owners of the former Whalen Drug Store building across the street from The Pendergrass, lending them $100,000 over a 15-year term, with the first five years of payments being deferred.
Mayor Victor Gomez said during discussion of the options that “it all goes back to what kind of return we are going to get four our investment.
“Everybody wants to see something happen there,” he said. “My concern is, what’s going on beyond the restaurant?”
Avera told council members that while a $50,000 loan “won’t break the bank,” it also wouldn’t be enough to renovate the building to make the second, third and fourth floors viable.
“I don’t think waiting (on a more specific proposal from Lantz) is necessarily a bad idea,” he said. “Maybe we wait until he has more tenant options.”
Councilwoman Pauline Valdivia, who voted against the $1 million loan to Lantz seven years ago based on similar concerns about a lack of specifics from him, said she would prefer more information from the developer before approving RDA help. Councilman Ray Friend echoed her sentiments.
Councilman Doug Emerson said The Pendergrass “is a key building” for the entire downtown area because of its size, location and history, “but to get a real solid business plan out of the owner has been a little difficult, so that’s a concern.
“We’ve got a restaurant in there now,” he continued, “and I wouldn’t be opposed to a loan (if more specific plans were presented.) I wouldn’t be agreeable now.”
The council did not vote on whether or not to lend money to Lantz, who did not attend the meeting, though Avera said he will bring back a proposal in which the RDA would offer an expansion of the facade improvement loan – perhaps $50,000 – because rehabilitating the building “is a catalyst project” for the downtown area.
