A debate is brewing over private property owners leasing out space to sell merchandise during the Hollister biker rally and whether the city can charge special fees to those locals to help make up a continued deficit for outside promoters.
For years, city and business leaders have been aware of the dilemma along Seventh Street where property owners lease out three lots to vendors who sell T-shirts, right in the heart of the designated “Rally Area”, and compete with the traditional vendors that pay the promoter a set fee and set up shop on public roads such as San Benito or East streets.
The recently departed promoter, Chuck Schwartz from Las Vegas-based ConvExx, claimed those competitors were the primary reason for a $90,000 deficit still owed to the city and suggested Hollister must create a revenue source from the lots in order to make the rally sustainable. The three lots, the gas station at the corner of Seventh and San Benito streets, an open lot across the street next to the Metropolis store and the Hollister Muffler shop at South and San Benito streets, are the ones that lease outdoor space adjacent to out-of-county vendors on public streets.
Hollister Mayor Ignacio Velazquez argued that Schwartz is using the private lot issue as a negotiating tactic, but also said he supported the idea of city officials pursuing money from those local properties. Others in the Hollister Downtown Association have been pushing the idea as of late.
Velazquez, however, acknowledged he was uncertain if the city even had a legal right to pursue such fees beyond standard business license and permitting charges. Hollister doesn’t even own the trademark on the event name, but did initiate the application process to obtain it in the spring with the U.S. Patent and Trademark Office, a move that could reap royalty rewards.
“The core of the event is in the downtown area,” Velazquez said. “Those benefiting that weekend only should be participating financially in the event.”
In a way, city officials like Velazquez have come full circle when it comes to the rally and local businesses. The mayor, though he recuses himself from official council decisions on the event due to his ownership of The Vault building downtown and his own financial benefit from the rally, was arguably the key proponent who kick-started the dormant tradition after his first election in November 2012. He and other city officials for years argued in support of the rally due to its prospective benefits to local businesses. Now, facing an uncertain financial fate, Velazquez and other downtown business leaders want local merchants like Jessie Brar at Jessie’s Cheap Beer & Cigarettes, a gas station and convenience store, to pay some sort of fee toward the rally.
As for how the city might try to regulate the sale of a particular themed apparel over a particular weekend, the Hollister mayor and others aren’t sure.
“I don’t know the answer to that,” Velazquez said.
The mayor did have answers for questions that might surface as this debate unfolds. Although he acknowledged the Jessie’s shop is already permitted to sell retail items (T-shirts would qualify), he argued that the business changes its use for the rally weekend and that a special fee should apply. When informed that the Jessie’s shop sells rally-themed T-shirts year-round on tables and racks inside the store, the mayor said such fees should apply because the store, during rally weekend, uses the outside portion of the property for merchandise sales, an area the gas station owner would otherwise have to shut down for safety reasons due to the pedestrian crowds.
“If he’s selling things within his store, that’s great,” Velazquez said. “That’s great. Maybe right along the front of his store.”
Velazquez and other downtown leaders’ thought process left the store owner dumbfounded about it.
“Their argument is nonsense,” Brar said.
The business owner in an interview with the Free Lance said “retail is retail” as it pertains to his lot’s sale of rally merchandise.
He said his alternative to leasing out the gas-pump space is closing down his business for those days.
He argued he has the legal right to sell items on the outdoor lot up to a minimal distance from the property line.
He pointed out how he pays all property and sales taxes, while contending that government entities should do more during the event to collect such funds from the outside, temporary vendors.
And he mentioned how other local merchants along San Benito Street—along with churches—change their use for the rally and openly wondered whether the city would pursue fees from them.
The shop owner also said if the city wants to add special costs for his T-shirt sales, he could just pursue permission from the Department of Alcohol Beverage Control to sell beer on the outside lot and do that instead.
He emphasized that the rally comes with costs for local business owners as well, that some are forced to shut down for the three-day event, and that he happens to be one of them who’s benefiting.
“Who’s going to pay for our loss?” he said in the event of a closure to the outdoor area. “Who’s going to help me keep all the drunks off my property?”
As for the mayor’s contention about the use of the outdoor space, the store owner responded to that as well.
“I think the boundary is all the way to your property line,” he said. “If we are within our property line, what the heck is the difference if you have a door or not?”
Responding to the rally theme aspect of the mayor’s fee idea, he had yet another question for city and business officials.
“I think retail is retail,” he said. “You’ve got to survive how you can survive. What else do you want me to put in here that sells?”
The mayor acknowledged in his interview that he himself has sold rally-related merchandise out of properties he owns at Fifth and San Benito streets including The Vault building. He said the difference is when private property owners use the outdoor portion of lots. Velazquez acknowledged that some other local merchants, albeit in lower volumes, offer items in the stores and on the sidewalks along San Benito Street that they normally wouldn’t sell.
“I’m all for Bene or all these guys selling whatever they want all year round,” Velazquez told the Free Lance.
Brar pointed out, though, that he’s a local businessman as well and he’s benefiting from the rally from his lease arrangement for T-shirt sales on that weekend.
“The local people need to get a benefit out of it,” he said.
Outside of Velazquez, meanwhile, three other council members are less convinced as of now about the idea of charging extra fees to private property owners during one weekend because they sell a certain type of product.
Councilman Ray Friend previously said in a Free Lance interview that telling a business owner he or she can’t rent out a space is “kind of difficult.”
Councilman Victor Gomez on Tuesday told the paper he understands why the situation came up and said city officials must reevaluate the private lot situation going forward.
“From a legal perspective, we need to confer and make sure we are doing what’s right when it comes to the trademark and moving forward with any type of sale of merchandise,” Gomez said.
Councilman Karson Klauer called it a “tough issue” and stressed the importance of completing the trademark application process.
“As a city, we really shouldn’t be infringing on private property owners and what they can do, really, outside of the normal policing aspect of it,” Klauer said.
