Regretfully, after nearly a year of negotiations between the city of Monterey and Sam Balesteri, who has had a master lease for the Wharf Gift Shop, Coffee Shop, and Paluca’s Trattoria for 50 years, it has become clear that an agreement cannot be reached. This was heartbreaking to me. I know and like Mr. Balesteri’s sons, and the last thing I wanted was this outcome for these wharf businesses.
But my responsibility is to do what is best for the city. The City Council has great respect for the history and heritage of the wharf, and much of that history and heritage is a direct contribution of the tenants. Because of this respect, the city chose to negotiate first with existing tenants rather than market the property competitively.
Second, we offered terms that gradually ramped up rents to move the lease terms toward market rate over a period of years, making it easier for the businesses to make adjustments. The city also made other concessions to try to find a way to extend the Baluster lease. But the council has a responsibility to manage our resources wisely, to treat everyone fairly, and to ensure taxpayers are not subsidizing businesses.
People need to know that the decision to evict these businesses was not a careless one; it came after 11 months of fair negotiations and after several hours of discussion by council and staff. On several occasions the city made concessions during negotiations and on several occasions we thought Mr. Balesteri was ready to sign a lease renewal. Each time he came back seeking more concessions from the public. In the end it became apparent that he wanted a deal similar to the 50-year ground lease that expired two years ago.
I am not permitted to tell you what he has been paying the city for monthly rent—only he can—because it would let competitors know his revenue, which is considered “proprietary” information. Before people decide if the city is being unfair they should ask to see what monthly rent is being paid and then look into what other businesses pay. What I can say is that the proposed terms were still below market rent as compared to what other businesses in town pay. Moreover, the city offered terms of more than ten years so the rumors you may be hearing to the contrary are simply not true.
If you think the city was asking for something unreasonable, then why would Mr. Balesteri’s sub-tenant, who owns and runs the restaurant, Paluca Trattoria, sign a lease directly with the city on terms comparable to what was offered Mr. Balesteri? He has been able to run a successful business for years paying Mr. Balesteri market rent; why is it a hardship for Mr. Balesteri, who has enjoyed favorable terms for 50 years, to pay rent comparable to other businesses?
The city took so much time and was willing to compromise so much because we truly wanted to keep Mr. Balesteri there on the wharf. We appreciate who he is and what he has done. The city’s approach is to negotiate first with current tenants and seek market rate terms as their leases expire. If that fails, then we will market the properties and again give first priority to local and independently owned businesses. False claims from wharf business owners that the city has plans to replace local businesses with national chains like Hooters, McDonalds, and Red Lobster are false and misleading. I personally inserted a motion into our leasing policy that expressly allows the council to give preference in leasing to local business and that is what we have been doing.
My core principles tell me that the public should not be subsidizing private business, however nice the owner of the private business may be. Due to the limitations of the leases negotiated decades ago, the city has used some General Fund money to pay for maintenance and improvements in our Tidelands area, which should be funded by Tideland’s commercial leases. Additional revenue from the commercial leases will enable the city to make the wharves more attractive, clean, safe and enjoyable.
EDITOR’S NOTE: Libby Downey contributed to this article. She and Haffa are members of the Monterey City Council and have been leaders of the effort to reform the city’s leasing practices. Some of the Monterey wharf tenants, led by restaurant owner Chris Shake, have been conducting a vigorous disinformation campaign via petitions and social media in an attempt maintain deeply discounted rental rates by putting political pressure on the City Council. The group contends, with zero evidence, that the city wants to drive out local operators in favor of chains and, contrary to reality, that the city won’t allow new leases beyond 10 years.