Troubles for Old City Hall

A sign on the front door of Old City Hall, which has been up

– A sign in the dark glass door of Old City Hall says the
restaurant has closed for vacation. Its answering machine echoes
the message, adding that the downtown bistro will remain closed
until the end of January.
Gilroy – A sign in the dark glass door of Old City Hall says the restaurant has closed for vacation. Its answering machine echoes the message, adding that the downtown bistro will remain closed until the end of January. But a holiday break may become a permanent vacation if owner Glen Gurries fails to find a new partner for his financially struggling enterprise.

“For many reasons, mostly financial, we’ve decided to temporarily close our doors, but we’re actually marketing for either a new equity partner or a sale,” Gurries said.

He declined to detail the restaurant’s financial situation, other than to say it was “undercapitalized.”

He said the restaurant, at the corner of Sixth and Monterey streets, was overstaffed when it first opened in Oct. 2003, and “that of course put a hurt on us.” The restaurant’s cost-cutting adjustments included closing its doors on Mondays. At the same time, Gurries pointed to some signs of success, such as growing interest in the restaurant’s banquet services.

“But there’s always ratios you’re dealing with,” he said. “It’s a matter of having consistency day to day.”

The city owns the building and leases space to Gurries. City Treasurer Michael Dorn confirmed that Gurries owed the city rent money but declined to say how much.

“We are concerned that it’s empty,” he said. “There are two aspects to it. One is simply that we’re not receiving our rent payments. But even more importantly, we’re working on the downtown and having one [business] leave – especially one that draws people to the downtown – is too sad.”

Gurries and city officials like Dorn envisioned the restaurant as an anchor in the redevelopment of the downtown area.

The numerous measures the city has taken in the last two years to spur growth are set to pay off, with a major building boom beginning this year. Before the end of the decade, the Monterey Street corridor will have hundreds of new apartments, dozens of stores and offices, and a new civic arts center.

“The time is right with regards to all the economic incentives and improvements that are going to happen downtown,” Gurries said. “We felt good where we were headed. We just weren’t quite able to turn the corner.”

He admitted also that, despite the best efforts of city officials to speed up the makeover, he may have entered the market a bit early.

Old City Hall, which closed its doors just before Christmas after a little more than a year in operation, is not the first business to struggle at the site.

The building has served as a short-lived home for two other tenants since the city restored the site and began leasing it in 1998. The New Renaissance Center, a social services and business center, operated from 1998 to 2000, according to Dorn. Next came Gavilan College, which also ran a business center, between 2001 and 2002.

Both groups faced steep operation costs, with utilities in the uninsulated building reaching as high as $2,400 each month, according to Dorn.

Gurries said his restaurant averaged between $4,000 and $4,500 in utilities per month, plus the $3,000 leasing fee.

That price reflected a $2,000 discount – a reward for the many physical improvements Gurries made to the building and a sign of the city’s eagerness to have a successful business at Old City Hall.

Over the years, the city has taken pains to preserve the historic site. The community first rallied to save Old City Hall when it ceased to serve as a government building nearly 40 years ago, according to Dorn. Starting in 1905, the building housed city offices, the county court, fire department, and the city jail. The current men’s and ladies bathrooms in Gurries restaurant once served as jail cells; the three bay doors on Sixth Street opened to let out horse-drawn fire trucks.

Residents and local leaders again fought to preserve the building after a 1989 earthquake that left it structurally unsound, Dorn said. City officials spent nearly 10 years battling over the extent and cost of repair with state historic preservation groups and the Federal Emergency Management Agency. The city ultimately agreed to pay $1.25-million to install an earthquake-compliant wall, a buttress, and other safety measures.

Gurries’ restaurant is the third business to fail since the city began leasing out the space in 1998, according to Dorn. It joins the ranks of empty store fronts that litter Monterey Street, an area that bustled with activity before the onslaught of discount chain-stores and big box retailers.

Of the remaining proprietors, many complain of high rents and a shortage of customers. Across the street from Old City Hall stands a veteran of good times and bad – Harvest Time, one of the oldest restaurants in Gilroy.

The restaurant opened its doors in 1929 and, in its heyday, boasted guests such as Will Rogers and John Wayne. In recent decades, it too has fallen victim to waning commercial activity along Monterey Street.

Current owner Louie Kalivitis, who ran three restaurants before taking over Harvest Time 10 months ago, was unsure if he would stay around to benefit from the promised rejuvenation of Monterey Street.

“Downtown is rough,” Kalivitis said. “You have to work too hard to make it.”

Despite the current closure, Gurries remained hopeful of a comeback. He said he is working with commercial real-estate agent George Renz to find a buyer or partner.

“We’re supposed to be part of the catalyst in helping things roll downtown,” he said, “so we’re hoping real quick to be up and running again.”

Leave your comments