– A dispute between the city and a large new furniture store
that has included charges of dishonest intentions, harassment
driven by business competitors – and now allegations that race
played a factor as well – may end up in court after a final City
Council decision Monday.
Council voted 5-2, with Councilmen Charlie Morales and Peter
Arellano dissenting, to implement findings that the 5-Day Furniture
Warehouse violated the terms of its business license and must
immediately close for sales to the general public except for 12
days a year.
GILROY – A dispute between the city and a large new furniture store that has included charges of dishonest intentions, harassment driven by business competitors – and now allegations that race played a factor as well – may end up in court after a final City Council decision Monday.
Council voted 5-2, with Councilmen Charlie Morales and Peter Arellano dissenting, to implement findings that the 5-Day Furniture Warehouse violated the terms of its business license and must immediately close for sales to the general public except for 12 days a year.
Still blistering at the decision and some of the comments made from the Council dais, 5-Day owner Hai Tran said outside the hearing that the city misled him on his permits and vowed to fight on, although he couldn’t say for sure whether he’d file a lawsuit until he meets with his attorney today.
“I’d rather be homeless than lose my principles,” Tran said. “My principle was coming in with every integrity. I asked them for the permit, they gave me the permit – that’s why we opened. If they didn’t give it to me, I wouldn’t be open at all.
“What they’re doing today is not fair, and I’ll fight it.”
Tran also said he believed his status as a minority affected the Council’s decision, and echoed past concerns that complaints from competitor Rosso’s Furniture – owned by a Gilroy schools trustee – were driving the city’s actions.
“The only reason I got voted down is because I’m a minority,” Tran said. “That’s the only reason, because my name is not ‘Smith.’
“If my name was Smith, it would be a different outcome.”
But Mayor Tom Springer – one of the Council’s most vocal critics of the store’s actions – said Tuesday that the decision had nothing to do with competitors’ complaints or race. He called the race charges “idiotic” and the allegations about Rosso’s influence “bull-dickey.”
“There was absolutely no issue of race in this,” he said. “It was always about having a proper business location.
“And now to play the race card, trying to argue because he happens to be Chinese that that somehow factored in the decision, is the most racial, idiotic comment I’ve heard in a long time …
“He just seems to think the (city’s) rules don’t apply to him.”
Monday, 5-Day attorneys continued their appeal for changes to the city’s industrial zoning regulations that would allow the store to apply for a use permit for retail operations at the 500 E. Luchessa Ave. building.
They also asked city officials to delay adopting a formal resolution – which would close the store’s retail operations as early as today – until at least August so the request could be processed.
They first made the requests two weeks ago, but several Councilmembers wondered why the city should go through the trouble of considering a zoning change while rumors floated that 5-Day Furniture is considering a second store in town.
5-Day attorneys verified Monday the company has signed a lease on a building at 10th and Monterey streets – across from Rosso’s Gilroy store – that’s meant to open as a separate retail showroom.
Councilmembers wondered why the store couldn’t just relocate its entire retail operation over to the new location and solve the problem.
Store officials argued they would be two different operations, with the new location featuring furniture arrayed in roomlike settings with different sales staff. The original location would continue to be used for storage and liquidation-type retail sales to other furniture store owners and the general public.
Moving all retail operations to the new location just doesn’t work from a business perspective, said 5-Day attorney Thomas Griffin – the gallery and liquidation operations are totally different, and the new location is too small.
“It’s like saying to Macy’s that you have to display your furniture in the same way as Costco” or vice versa, he said.
The majority of Councilmembers were not convinced. Springer – who has called the store’s overall business model “an afterthought,” citing conflicting sales figures – said there hasn’t been much honesty from the store. He called Monday’s arguments “nonsense” and said honoring the request would set a nasty precedent.
“You’re asking us to change the rules, and if we do that here we have to do that everywhere,” he said. “Then why do we even have zoning?… There would be total chaos.”
But Arellano said he was willing to give 5-Day the benefit of the doubt and at least make an application for a zoning change.
“To close someone down without at least giving them a chance … ” he said. “There’s no guarantee they’ll get the (zone change) or a special exemption to work there.”
And Morales said the store’s request for an extension and rezone was not that unusual. He wondered what message the supposedly business-friendly city would send by closing the store – especially concerning a minority business that brings new sales tax revenues to town without asking for city financial incentives.
“I would say this is a very bad process,” he said.
But Councilman Craig Gartman disagreed that the request to alter land-use rules is not unusual.
“To bring up other businesses that (operate) legally is not fair,” he said.
Outside the hearing, Tran railed against the comments about dishonesty.
“I did not lie, I did not cheat – I came with every intention to do good business,” he said. “I did not ask the city for any money.”
Jaime and Anthony Rosso have said they don’t oppose new competition, but merely seek a level playing field among businesses and that all have to follow the rules.
At issue in the dispute is whether the amount of retail traffic at the 162,000 square-foot store exceeded boundaries the city set for the business.
City officials allowed for some “ancillary” retail use at the store, which lies in an industrial zoning area where retail is supposed to be limited. But spurred by “anonymous” complaints, they later determined the store was functioning primarily as a retail business, citing as evidence extensive hours of operation, advertising and local sales figures where retail exceeds wholesale sales.
But 5-Day attorneys argued that the city did not understand the store’s overall business model, where the Gilroy operation is but a small part of its parent company’s larger China-to-United States furniture wholesaling operation. In that context, retail sales in Gilroy are ancillary to the company’s overall West Coast sales, they said.