GILROY
– A controversial south Gilroy furniture warehouse store that’s
been closely watched by competitors has lost its appeal of a city
ruling and will have to limit the amount of time it is open to the
general public.
GILROY – A controversial south Gilroy furniture warehouse store that’s been closely watched by competitors has lost its appeal of a city ruling and will have to limit the amount of time it is open to the general public.
The Gilroy City Council voted unanimously Monday to stand by City Administrator Jay Baksa’s determination last month that the 5-Day Furniture Warehouse is functioning primarily as a retail business in violation of city regulations and the terms of its business license.
The decision means 5-Day Furniture will be able to open to the general public for 12 days a year, unless it can get the zoning changed at its current location – or win a lawsuit against the city, as its owners have reportedly threatened in the past to undertake.
In issuing their decision Monday, Councilmembers said they support competition and would like to see 5-Day Furniture remain in Gilroy, but that the business would need to change locations or redefine its existing one.
Mayor Tom Springer, one of the more vocal Councilmembers during the hearing, said there is a place for 5-Day Furniture in Gilroy, but that he was troubled by evidence of a process used to put a retail business in an industrial zone.
“I don’t think the method by which they located in this (zoning area) was done openly and honestly in conformance with our zoning,” he said.
But 5-Day attorney Tom Griffin said it’s unfortunate that the city and Council still don’t recognize the company’s overall business plan – and he doubts that the city wants to actively help solve the problem.
“As a consequence of them not seeing that (business model), there’s a real sense that 5-Day is not welcome to the community, notwithstanding the comments to the contrary,” he said.
At issue was whether the amount of retail traffic at the 162,000 square-foot store exceeded boundaries the city set for the business.
The store at 500 E. Luchessa Ave. lies in an industrial zoning area where warehousing and storage are permitted but retail is generally limited or banned. However, city planners allowed some “ancillary” retail at the store when 5-Day applied for permission to operate.
However, Baksa found last month that the store was functioning primarily as a retail business, citing its extensive hours and days of operation, advertising and marketing campaign and local sales figures – where retail sales exceed wholesale sales – as evidence.
As in a hearing last month before Baksa, 5-Day attorney Tom Griffin argued Monday that the city did not understand his client’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.
Griffin said 5-Day’s Gilroy warehouse is meant to help store and then liquidate excess wholesale inventory rejected by department stores because of market timing or other complications. In that sense, retail sales from Gilroy are less than a fifth of the parent company’s total monthly West Coast sales, he argued.
“That issue was totally ignored by the administrator,” he said.
However, Springer said Monday that evidence in the record suggested the more “global” overall business model seems like an afterthought. He noted that the amount of annual retail sales 5-Day officials quoted in their business license application to the city were different than other figures quoted in the attorney’s arguments.
“The model you suggested doesn’t seem to correspond to what the applicant (stated) in their application,” he told Griffin.
Griffin said the wrong number was used in the application, and that the business license figure was probably an estimate.
“I don’t think there was any afterthought at all,” he said. “It was the model at the get-go, and the number (in the application) was inaccurate.”
As Rosso’s furniture owners Jaime and Anthony Rosso watched from the audience, Griffin also asserted again Monday that competitors’ complaints were an underlying reason behind the conflict. Councilmembers did not address or comment on that argument.
The city’s decision allows the portion of the store’s license that relates to its wholesale and storage operations to remain intact, but limits retail sales aimed at the general public to four three-day weekend “clearance” sales a year. The store will have to change its operations as early as next week, when Council is expected to approve a resolution that formalizes its decision.
5-Day co-owner Hai Tran has threatened to pursue a lawsuit or a grand jury investigation over the dispute in the past, but declined to comment Monday, deferring to Griffin.
Griffin said he didn’t know what direction his client would go next, but hinted that it probably wouldn’t involve a mutual effort on the part of the business and the city to find a solution.
“I see a real effort to make this business go elsewhere,” he said. “That’s a concern because there was a clear opportunity tonight to help solve that problem if someone wanted to solve it, but instead they said they don’t buy the business plan.”
However, Baksa said the business could have applied for a zoning or land-use change for the building – and they still can. But they haven’t, and it’s not the city’s responsibility to launch such an application, he said.
“They’ve always had the option for that,” he said.
Meanwhile, Tran has said he may end up supplying a new furniture store at 10th and Monterey streets – across the street from the Rosso’s Furniture store.
