Mayor, Council members weigh in on ownership travails, financial trials of downtown icon

By Donna Beth Weilenman
Staff Reporter

The announced foreclosure of the Tannery Building as reported in Tuesday’s Benicia Herald generated sadness, but not much surprise, from members of Benicia City Council.

One of those is Mike Ioakimedes, who formerly operated a restaurant, Mike and Gayle’s Shoreline Restaurant, in the historic building that sits at 127, 129, and 131 First St.

“Goodness — anytime there’s a foreclosure, it’s a sad event,” Ioakimedes said Tuesday. “It’s a particularly significant building.”

Foreclosure on a building that has housed Benicia businesses since the 1870s “has extra weight, and extra sadness,” he said.

Though the building has long been called “The Tannery,” it actually housed the business offices for the leather tanning companies that operated across First Street until 1928.

Sheet metal was added when the building was expanded and converted into a box factory. When that company closed, Roger Steck and a group of partners who included as a minority partner one of the current owners, John Hernandez, bought the building and filled it with a variety of local businesses.

Hernandez and his partner, attorney James Morgan, have owned the Tannery since 2008.

Ioakimedes and his wife, Gayle, opened Mike and Gayle’s in the Washington House Building on First Street 30 years ago. About 11 years ago, they moved to the Tannery, which put the restaurant even closer to Benicia’s shoreline, in keeping with the restaurant’s name.

“When the current owners bought the building, it was 100 percent occupied,” Ioakimedes recalled.

Besides his restaurant, the building was home to such businesses as Cooper’s Doll House, Char’s Hot Dogs, the costume shop Lottie Ballou, a hair dresser, a coffee shop and coffee roasting company, and O’Leary’s, an Irish-style pub founded by Denis O’Leary and later bought by Jan Lucca.

Ioakimedes said when his restaurant moved out of the Tannery in 2009, “it was less than 25 percent full.” Many of the other businesses moved elsewhere in Benicia’s historic downtown commercial district.

“They were viable enough to find the capital to move,” Ioakimedes said. “That tells part of the story.”

Ioakimedes began moving his restaurant to Southampton Shopping Center. It took nearly a year to acquire the financing during the recession as well as to remodel and upgrade the former Country Waffles site in time to open in February 2010, he said.

The couple shortened the restaurant’s name, dropping “Shoreline” since the business had moved away from the waterfront.

Would the couple consider moving back to the Tannery under its next owners? Ioakimedes said, “I never say never, but I have a pretty decent lease right now.”

Councilmember Tom Campbell reacted to news of the Tannery foreclosure by saying, “Well, that’s not a surprise at all.”

Campbell said he has wondered at the current owners’ business acumen, saying they “kicked out rent-paying tenants, and it sits vacant a year.

“OK, let’s think this thing through: Does it make sense to kick out a revenue source and let it sit for a year or more while it eats your capital? I would have done it differently myself. I wouldn’t kick out rent-paying businesses.”

He discounted suggestions that Bay Trail construction and revetment requirements made by the Bay Conservation and Development Commission, which regulates area development within 100 feet of the shoreline, might have contributed to the Tannery owners’ financial downfall.

“That’s as red a herring as you get,” said Campbell, adding that the work could be done to BCDC’s satisfaction for less than a $250,000 project he said was suggested by the Tannery owners themselves.

Councilmember Mark Hughes said he felt conflicted by the news.

“I have mixed feelings. You’re never hoping a business will lose its buildings, but it could be an opportunity for someone else to buy it and open it up for business,” he said.

Hughes said he was worried about remaining tenants in the building, and said he hoped the present and future owners would take care of them.

Hernandez said Monday that he was closing his Tannery Building business, Frankenburger, because it wasn’t making a profit.

Morgan said Monday he has no knowledge of any of the other occupants — a hair salon, a gallery, a dance studio and a security company — receiving notice to leave.

Benicia’s acting Economic Development Manager Mario Giuliani said Sailor Jack’s, a neighboring restaurant owned by the same principals, is not affected by the Tannery foreclosure.

Hughes said he hopes someone “will buy the building, lease it at reasonable rates, and put businesses in that can service the community.

“I’m not set on one type of use. My concern is that it is open, regardless of the type of business, retail or restaurant.”

Vice Mayor Alan Schwartzman, the sole member of the Council to have a First Street business, said, “It’s unfortunate for anyone to go through foreclosure.”

The property owners’ plans for the building plus the requirements of BCDC may have led to the foreclosure, he said. “There was a glitch,” he said.

But any BCDC regulations shouldn’t have come as a surprise, he said. “I would think that anyone involved with development by the water would inquire about them,” he said.

Schwartzman explained that in a foreclosure sale, if the bids for the property don’t meet the required minimum, the property would revert to bank ownership.

He suggested, “I think the bank is going to get it.”

On the other hand, Schwartzman said, “It could be a real opportunity. It could be a good thing. Time will tell.”

Mayor Elizabeth Patterson said she, too, found the development “not unexpected, because there was such a delay in the process they were going through and mistakes made. And the economy worsened.”

Like other members of the Council, she saw the foreclosure as a potential opportunity.

“We wanted the Tannery to generate foot traffic on First Street. You need business, not events, and that was a sticky point with the owners. The new owner has an opportunity to get it right.”

She said she views the BCDC Bay Trail requirement, as well as the waterfront revetment, as an amenity to the Tannery, not an impediment, particularly in luring more tenants to the building.

The expanded public access to the waterfront “should be exploited in the best possible way,” she said.

“I don’t want to be overly optimistic, but through our staff expertise and focus, and work with Main Street and the Chamber of Commerce, it could be a more positive development,” she said.

The building’s longtime history is another benefit, she said.

“You could take advantage of that. People like to know they’re in a building with history.”

An auction for the Tannery Building, which has been estimated to be worth about $3.4 million, is scheduled for Sept. 2 at 10:30 a.m. at Vallejo City Hall, 555 Santa Clara St.