DATE: August 15, 2023
TO: Mayor and City Council
FROM: City Manager
SUBJECT: Adopt a Resolution Authorizing the City Manager to Appropriate the Necessary Funds and Execute Agreements For a Business Assistance Package to Cerveceria LLC, (DBA Buffalo Bill’s Brewery) Including a $75,000 Grant, a $50,000 Small Business Loan, a $295,000 Economic Development Loan, and a $230,000 CDBG Revolving Loan Fund Small Business Loan to Assist in the Refurbishment and Reopening of the Full-Service Restaurant and Outdoor Dining at 1082 B Street
RECOMMENDATION
That the Council adopts a resolution (Attachment II) appropriating the necessary funds and authorizing the City Manager to provide financial assistance in the form of a grant in the amount of $75,000, a $50,000 Small Business Loan, a $295,000 Economic Development Loan, and a $230,000 CDBG Revolving Loan Fund small business loan to Cerveceria LLC, (DBA Buffalo Bill’s Brewery) to assist in the refurbishment and reopening of the full-service restaurant and outdoor dining at 1082 B Street.
SUMMARY
Buffalo Bill’s Brewery is a long-standing restaurant and brewery that has operated in Downtown Hayward since 1983. It was the first brewery and pub in the United States and was recently inducted into the Smithsonian in honor of that history. Buffalo Bill’s Brewery was forced to close during the pandemic per the emergency health orders for the State and County. The brewery never fully recovered due to staffing shortages, supply chain issues, and increasing costs associated with operating the business. In 2022, the owners moved forward with placing the business and building up for sale.
On July 31, 2023, Mr. Alejandro Gamarra, operating under the Cerveceria LLC purchased the building, business, and the Buffalo Bill’s brand. The plan is to reopen the restaurant and brewery and maintain the historic Buffalo Bill’s brand in Downtown Hayward. Due to the age of the existing restaurant, upgrades and remodeling of the facilities are needed to ensure the restaurant can operate efficiently and meet consumer expectations. Staff recommends that the Council adopt a resolution authorizing the City Manager to provide a grant in the amount of $75,000, a $50,000 Small Business Loan, a $295,000 Economic Development Loan, and a $230,000 CDBG Revolving Loan Fund small business loan to Cerveceria LLC, (DBA Buffalo Bill’s Brewery) to assist in the refurbishment and reopening of the full-service restaurant and outdoor dining at 1082 B Street.
DISCUSSION
Mr. Alejandro Gamarra is the current owner of three Metro Taquero locations in Hayward, Casa Del Toro in Downtown Hayward, and The Mexican in unincorporated Alameda County. His extensive restaurant experience has set him up for the purchase of the Buffalo Bill’s Brewery building, business, and brand. His goal is to reopen the full-service restaurant and brewery and continue to brew beer under the Buffalo Bill’s brand. He is currently in escrow to complete the purchase of the building and business.
Mr. Gamarra approached the City seeking financial assistance to aid in the refurbishment and update of the existing facilities. The request for business assistance was received in March 2023. He originally was seeking a much larger sum of funds for the project; however, due to limited available budget, staff compiled a financial assistance package that will provide available funds towards the project.
The initial grant amount of $75,000 will be paid out to the business first per the agreement, which requires the submission of receipts indicating the dollars that have been spent on improving the restaurant location. Once the full amount of the grant has been dispersed, the loans will then become available for the business owner to access. The loans will be dispersed as follows:
Economic Development Small Business Loan - $50,000 – will be dispersed as one lump sum after the grant requirements have been met.
CDBG Revolving Loan Fund Small Business Loan - $230,000 – will be dispersed as one lump sum after funds have been repaid from the loans to the previous Buffalo Bill’s Brewery owner and the execution of the new loan agreement with Mr. Gamarra.
Economic Development Loan - $295,000 – will be dispersed when Borrower provides evidence of expenditures associated with the property/business at 1082 B Street equal to or greater than 50% of the loan value.
Consistent with past practice, the loans will have a payment deferral of one year from loan execution date and then monthly principal and interest payments at 1% interest over five years except the larger Economic Development Loan ($295,000). This loan will have a ten-year payment period. The purpose of the deferral is to provide the business time to open and generate revenue before repayment begins.
Terms of Loans
Each of the loans have additional terms of performance that must be met. Those terms are as follows:
Economic Development Small Business Loan - $50,000 – First Source Employment Agreement, which commits the borrower to make a good faith effort to hire and retain for the life of the loan at least three (3) full-time equivalent employees of low- and moderate-income.
CDBG Revolving Loan Fund Small Business Loan - $230,000 – At least 51% of permanent jobs created and/or retained by the new business must be held by individuals making 80% of the area median income (80% AMI) or lower and the borrower must provide annual reporting of individuals hired, including income level and other key demographic characteristics required to meet the Department of Housing and Urban Development (HUD) reporting requirements.
Economic Development Loan - $295,000 – At least 51% of permanent jobs created and/or retained by the new business must be held by individuals making 80% of the area median income (80% AMI) or lower. This loan will also include a Public Art Requirement. The borrower shall be required to develop and install an art piece tied to the Buffalo Bill’s brand identity. The art should be designed and located where people can take pictures with it.
STRATEGIC ROADMAP
This agenda item applies to Grow the Economy Strategic priority: 2b Engage owners and encourage activation of vacant sites. The parcel at 1082 B Street has been a vacant site for approximately one year and is an important anchor for the downtown. The proposed use will activate a key site along the B Street corridor.
ECONOMIC IMPACT
The proposed grant and loans will provide funds to aid the project completion that are not currently available through traditional lending institutions. Mr. Gamarra plans to create a minimum of forty local jobs at competitive wages. This project supports the Economic Development Division team’s efforts to fill a vacant downtown anchor site with an active use. The business owner’s investment re-establishes a full-service restaurant concept.
FISCAL IMPACT
The funding for the recommended grant is $75,000 and loans totaling $575,000. Funds to support the economic development grant ($75,000) and the small business loan ($50,000) package have been allocated in the Economic Development Division budget adopted along with the rest of the City’s FY 2024 Operating Budget. Funds for the CDBG Revolving Loan fund ($230,000) will be available once the previous loans for the Buffalo Bill’s Brewery have been repaid upon the sale of the property and business. Funds for the larger Economic Development loan ($295,000) will be allocated from the General Fund.
NEXT STEPS
Upon authorization by the City Council, staff will prepare agreements to execute with the business owner for the proposed grant and loan packages.
Prepared by: Catherine Ralston, Economic Development Consultant Recommended by: Paul Nguyen, Chief Economic Development Officer Amy Cole-Bloom, Acting Community Services Manager
Approved by:
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Kelly McAdoo, City Manager