It has that weird feeling, like Dead Man Walking. We’re at the bar. Jimmy has got me my regular Arrogant Bastard. Tiger does a pretend growl. “That Arrogant Bastard.” Miguel the chef sits with his evening cerveza, a Bud Light, swearing in Spanish at the ball game on TV. Guillermo, one of the bar trainees, passes by clinking a load of glasses. “Como estas?” he says, mainly to give me the chance to use the oh-so-cool answer he taught me, “De que me quejo?” — “Can’t complain.” James the wooden-boat builder, and Bob and Dorothy the retired couple who are famous for dancing lovingly whenever musicians play here, are already ensconced.
Brian the Marine officer and Inga his Navy dentist wife pull up stools to eat and watch the game. Pete the surfboard designer comes up ready to argue the latest wrinkle on the presidency. We both enjoy arguing, so that’s the next half hour taken care of. We’ll end up talking about his idea to start a surf school in Gaza, on the Mediterranean coast, our own Middle East peace initiative.
So, yes, it is a real-life Cheers sort of situation. It quietly soaks into your bones that this is as important to your day, your week, your sanity as any work. And yet, tonight, it’s got a hollow feel. Everything’s good, except it’s not.
“This is it for Costa Azul,” Brant, the owner had told us. “We’re closing at the end of the month. New owners. Going to up the rent. Want to turn this into a ‘high-end boutique restaurant.’ That’s not Costa Azul. We’re a cantina for locals.”
This was last November. What was happening was that a company called Kleege Enterprises had bought the entire prime block of downtown Coronado in one giant real estate deal.
The 20 businesses operating on the block include two restaurants (three, if you include MooTime Creamery), plus the local newspaper, the Eagle & Journal (headquartered in the second-oldest house on the island), cleaners, beauty salons, galleries, the famous Bay Books bookstore, and El Cordova Garage, reputedly the oldest operating garage west of the Rockies.
And the first shock: Kleege Enterprises told El Cordova to leave. They ousted the 114-year-old garage, which had been selling and servicing Coronado automobiles since 1904. El Cordova was about the only place on the island where you could get anything fixed, from your Bentley to your golf cart. El Cordova was such a fixture in the community, as a piece of working history, and a symbol of the “real,” non-tourist Coronado, that it had become a tourist attraction itself.
Kleege Enterprises had decided to kick out El Cordova Garage in favor of an Italian pizza restaurant, Buona Forchetta.
As real estate bites go, this was shark-size. Overnight, a third of downtown Coronado had changed hands. And because ownership rights trump citizens’ or local government or renters’ rights, all eyes were turned to the new owners.
The block fills the space between Orange Avenue, Tenth Street, and C Avenue. Kleege won the bidding war by offering a reported $23 million to Hartwell Properties Limited Partnership of Las Vegas. Hartwell was actually very much a local Coronado concern run under the leadership of Nina Hartwell (whose house on Ocean Boulevard is still for sale at $13,500,000; it’s known as the Velcro Mansion, because Nina’s husband Clark was an early investor in the rippy-sticky stuff). For decades, Ms. Hartwell ran the downtown commercial property with mostly month-to-month leases but, to compensate, a light hand and reasonable rents, until she became too old and infirm.
Suddenly, the Nina Hartwell era has taken on the golden haze of the Good Old Days. All the businesses received notes revealing the new address to send rents to, but, according to Rock Walton, that was pretty much it. Unspoken: an upcoming rise in the rents.
But for Walton, it was much more.
“I got a call. And [people from Kleege Enterprises] wanted to come in and meet with me. I took that as a positive, that at least there would be some kind of communication. Because they weren’t returning calls; they won’t talk to anybody. So we set up an appointment for the next morning. These two guys walked in here. One of them is some kind of vice president for the company, and the other one is a consultant. And this young kid, the vice president, had a prepared speech that he’d practiced that was obviously written by someone else.
“And he said, ‘We wanted to come down and speak with you, face-to-face. And we need to let you know that we have reached an agreement with a new tenant for this property. We understand that it will take some time for you to get your work done, and to get all of your equipment moved out of here, so we’ll give you three or four months to get that done.’
“Because I was a little bit flabbergasted, I didn’t really respond. It was just, Are you frigging kidding me? Because it was not what I was expecting at all. I’m one of the highest rent-payers on the block, and so for them to come in and kill us first was a surprise.
“Honestly, I was freaking crushed. I have spent $2 million on this place. I spent 30 years of my life in this place. It’s more than half my life. And I came to work [that] morning worth two million dollars and went home worth about 20 grand. The $2 million represents the value of the business. Without the property, the business has no value. The only thing it has is its equipment.”
Was there no way to stay? Like offering to pay more rent?
“They didn’t even offer anything to us. There was no offer of ‘If you pay this much.’ After the fact, after that 30-day eviction notice, the guy said that even if he would allow us to stay here — which, again, we don’t fit in his business model because, since he thinks it should be a strip mall, automotive doesn’t belong in a strip mall — he wouldn’t let us stay no matter what we paid. But he said he would have to get $30,000-a-month rent for this building, for what [financial stake] he has in it, ‘to make his bankers happy.’ There is no possible way that this building is worth $30,000 a month. I don’t give a shit what you do with it. It is not worth $6 a foot. Right now, I am paying $10,000 a month.”
Could he perhaps move to, say, I.B.? “There are consequences to moving. We would have to plan on half of our customer base going away if we leave the island. It’s just the way business works. And we lose the towing [contract]. So that means we’re going to go from a million dollars a year down to $750K when we lose the towing. And then we’re going to cut that in half [by leaving], so now we’re at $375K. And I’ve been hearing $125,000 a year in rent down there, and when you’re only doing $375 grand, that’s just hard to swallow. So the rent needs to be around $3000 to $4000, like what it’s worth. It’s hard enough to do what we do here at $10,000. This has been a hard nut to crack every month. It costs me $80,000 a month to keep these doors open. I come out at the end of the year with about $50 grand, working as much as I do.”
This is nine on a Thursday morning, one of the business’ last days. We’re sitting in his office, beside one of the old cars he always exhibits in the corner window, just as they did back when this was a DeSoto dealership. All the time the phone is ringing and people are coming in. And his twin sons, John and Matt, who work in the business, come in and out with mechanical problems and dockets.
And beside him all the time, Kai, a malamute-like dog with Arctic-blue eyes.
Elderly lady comes in. “Just came to see Kai. How are you, boy?”
It’s Mrs. Kirschner from the chamber of commerce, across Tenth Avenue.
“She’s here every morning,” says Walton. “Just to say hi to Kai.”
“El Cordova Garage. Yep. How are you? So they didn’t fix it? Tell me your address over there again. Give me your phone number so I can give it to the driver. Yep. And you are there now? I’ll send him over.”
Walton, into intercom: “Hey, I need you over here.”
A pneumatic impact gun burps off, taking nuts off a wheel.
It’s like this for the whole hour we talk.
“They’ve also gone after Costa Azul,” Walton says, getting back to the subject. “They have a set business plan. And it’s a La Jolla look. As far as I’m concerned, and I’ve said this from day one, [they’re] trying to make us Southern La Jolla. And nobody goes to La Jolla because it’s now a crap hole with a bunch of empty offices and places because nobody can afford it, and it’s too commercial.
“What the attraction has always been for Coronado is that it’s a small town. We don’t need to be what the tourists want. We need to be what we are so that the tourists will come.
“It’s kind of like the Italian restaurant they want to put in here [Buona Forchetta]. How many Italian restaurants can you put in a town? We have half a dozen already. And they keep failing because there’s too many, and these people don’t understand that you cannot live off of [the tourist season] four months a year.”
So, has the City of Coronado tried to help Walton, especially given the status of his garage in the community?
“Nobody [from the city] has made a direct contact about this with me.”
And solidarity from other business people?
“No. They have all more or less talked to me. Most of these people are just trying to run their businesses. And most people don’t have the fire in the gut that I have. They’re afraid to do anything. They’re afraid that if they do anything then it’s going to happen to them. So, they cower in a corner. I am not one to cower in a corner.”
It’s not that he doesn’t have supporters. A Coronado resident, who wishes to stay anonymous, shows me an email exchange he had with Richard Bailey, mayor of Coronado.
“Richard, this email is my request for Coronado’s City Council to support and facilitate El Cordova Garage staying in business in Coronado. El Cordova is a highly valued, well managed, and competent business, providing well-paying jobs and probably nice steady business tax revenue for Coronado. Plus, El Cordova is part of Coronado’s true history. To me, Mr. Walton is running a business that exemplifies the necessary, desirable, non-touristy aspects of living in Coronado.”
From the mayor: Dear [Sir]: There is nothing we as a city council can do to get in between the relationship of a tenant and landlord. However, I have been in touch with Rock and the representatives of the new ownership to inquire about any other possibilities. Fingers crossed for a successful outcome but there is nothing within the control of the city council. Richard Bailey, Mayor.
Gent comes in named Toby.
“I just came, actually, to chat with you a little bit. Find out what’s going on. How much longer do you think you’re going to be here? I wish you were going to stay. We don’t need another damned pizza parlor.”
Then a lady customer asks Walton, “What am I going to do when you’re gone?”
Walton tells her, “Let’s pray [son] John finds a place [off-island]. You know, my dream was, as a kid, to have a little two-bay garage in a gas station in the middle of freaking nowhere, where I was dealing with a small group of people. I wanted to be that — as goofy as this is, what was it? The Andy Griffith Show? Remember the tow-truck driver, the mechanic? That was my dream.”
Now, he’s worrying for the restaurant that’s slated to replace El Cordova.
“[Customers] are saying things like no matter what [business] they put in here they will not come here. The guy who is renting this space, this Italian pizza shop, he doesn’t know that he is getting into a building that people will hate him for being in. Just for being here. It’s not his fault. But he’s going to be boycotted back here. He’s on the back of a block that nobody’s going to see him; this location is not good for a restaurant. So, if he doesn’t have the tourists, and the locals hate him, this guy’s going to dump a shitload of money in here and not have a chance.”
Another woman comes in, goes straight to Walton, and kisses him. As she reaches up, I notice she has stars tattooed on her neck, climbing up behind her right ear. Eleven, by my count.
“Each one is for a grandchild,” she says. Her name’s Sheala, Rock Walton’s wife.
“This is where we’re at,” she says. “From having a life to everybody just closing everything. Rock was crushed. As difficult as it is for me, I can’t even imagine the stress he’s going through. It’s not just us. It’s [the crew]. They have lives, too. You’ve got to think about the employees. And this man [Kleege] does not care about anybody.”
“We’ve got nine guys that work for us,” says Rock.
“So,” says Sheala, “we’re going to Oklahoma.”
Why Oklahoma? Sheala’s relatives are there, and they can find pasture for the three horses they’ve kept down on Hollister. Plus: Oklahoma’s way cheaper.
“The cost of living here is outrageous. And then to have some guy say that if we wanted to stay, he’s going to triple the rent, we had to go.”
“He wants to make this a restaurant for now, but potentially, he wants to make this a mall,” Rock says. “I truly believe that his intention is to plow this block. I’ve looked at all his other properties, and he’s plowed them all and turned them into strip malls.”
“He appears to be a nice guy,” says Sheala, “but look at what he’s done to us. I had planned on being here, with my husband and my kids.”
“The boys,” says Rock. “They’ve been working here for years, and my intent was that they would take this place over and continue it on for another 30 years....”
His voice wavers. I can see he’s trying to hold back his emotions.
“As I told the Eagle, to let El Cordova Garage go out of business on my watch, after it has survived 114 years, that’s kicking my butt.”
They can lie. They can cheat.
Around the block, Brant Sarber, owner of Costa Azul, is having his own dramas.
“When they first came in, all they did was give their address and say, ‘Here’s where you want to send your rent. Your lease is up at the end of November, so if you’d like to stay, send a proposal.’ And so I did.
“We have been here 18 years. I first heard about these coming changes in August. I knew the block was for sale. We still had some lease left, so we were feeling like everything was fine.
“It felt like they were going to give us a new lease, and we were going to continue on as we wanted.
“And then they came and said that they were probably going to be raising the rents. And they said, ‘We are probably looking to do something different here.’ They said they were looking more for a high-end boutique restaurant.
“I was feeling I’m not changing it. So, what I’m going to do is let them know that I’m not going to operate a high-end boutique restaurant. I want to keep Costa Azul Costa Azul. I have it here mostly for the locals; I have my price-point down so the locals can come, and maybe come a couple of times a week. The tourists are just a bonus for me.
“So I sent them a proposal around the end of August, and it was registered mail, and they received it. I never heard anything back.
“So I sent them [another] letter that said, ‘I’m definitely not going to change Costa Azul. We’re here for the locals. So, I’m sorry, but I’m going to have to quit. And I’ll be out November 30.’ On the 3rd of November, I got a call from Mr. Kleege himself. And he said, ‘I understand that you’re getting ready to leave.’ And I said, ‘Yeah, I just really haven’t heard much back about any of my correspondence.’ And he asked me to resend that August letter. So, I emailed him the letter, and about an hour later, he called and said, ‘Would you be interested in staying until the end of August?’
“I said, ‘That would interest me.’ But, bottom line, I would not take an increase in rent. And he said okay. So, reprieve. But after August, who knows? Almost everybody on the block is month-to-month. Everybody’s like [Bay Books], who are wondering if they can order [books] for Christmas. It’s the uncertainty.”
Sarber’s main beef with the new owners: “Everybody on the block says the same thing: they won’t communicate.”
Not that this makes any difference from a legal standpoint.
“My attorney has basically told me, ‘There’s nothing you can do. They can lie, they can cheat, they can do whatever they want, because they are owners of the property.’ ”
Sidewalks rolled up
“The price is outrageous,” says David Spatafore. “It doesn’t pencil out in any way, but it was a unique opportunity and that’s why he bought it.”
He’s talking about Kleege Enterprises paying $23 million for this block where Spatafore has two businesses operating, Mootime Creamery and Leroy’s Kitchen + Lounge. Spatafore is one of Coronado’s great hometown-success stories. The Coronado High School grad started off creating MooTime Creamery in 1998 and has since expanded under the corporate title Blue Bridge Hospitality to create a dozen restaurants. We meet at his latest, the ramen-leaning West Pac Noodle Bar, across Orange Avenue from the block Kleege purchased. It’s still reverberating from a jam-packed opening week. The morning sounds of pot clangs and flatware jiggling are our background music.
For Spatafore, the sale of the block signaled the end of the unsatisfactory but financially easy times.
“The party’s over. Because the old landlord was old-money and they never did anything to the block. They never gave us any money for tenant improvements, they didn’t ever fix anything, they didn’t do a damned thing. But, the rent was cheap. So it was a give-and-take. You never called them if you had issues with certain types of things. Look at the parking lot at the back. It’s completely destroyed. They never repaved it. It’s been there for 18 years. But, the rent was cheap.”
Could Coronado devolve into La Jolla South? Spatafore believes the new owners can’t actually change much.
“Mixed use is banned in Coronado now. Living above and commercial below. Parking was an issue. Residential density. [Kleege] can’t do that. So I think that the town will dictate what can be done there within the current codes. It can be pretty limiting.”
But how fair are sudden jumps in rent and the kicking out of tenants who may make great contributions to the character and well-being of the community?
“Well, when you rent, that’s the risk you take. When we had the low rents, they never gave long leases. So, again, it was a risk. Like in this place [West Pac Noodles] we have 13 years of a lease. In Maretalia we have 15 years of a lease. At Stake we have 12 years of a lease. Well, they never did that [at Leroy’s]. That was one of the reasons we got low rent. So, to say that Kleege this, or Kleege that, I understand, emotionally, but you don’t have any rights. You’re just renting. If you don’t secure a long lease, then you’re taking a risk. So it’s kind of hard to blame [the owners].
Spatafore says he met with Bruce Kleege before he closed with escrow.
“He told me from the very moment he met me that he likes our operation [at Leroy’s]. We put a lot of money into remodeling that whole space, so he’s not really concerned. There’s no blight. It didn’t excuse us from paying higher rent in future, but it doesn’t subject us to being removed.
“Unfortunately, there are some uses in the block that economically no longer make sense, when you pay that kind of money for a block. Actually, it’s more the bigger places that are subject to the issue. So, Bay Books and the [El Cordova] garage are the two biggest spaces on the whole block. [And] they pay the lowest rent! We pay way more rent than they pay. But how much rent can a bookstore pay? They’re in competition with Amazon and Costco. It’s a feel-good business. It’s tough. Margins are thin. Everybody loves to go in there and looky-loo, and all that inventory costs them a ton of money. And then they turn around and they go buy the book on Amazon five dollars cheaper. But these guys are stuck with the rent. You can’t have it both ways.
“Things are tough in the restaurant business, too,” Spatafore says. “Minimum wage is up, like, a dollar. That’s a 5 percent increase to our cost basis. If your margin is only 10 percent, how do you absorb a 5 percent increase in cost? When I started in 1998, we paid, like, $60 to $70 for a keg of beer. Now, beers are better, but they cost $150 to $200. So, the price [we charge for] a beer hasn’t doubled in 20 years, but the cost [to us] of a beer has doubled.
“I just think that all these things, including the rise in value of real estate, which reflects a rise in rent costs, are going to [reach a point where] eventually, there’ll be some cross-hairs that are just going to take people out at the knees.”
He says the new owners would like to put some money into the block to make it more aesthetically pleasing. “And being what he paid and what he’s going to put into it, the rents are going to go up.”
But what about, say, Manny Granillo’s much-loved Island Surf, another Coronado institution for generations of wave-riders? He has closed down already, for a reported fear of a tripling of his rent.
“Manny was ready to close. I loved Island Surf. It was a great store. But [closing] wasn’t even a decision if you’re already just barely making the rent. If it’s just kind of subsistence level, whether the rent goes up 20 percent or 100 percent, it can’t [realistically go on].”
But did the El Cordova Garage — surely the ultimate symbol of the “real” Coronado — have to go? It’s clear that an oily garage wouldn’t fit into the new owners’ vision of an “upgraded” downtown. But don’t the people of Coronado also have a say?
“I’ve warned [Kleege Enterprises] that Coronado is a unique, odd market,” says Spatafore. “Because it’s got this false sense: it’s an affluent community, but a lot of the affluence that’s here is part-time residents, number one, and transient residents, visitors. You see the sidewalks here? Four o’clock in the afternoon in, say, December, they’re rolled up. Leroy’s tries and stays open late and have a late-night presence, and, man, it’s crickets!
“So, I don’t think people have to worry about [developers] trying to La Jolla–ize Coronado. When I hire people, particularly for management, I always tell them, ‘There’s a difference between Coronado, La Jolla, and Rancho Santa Fe. The people who come and buy homes in Coronado have the same amount of zeros in their checking account, but they like to wear flip-flops and get out of their Maseratis. Here it’s a bit of a more small-town mindset. The sale of one block is not going to change that.”
Destruction of Coronado
But don’t tell that to Rock Walton.
“It’s more than just me being gone or El Cordova Garage being gone. This is the start of the destruction of Coronado downtown,” says Walton. “It has already started to roll into the adjoining blocks. I talked to a gentleman who has a business down the street whose landlord has already contacted him, saying that he understands that the rent values in Coronado are going up. This guy still has three years left on his lease, but his landlord, at the end of that three years, wants to match the rents that this guy [Kleege] wants. So, we’re going to run out some more small businesses. This is not going to stop on this block. It’s going to ruin Coronado downtown. And frankly I’m glad I’m not going to be here to see it. It’s already starting to ripple out. It hasn’t even happened yet, and it’s rippling out.”