Well as if Austin needed more problems from the good ole' Perez Sisters:
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AUSTIN
Las Manitas rejects city loan
Perez sisters say proposal is too restrictive
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By Sarah Coppola
AMERICAN-STATESMAN STAFF
Friday, August 17, 2007
The owners of the Las Manitas restaurant have changed their minds and rejected a $750,000 partially forgivable city loan to move up the block, just a few weeks before they were supposed to sign the loan paperwork.
Sisters Lidia and Cynthia Perez said in a three-page statement Thursday that the loan proposal, which the City Council approved in June amid widespread community criticism, "has become way too complicated and caught up in controversy, politics and misunderstandings."
Jay Janner
AMERICAN-STATESMAN
(enlarge photo)
Cynthia Perez, left, and Lidia Perez want to keep Las Manitas open, their attorney said, but they don't know how they will pay for renovation costs, estimated at $844,000 to $1.13 million. They won't apply for other city loan programs, Amon Burton said, and are wary of a bank loan that large.
Jay Janner
AMERICAN-STATESMAN
(enlarge photo)
Lidia and Cynthia Perez say they never asked the city for a loan or grant, and had no part in writing guidelines for the Business Retention and Enhancement Program. The mayor says that's true.
MORE ON THIS STORY
.
* Las Manitas lawyer discusses decision to reject loan
* Statement by the Las Manitas Avenue Cafe owners
* Tell us: What do you think of the Perez sisters' decision to not take the City of Austin's loan?
The sisters' decision could put a downtown Marriott hotel project, which is expected to generate 600 jobs and $7 million a year in tax revenue, in jeopardy. The hotel developer, White Lodging Services Corp., needs the sisters to agree to let it build over an alley they own behind the block.
The loan was supposed to be contingent on the sisters allowing White Lodging to use that alley.
But now White Lodging and the Perez sisters will have to go back to the bargaining table and negotiate again.
The sisters said they were not happy with terms and conditions that were added to the loan, including a provision that tied the forgivability of the loan to the completed construction of the Marriott hotel complex.
That project would displace Las Manitas from the restaurant's current location, 211 Congress Ave.
"We concluded that trying to operate a small business under (the proposed loan terms) is not practical or consistent with how we have successfully run our business for over two decades. We feel we would lose a lot of our independence. And that isn't an acceptable option," the sisters said in the statement.
The council approved the loan to help the sisters move into and renovate 227 Congress Ave., a building the sisters own up the block from their current location.
It was part of a loan program designed to help small, local businesses stay open during large-scale development in the area.
Richard Suttle, a lawyer representing White Lodging, said the company would be willing to keep talking but probably won't offer the sisters more money than it already has for them to move and for use of the alley.
The sisters' lease at 211 Congress Ave. expired in December, but they've continued to operate there pending the finalization of the city loan.
The Perez sisters want to keep Las Manitas open but haven't determined where they will get the money for the renovation costs, estimated at $844,000 to $1.13 million, said Amon Burton, a lawyer who has been representing the sisters.
They will not apply for other city loan programs and they are also "not comfortable, from a business standpoint," with taking out a bank loan that large, he said.
The sisters declined to be interviewed Thursday.
Earlier this year, residents flooded City Council offices with calls and e-mails to denounce the loan's size and forgivability, and to suggest that the eatery got favorable treatment because politicians like to eat there. Burton said the controversy was a factor in the sisters' decision, but, "They are not angry. They are not bitter. This just didn't work out. It wasn't in the best interest of their business," he said.
Mayor Will Wynn, a proponent of the loan, said the loan's terms were tough, but reasonable and necessary for proper oversight. He said he is concerned that the sisters' decision could imperil the future of Las Manitas and the Marriott.
"I didn't mind the heat we got for voting for the loan," he said. "The real issue was whether we were going to have both of these projects or neither. I would be really disappointed if, nine months after this began, we start back at ground zero (on the negotiations) and these projects don't happen."
Council Member Jennifer Kim said the city should not step in again to try to resolve any conflict between the sisters and the developer.
"As far as I'm concerned, I'm done," she said. "We gave them our offer and took a lot of hits for it."
The initial loan proposal would have required the sisters to pay back the loan for only five years. If the sisters met certain conditions, such as retaining employees, the city would have forgiven the balance after the fifth year.
But Council Member Mike Martinez recommended a provision, which the City Council approved, that would have required the sisters to pay back a prorated portion of the balance if they closed or sold the business between the fifth and twentieth year of the loan.
That provision made sense, Martinez said, because it ensured that the Perezes would no longer benefit if they violated the basic goal of the program: to retain businesses along Congress Avenue.
That provision extended the city's lien on the sisters' 227 Congress building through the 20th year, putting them in jeopardy of losing that valuable downtown property if, for some reason, they could not continue operating the business for two decades, Burton said.
The city added other terms and conditions that were too restrictive after the council approved the loan proposal, Burton said.
For example, the loan would have been forgiven immediately after the first five years only if White Lodging finished building the hotel during that time, but the sisters would have had no control over that construction schedule, he said.
That provision was included because the fees from developers that would support the loan program could be collected only if the Marriott was actually built, Martinez said.
Another intrusive reporting requirement, Burton said, would have required the sisters to notify the city if any of their key employees became seriously ill.
Assistant City Manager Laura Huffman said Thursday that was not a condition of the loan.
The sisters wrote in their statement Thursday that White Lodging initially offered them $72,000 to relocate after the developer first proposed the Marriott project last summer. But that amount would have covered only about 10 percent of the relocation and building costs, the sisters said. The negotiations reached an impasse in December.
That month, Burton got a call from one of the hotel developers, saying an arrangement had been worked out to resolve the stalemate. Burton said Wynn had told him the city would create the Business Retention and Enhancement Program to help retain small businesses along Congress Avenue.
The fund would be financed by development fees from new projects that displaced small businesses.
The sisters said they never asked the city for a loan or grant, and they played no role in writing the loan program's guidelines. Wynn said that is true.
The initial loan proposal seemed like a creative way to resolve development conflicts, the sisters said, because the money they paid off during the first five years would go back into the loan fund to help other small businesses.
But when they received the loan terms this summer, they said, they were troubled by new terms and conditions that had never been discussed with them.
"What appeared in December and this spring as a win-win for the City, for the developers, for a locally owned business, and Congress Avenue looks very different today," they said.
Linda Smith, a Dripping Springs resident whose husband's band often plays at the restaurant said Friday, "I would hate to see it close.
"Maybe they could get an investor to help pay for it. They had good expansion plans, and I would encourage them to look at every possibility and not give up."
Other questions have been raised about the loan since it was approved.
Public records show that Paul Hilgers, the city's community development director who manages most of the city's business-loan programs, concluded in May that the loan for the Perez sisters should be lower, should not be forgiven and should be supplemented with a bank loan or private funding, which the sisters had not sought.
But Economic Growth director Sue Edwards never showed that analysis to City Council members because she said the loan proposal met guidelines the council already had approved.
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I'd want to feel secure on my balcony if I was a little buzzed. Besides that, nevermind trying to sit out there during a thunderstorm or just rain as you'd be right out in the elements, plus during the day it must be hot as hell out there. I love the balconies on The Monarch. Looks like an actual living space. One that you could enjoy with a few potted plants. 
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