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Buchholz Guest Commentary is Hypocritical

Michelle E. Buchholz of Hook, Line & Sinker put out a Guest Commentary in the Brentwood  Press yesterday which did not provide accurate facts that should be corrected before people pass judgement. It’s also somewhat hypocritical.

While I support her right to express her opinion,  she is not entitled to make up her own facts.

Her concerns are valid and deserve a further look while  her and I probably agree the deal overall does stink, but the reality is she and her business have no room to be complaining and attacking  Carpaccio’s about taxpayer money because they have a nice deal of their own.

Since the city is still technically the landlord, the City has honored Hook, Line & Sinkers current rent which is 50% of market value which they didn’t have to do.  This is money that would otherwise go to back to taxpayers in Oakley in one form or another.

Market value in Oakley is estimated at anywhere between $1.71 per sq. ft. to $2.00.  So you can do the math on a 4,500 to 5,000 sq. ft. building. Basically, Hook, Line & Sinker has a fabulous deal on rent at our expense.

(update: I was just informed fair market rent for Oakley is not $1.70 per sqft., especially where Hook Line & Sinker is. It’s closer to  $0.75 to $1.10 plus CAM’s.)

To put this in perspective, Black Bear Diner across the street is paying well above market value at $2.08 per square foot with a 3% annual inflation adjustment.

The City further worked with the business to waive their Common Area Maintenance Fees (CAM) of $1,200 per month which could otherwise have gone to Oakley Taxpayers.

Before she wants to go trash another business and the City of Oakley because she is not getting enough special treatment during construction, she might want to look in the mirror.

You can read her entire article on the Press Site, but I want to go through her glaring errors. Her text is in bold with my comments below.

During our first meeting with city staff regarding the construction, I casually inquired about the rumors I had heard that the Carpaccio’s restaurant in Antioch had closed a few months back because of tax reasons. We were told that they could not find any evidence to support those “rumors.”

We are talking about two separate companies. Five Restaurant, Inc. and Manuals Five Star Restaurant, Inc. are both different. One is now out of business while one was just formed.  From what I’ve been told, Five Restaurant, Inc. had to file bankruptcy to get out of its lease from Antioch because they were not going to allow them to break the lease.

So can you imagine my surprise, after spending just a few minutes on the county website, that I discovered that Five Restaurant, Inc., the corporation that owned Carpaccio’s in Antioch, had 12 liens filed for non-payment of federal state employment taxes and county property taxes to the tune of over $113,000? Ouch!

Again, the company that was not in Antioch is not the company the City made the deal with. The City is dealing with Manuel’s Five Star Restaurant, Inc. and not Five Restaurant, Inc.

Being a CPA, I thought the City Council should be made aware of this and that they would be dumbfounded and outraged. But first I did a little more research and discovered that a second corporation, Manuel’s Five Star Restaurant, Inc., was established by Manuel Munoz to handle the transaction with the City of Oakley, where he eventually obtained loans of taxpayer funds in the amount of $2.175 million.

Just because she is a CPA, doesn’t make her an authority on facts.  According to Bryan Montgomery this $2.175 million loan value is incorrect as the real number is $1.8 million. The loan was not from the City, but from Redevelopment monies that the state was taking away.

Why did the city attorney need to investigate the shutting down of the old corporation? So, which is it? You didn’t know about the liens or you knew and had it investigated. Or did you not know that these tax liens go back almost three years to 2009 – well before any discussions with the city? How do you approve a $2.175 million deal without doing a simple credit check, which would immediately indicate recorded liens?

Of course they are going to investigate it to ensure there is no liability. If there was a liability to the city, the city would have walked away. I will agree the liens should  have been more public during the sales job to the public and vetted out, but what does Ms. Buchholtz suggest we do now? Boot Carpaccio’s and have an empty building?

Again, she is inflating the loan which was just $1.8 million.

Where is your sense of fiduciary responsibility? Where is the fundamental belief that you have a duty to the taxpayers to use their money wisely? Did it never cross your minds that the owner of a failing restaurant might not possibly be the best choice for an investment of this size? Were you in such a rush to spend Redevelopment Funds, before the state could get its hands on them, that you threw all caution to the wind?

 All valid questions, but this had been vetting in public during council meetings and where was she then?  Had the city not moved, the money would be lost, we would be looking at a parking lot, and the State would eventually pick what business/facility would be placed across from City Hall.

Ultimately, the City had better hope Carpaccio’s does open without failure and operate in good standing for years to come or this will likely go down as the city’s poorest decision in the history of the town.

I received only three responses from City Council members and, except for Randy Pope, the lack of concern in their responses was very evident.

The Council should be concerned, aside from Jim Frazier who voted no to this, all other council members supported the deal which includes Randy Pope. Her giving him credit for being concerned is too little and too late. What is he doing to ease concerns? Probably very little.

So what now? Let Mr. Munoz continue to build and open Carpaccio’s and let him use taxpayer funds to pay off his liens. I suggest they cut their losses and know full well that this is most likely the tip of the iceberg for Mr. Munoz’s financial problems, and the City of Oakley shouldn’t be the solution.

This is a flat out lie and poor rhetoric by Ms. Buchholz where an apology to both Mr. Munoz and the City is warranted.  None of this money will go to paying off liens because its needed for the business in Oakley.

Some have suggested that we might be jealous that Mr. Munoz got a better deal for Carpaccio’s than we ever did for the Hook, Line & Sinker. But the point is that Mr. Munoz got a better deal than any other existing business in the city of Oakley – except, of course, for CentroMart, which received $6 million, at least double the fair-market value for the Oakley Plaza.

If Hook, Line & Sinker was not jealous, they would not bring this up. Truth is, the city has worked with them, but they wanted something for nothing while construction was on-going. This actually is not the best deal in Oakley because another building actually had a higher value in redevelopment funds used.

As for the claim that $6 million was more than double fair-market value, it’s a lie. The parcel appraised at $6.8 million while the owners wanted between $7.25 – $7.50 million. Anything under appraisal is a deal no matter how you slice it.

Just so she can understand it in a likely scenario. A buy wants to buy a gun but Hook, Line & Sinker but it costs $600. A competitor is selling the same gun for $400. Unless they negotiate down in price, the buyer goes elsewhere. It’s the same with property.

The members of our City Council are nice people and I wish them well, but nice isn’t cutting it any more for me – and I don’t need another park. I urge you to cast your votes wisely this November.

This paragraph provides all you need to know two-weeks before an election that this is nothing more than a political attack because Hook, Line & Sinker is upset at the city. On the Brentwood Press site, Michelle admits to this being political and she is fed up.

Final Thoughts:

We can debate this all we want, but lets at least use the same facts and figures before entering a debate. At the end of the day this building is much better than an empty parking lot and an eye sore.

Would Carpaccio’s have been my first choice based on this deal? Probably not but as long as the business can open in November without failure I think we see how this plays out.

If it fails to open or closes within a year, then some serious personnel questions down at City Hall need to be addressed.

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10 Responses »

  1. Is this woman stupid? She is paying 50% rent, $1,200 CAM fees waived which is basically $3,200 per month or about that lost to taxpayers and she is complaining? In a years time, thats nearly a $40k break from Oakley that needs to stop She needs to be paying fair market value NOW along with any other business on that parcel. This is unfair to the taxpayers.

    If she is so concerned with Carpaccios ripping off the taxpayers, then where is she with the Oakley Chamber of Commerce who is paying just $1 rent for their building each month? Residents need to demand all businss pay fair market value and the City should stop playing favorites.

    Well done Burk in bringing this forward and correcting facts.

  2. This is why Oakley needs to get out of the landlord business. They give a bunch of sweetheart deals to business at the expense of residents. Shame on Ms. Buchholtz.

    • Many of us have been aware of problems since Carpaccio’s closed. Wasn’t difficult to get the facts. But, many many people from Antioch will be knocking the door down to eat at Carpaccio’s again. It was THE best place to eat in Antioch and we were sick our council wouldn’t do anything for Chef Munoz. He deserves to be in a better place.

      Back taxes are a problem, however if you check out a few places in Oakley you will probably find more than 113,000. A certain former stove place on main street comes to mind. But I understand he has left town.

      • Agreed. I miss it because it was right down the street from me before closing. This piece wont win Mike any friends, but at least he is telling the truth which is more than the Brentwood Press allowed to be printed.

        You are right, we do have a real problem with our Antioch council.

  3. Mr. Burkholder, you bring up some very interesting points which Hook, Line & Sinker is being pretty hypocritical to the city when they are getting one of the best sweetheart deals available. I know firsthand they have been complaining ever since construction started and have been a thorn in the cities butts for a while now, this letter was probably the tipping point as something set her off.

    While I believe incentives are needed (which I know you agree with) to bring business to Oakley and get them up and running, Hook, Line & Sinker have been there how many years? It’s time for them to pay their fair share including CAM Fees! Residents should encourage this change immediatly. If Ms. Buchholtz wants to run her mouth on one business abusing taxpayers, she should do it for all business including her own.

    Someone brought up the Chamber, while I personally do not want to see their rent go up from a resident stand point they should, I’d want them paying more. I am torn. Maybe put them at a pay structure similar to the Dirty Pirate who is paying just $500 for downtown but no more than that!

    It appears that Ms. Buchholtz opened up a can of worms that she maybe didn’t realize would happen. Mr. Burkholder is correct with his facts, but residents should demand better from the city in oversight of its rent and the deals they do and do not get.

    If I am Black Bear Diner, I am a bit pissed right now and would seek some answers.

  4. So Mr. Burkholder has been providing all the facts on Ironhouse abuses and lies to ratepapers and the paper does nothing with it even when documents are provided. But then the paper prints this Guest Commentary without fact checking???????

    No wonder why East County is so naive when it comes to local politics, the papers are failing us.

  5. Great work Mr. Burkholder, I just read this article in the paper this morning and thought to myself that it was interesting she would “out” Carpaccio’s and not be transparent in the details of her own deal.

  6. Not a fan of Hook, Line & Sinkers overpriced merchandise. Good work Mike on sticking to the facts. I’ve noticed you have been more factual instead o making fun of people.

  7. Mike,
    Your comments are interesting, but you are still writing based solely on your emails from Bryan Montgomery, and not taking the time to verify or research the facts. I believe, as a citizen, taxpayer and business owner in Oakley, that I actually do have the right to complain, not to mention our First Amendment, which apparently gives you the same right.
    You say I am hypocritical, but in order to validate that, you actually use bad data, such as the fair market value of rent in downtown Oakley, comparing our 55 year old building in which we made all the improvements, to a 5 year old building built by the city under prevailing wage statutes (and even your correction is high). Have you seen that the City of Oakley is accepting bids on the new retail space being built as low as $1 per square foot? And, there is also the fact, that the city purchased this property “subject to” existing leases.
    To respond to one of your reader’s comments, most of whom seem to be very quick to judge without knowing all the facts, we have been paying our fair share of rent and CAM charges, employing people, supporting the community and paying our payroll, sales and property taxes along the way for the last 19 years. I hope you don’t hold that against us, but we actually do try very hard to run a reputable business seven days a week.
    Personally, I agree with one of your readers that charging $1 per year rent to the Chamber, YMCA, HALO, Clinica de la Raza, and perhaps other non-profits, is not a financially responsible decision for the council to be making when it is still approving 23 furlough days per year for city employees.
    You also say that the second corporation was “just” formed. Actually, that’s an error because that second corporation was formed prior to Mr. Munoz signing the final agreement with the city in 2011. You also comment that he had to file bankruptcy on his first corporation to get out of his lease. However, have you seen any documentation on a bankruptcy filing? That is because there was none filed and that would mostly likely be because of the payroll tax issue.
    As far as my math being incorrect, the total loans are indeed $2.175 million – $1.2 for the initial construction, $600,000 for the improvements, and a third agreement approved by the city to roll the cost of the separate retail building into Mr. Munoz’ agreement to the tune of $375,000 for which the city will reimburse him.
    So, you ask where I was and why didn’t I ask these questions in the public city council meetings. To be honest, I was “in the dark” along with every other citizen of Oakley, and it’s only because I took the time to do the research and get the actual documents did I become “enlightened”. I wish I did know last year what I know now. And so do many others, perhaps even yourself, since you seem to agree that this deal “stinks” and “may go down as the city’s poorest decision in the history of the town.”
    Unlike the city manager and the city council, I am more than happy to share my research with anyone who has a valid interest in educating themselves. And, I will not defend our business decisions on someone’s blog, but if you’d like to know the truth, come on down. We’re located right across from city hall behind the construction.
    And finally, you should know that I write like I prepare tax returns. If I don’t think I can justify in audit everything I put on a tax return, then it isn’t included. I wish you held yourself to as high a standard. And if you get elected to the Ironhouse Sanitary District, I hope you insist on seeing the evidence before you take a side and don’t vote based on hearsay.

  8. Well said Michelle.
    Mike’s work here is not up to his usual standards. Wonder why?

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