The city is pursuing an amendment to the lease of the Villa Chanticleer that would include a cost sharing agreement with the lessee, Tayman Golf Group Inc. and the city, to help with carrying costs through Dec. 31. Direction was given to the city by the Healdsburg City Council during its meeting on Sept. 8.
Since 2014, Tayman has been responsible for operating the Villa, keeping up with maintenance and helping to organize events such as weddings and parties. The city is responsible for the overall structural integrity of the building.
Not only has the Villa been used for weddings, but it has also been used for events with local nonprofits and organizations at a discounted rate.
Annual popular events like the senior dinner and the American Legion crab feed are often held at the historical Villa, however, the lessee gets most of its revenue — which goes toward operating costs — from paid events like weddings, and corporate events.
According to Themig the use has increased significantly since 2015, however with the COVID-19 pandemic and the related stringent restrictions on events, use of the space has come to a grinding halt. Like many businesses who are struggling in a COVID economy, the Villa’s carrying costs have continued, but the influx of income has not.
“All of the upcoming bookings were either deferred or cancelled. The future immediate interest (in the Villa) has temporarily ceased and like many other businesses, the operation has stopped while the carrying costs continue,” Themig explained.
In April, Themig met with the Tayman Group to talk about how to get creative with the use of the center. He said they threw around ideas like creating temporary restaurants or creating a space for businesses or schools, however, as COVID and its related orders changed, there wasn’t much interest from locals in those ideas.
Themig and the group were now back to square one and through discussion in July they came up with three different options: enter into a new agreement with Tayman to operate the Villa for a fee on behalf of the city, share the carrying costs, or terminate the lease with Tayman and walk away from all operations.
Initially the Tayman Group provided the city with notice of internet to terminate the lease effective Aug. 31, however, Themig was able to extend that to Sept. 11 to allow the council to discuss the three different scenarios and provide direction to staff.
While terminating the lease altogether would be the least expensive option for the city, doing so might mean the group and the city misses out on a projected $450,000 in revenue from booked events that were planned for 2020, but are now rescheduled for 2021.
“There is an extreme interest in the site because weddings couldn’t happen this year,” Themig said. “She (the Villa event manager) was able to work with most of those weddings to get them rescheduled for next year and she has been receiving many contacts from other potential bookings.”
The fee option would essentially have the city provide the group with a monthly loan equivalent to the carrying costs, about $12,000 a month, throughout COVID-19. Themig said funds would’ve had to be identified in order to supply the loan. An alternative to that option was for the city to take in all of the operating costs of the Villa and enter into a management agreement with Tayman or another vendor for operations staff and work.
With that scenario the city would have been responsible for booking all revenue events and paying expenditures, plus they would’ve had to pay Tayman $75,000 a year for management costs. This would have been the most costly scenario long-term wise.
“We don’t think it is a viable option because the costs are significant,” Themig said.
All councilmembers were in agreement that sharing costs would be the best way to go.
With the city pursuing the cost sharing option, Themig said it will continue the operational framework, retain the approximate $450,000 in income and will allow Tayman to market the facility for other types of events.
“It also gives us a little more time to figure it out. The checkpoints (to evaluate if the city wants to continue with cost sharing) are December and March, and come Dec. 31 if COVID doesn’t look like it’s not going away for another year, we could make the decision at that point to close the operation.”
However, the downside is the city will have a fiscal impact of $6,125 per month during the COVID-19 pandemic, although it’s important to note that post-COVID no additional costs are anticipated.
“This would be about $6,000 a month for the city,” he said.
Councilmember Ozzy Jimenez said keeping the Villa operational and open for booking future events not only benefits the Villa, but it also benefits business related to events like wedding photographers, bakers and other vendors.
“It’s not just a building, it's not just a wedding site, it is the Villa and when you say the ‘Villa’ to anybody in Healdsburg, they know what you are talking about … I don’t think any of us want to see the Villa close,” Jay Tripathi said during public comment. “In good conscience we should try to share this burden with them with some expectations and guidance because COVID will end and when COVID ends we want to be able to run this thing and get it going.”
Mayor Evelyn Mitchell, Vice Mayor Shaun McCaffery, Councilmember David Hagele, Councilmember Joe Naujokas and Jimenez said cost sharing was their favored option.
“I think it is worth it to spend the money to keep the Villa viable,” McCaffery said.