The City's Big Investments and Losses in Downtown Anchors

Russell City Distillery owes the City, Buffalo Bill's gets big City investment, and Councilmembers question Police spending

Buffalo Bill’s Resurgence and Russell City Distillery’s Fall

Russell City Distillery Owes the City $100,000

The City of Hayward is paying back $100,000 of loans to the Federal Department of Housing and Urban Development (HUD) that the former owner of the Russell City Distillery and Buffalo Bill’s, Geoff Harries, took for a business that allegedly never opened.

Harries was the owner and operator of both the iconic Buffalo Bills Brewery, until it’s closure in June 2022, and the Russell City Distillery, named after the unincorporated area of the same name that was razed to make way for an industrial zone in the 1960’s.

Harries received a loan of $100,000 from the City as a part of their Community Development Block Grant in 2014. The loan came with some fairly minor strings attached (hiring stipulations based on income, and gathering some demographic data of hires), but likely had some very generous terms like a year’s deferred payment an 1% interest over 5 years.

Staff reports, however, that “As of this report writing, the business never opened for its intended use and the borrower never provided any of the required data to staff. The borrower has listed the property for sale. The City issued a notice of default on the loan to the borrower in October 2022 and did not receive a response.” I, personally, find this interesting considering I distinctly remember the business did open and this Facebook post from February 2019 proudly declares “Russell City Distillery now open Saturday, noon-4!” and shows off some prices in the background. Their remaining Facebook page continued to present itself as open until it’s final post in October of 2021. It’s also worth noting that Harries shuttered Buffalo Bill’s in June 2022, shortly before the City allegedly notified him of default.

No doubt, the COVID-19 pandemic hit this exceptionally hard, but it’s weird for the city to say that “the business never opened for its intended use” when it seemed open, at least insofar as I can tell. The City now has a lien on the building in an attempt to recoup their $100k for the Feds.

Unfortunately, nobody has yet decided to buy a fully kitted out distillery from Harries, so the City has to pay the Feds back from their own pocket, despite running a budget deficit. Though when it does come back, the additional fees and penalties may make up for the hassle.

If the City wanted, it could use its partial ownership of the property to take control of the business and distill some Municipal Imbibes, but that would take a much more active government that we doubtless have. A man can dream, though.

New Owner of Buffalo Bill’s To Receive Over $600k To Open It

The City has extended $575,000 in loans and a $75,000 grant to the new owner of Buffalo Bill’s, local restauranteur Alejandro Gamarra, to “aid in the refurbishment and update of the existing facilities.”

Gamarra, owner of several Mexican restaurants in Hayward (Metro Taquero, and Casa Del Torro) has taken on the task of re-opening the cornerstone of Downtown Hayward. Gamarra soft-opened Buff’s on August 8th with “friends and family” which included the entire City Council. Council likely met with Gamarra during the March 28th Closed Session to hash out some of the details of the funding.

With the approval of this week’s agenda, Gamarra will get $650,000 ($75k of which is a grant) in a few different pots. The first $75k needs to be spent on “improving the restaurant location”, per the Staff Report. After all those funds have been spent, Gamarra will get a $50,000 loan in one lump sum. The next largest loan, $230,000 is a HUD loan, much like Harries received, and will only be given after Harries repays the previous loan (maybe Gamarra will have more luck than the City in getting Harries to repay his loan), and finally a $295,000 loan will be available after Gamarra provides evidence of spending at least $147,500 on the business.

One upside of the loans is that they come with strings attached about hiring, keeping 3 full-time equivalent low- to moderate-income employees, 51% of jobs created going to folks making 80% or less of the Area Median Income (AMI) and keeping track of demographics of hires, and a requirement for public art tied to the Buffalo Bill’s brand (“The art should be designed and located where people can take pictures with it”).

An important item to note is that Buffalo Bill’s is already open and making money, even if it’s remained almost entirely unchanged from when it closed. Of potential interest, the actual business holding the licenses is called “BB Cerveceria Inc.” and in an interview with The Mercury News, Gamarra hasn’t been shy about outlining some changes he wants to make in the future.

How much of our hometown brewpub will change to chase trends and how much will remain the same? As this is Gamarra’s first non-Mexican restaurant, only time will tell.

Council Meeting Developments

The Bay Philharmonic Moves to Hayward

At public comment, Lisa Lorenz and Jung-Ho Pak of Bay Philharmonic, lifted up that the Bay Philharmonic, formerly the Fremont Symphony, has moved to Hayward’s Chabot College Performing Arts Complex for all performances going forward.

Pak outlined the importance that diversity played in their decision to move from Fremont to Hayward, the diversity of the performers involved in the upcoming shows in the Fall and Winter, and that for select performances, Chabot College students will get free tickets (student +1) to the show.

The benefits were largely pitched as economic, though I hope there are some cultural benefits to the move, as well.

Pushback on Funding Police Ammunition

Councilmember George Syrop questioned why $200,000 for Police ammunition, which is normally funded through the Capital Improvement Projects budget was instead left off of that budget when it was approved and is now being paid for with salary savings from unfilled Officer positions from the General Fund.

City Manager McAdoo deferred the comments to Police Captain Deplich who explained that the reason for the increase in funding was due to an unexpected increase in recruits which leads to an increase in ammunition needs. The Police Officer’s Association (cop union) negotiated that the City is required to provide each trainee with 3,500 rounds of ammunition (as well as each officer’s allotment of ammunition per month which our taxes pay for whether or not it gets used). Apparently the originally allocated amount was $150,000 so they’re paying for the rest out of the still unfilled positions.

The Captain also clarified, under questioning from Councilmember Ray Bonilla Jr., that a lot of the money they’d had allocated that could have paid for the ammunition, they spent on recruitment pushes instead. They Police Department has its own full-time social media staffer and offers signing bonuses to officers upon recruitment. It was unclear from the Captain’s comments whether or not the money went to the bonuses, though it was implied it was only used for the outreach.

Bonilla Jr. continued to question whether there are guidelines on the use of salary savings within the Police Department. McAdoo clarified that they are usually used for one-time expenditures and that, although they can be used by other departments, it requires council action to do so.

For context, the City continues to budget for dozens of police officers that they haven’t hired. That leftover money has a tendency to become a kind of police slush fund that they use to cover other costs that they couldn’t be bothered to include in their actual budget. This also successfully keeps any other department from accessing the funds, despite the fact that the Police Department itself admits that it’s unlikely to fill those positions in the foreseeable future.

Changes to Salaries

The main item on the agenda was increasing everyone’s salaries. The biggest winners were the Police and Fire who both received 9.24% salary increases. Everyone else listed got between 3% and 5% increases. The only increase that did not have an impact on the budget, was the 5% Council and Mayor salary increases, as that was negotiated into the budget in June.

The Police Officer’s Association (cop union) and Firefighter’s Union are, almost without exception, the strongest unions with whom the City negotiates. The Police Department currently comprises 43% of the City’s general fund expenditures, with the Fire Department coming a distant second at approximately 26%. As a comparison, the Library takes up a meagre 3.7% of the General Fund.