County Supervisors made a sizable investment to rebuild the Cayucos Vet’s Hall, stepping up the timeline for reopening the historic and iconic community facility that’s been closed about 5 years.
On Nov. 16, Supervisors voted to approve a $3.5 million loan out of the County’s reserve fund and moved the project to fix the Vet’s Hall to the point of going out for bids.
According to a report by project manager, Margaret Mayfield, the Cayucos Vet’s Hall is “an important community facility, central to the life and history of the town of Cayucos. It is a facility that hosts events, which bring economic benefit to the region.”
In 2015, during a project to re-stucco the building, they discovered the foundation was failing. The floor underneath the stage was rotted and the stage had slumped, so it was closed.
In May 2016, the County inspected the building and found that the building was in bad shape — the walls and roof were no longer properly connected — which led to it being closed indefinitely by the County for fear a strong wind could blow the roof off. However, since then we’ve had a couple of nasty winters and gone through numerous high wind events and the building remains intact.
In 2017, they were able to do enough repair work to reopen the kitchen and Cayucos Art Association’s Gallery. But in July 2021, the State Fire Marshall “prohibited use of the entire building by ‘red tagging’ the structure as unsafe to occupy,” wrote Mayfield.
The Vet’s Hall is owned by the State Parks Department and leased to SLO County as part of the deal that includes the Cayucos Pier and beach. That agreement is now slated to expire in 2024, but Mayfield said they have an agreement in the works for a 50-year extension.
The repair job is apparently ready to go. “The County contracted with an architectural firm, Studio Design Group,” Mayfield said, “to develop a design that meets the Secretary of Interior’s Standards for the Rehabilitation of Historic Properties. The State Historic Preservation Office has concurred with findings that the Cayucos Vet’s Hall has historic significance at the local, state and national level. Construction documents prepared by Studio Design Group have been approved by the State Fire Marshall and a building permit was issued in December of 2020.”
The project will entail new structural framing, raising the foundation to address sea level rise, restore the historic “fabric,” add a handicap-accessible deck over the beach and “return a cultural and economic resource to the community and region.”
The job will be expensive and the County has been paying for preliminary work over several years. “The County has funded $571,600 to carry the project through the completion of the Bid Documents,” Mayfield’s report reads, “including a $50,000 internal loan from the Tax Reduction Reserve Fund.”
“The project was awarded $1,937,000 from the Proposition 68 Cultural, Community and Natural Resource Grant Program, which the Board accepted on Sept. 1, 2020. The citizens of Cayucos have also vowed to pitch in, forming the “Cayucos Vet’s Hall Committee” (see: www.restorecayucosvetshall.org) and raised some $340,000 in a matter of days, with a goal of raising $500,000 to pay for “new furnishings to replace the heavily used ones in storage since the closure,” reads an announcement on the Committee’s website. “Nor is the money donated so far sufficient to guarantee that the rent schedule will make the Hall truly accessible for local service organizations.”
The current total estimated cost for the rehabilitation project is $5,958,600, said Mayfield.
The loan is a “line of credit” and the hall is expected to repay the money over time. And the clock is ticking on the Prop. 68 grant.
“The purpose of the loan is to demonstrate complete funding is in place for the project in order to allow legal award of a construction contract,” Mayfield said. “Proceeding with the bidding and contract award is required at this time in order to meet project completion deadlines required for the Prop. 68 grant.”
The County has hatched a funding plan that will be tied in with a bond measure — officially a “debt issuance plan” — that they intend to bring forth in 2022. That debt measure is intended to pay for a new Probation Department office and a new emergency dispatch center that would combine the fire and law enforcement dispatching duties under one roof.
The $3.5 million Vet’s Hall loan would get bundled in with those other projects, with the Vet’s Hall’s account kept separately.
If the probation and dispatch projects fall through, the Vet’s Hall project isn’t big enough for a bond and Mayfield said they would seek other financing options. Or they could just leave the loan they just passed in place.
“The potential would exist,” Mayfield said, “if unable to find alternative financing, that the $3.5M Tax Reduction Reserve Fund would remain, to be repaid over a 30-year term [with interest equal to the Treasury Pool] or until alternative financing is found.”
And the County continues to apply for more grants from the Locally Operated State Parks Grant from Prop. 68, and the State Coastal Conservancy.
“If successful with one or both grants, the need for interim loan draws and bond funding will be reduced,” Mayfield said.
In the past, the County subleased the operations and minor maintenance responsibility to the Lions Club, a situation that appears will continue.
“Prior to project completion and re-opening of the Cayucos Vet’s Hall, operation of the building will transfer from Real Property Services to County Parks so that the Pier, Beach and Cayucos Vet’s Hall can be operated together,” Mayfield said. “Parks will work with the Cayucos Lions’ Club to operate the facility to generate sufficient income to operate and repay the financing debt.
“A new fee schedule will be established that will include higher rental rates for the much-improved facility, with reduced community rates included to keep small local events affordable.”
County Parks is banking on the hall’s desirability for things like weddings. “County Parks is confident that the new facility features along with its beach front location will be a high draw event space with significant revenue potential.”
The forecast is that he Vet’s Hall will be able to cover the debt service by 2026, 3-years after it reopens, but will lose a cumulative $179,000 in the interim. If the bond financing is successful, the hall would have to start repayment in 2023, before the anticipated reopening.
“The portion of the first payment attributable to the Cayucos Vet’s Hall project is estimated at $164,000,” Mayfield said. “When combined with the pro forma operating losses of $192,250, total projected three-year shortfalls of $342,675 are expected through Fiscal Year 2026.”
Despite the risk, the County is obligated to get the hall fixed and reopened to the public under the terms of its lease with State Parks.