Lease Extension for Waterfront Brew Pub

Written by Neil Farrell

Neil has been a journalist covering the Estero Bay Area for over 27 years. He’s won numerous journalism awards in several different categories over his career.

May 19, 2023

A rendering shows the current Libertine Pub in Morro Bay and what was initially proposed for a redevelopment of the lease site. Courtesy City of Morro Bay

One of Morro Bay’s last waterfront lease sites to be redeveloped has been given more time to get a project moving through what can be an onerous permitting process.

The Libertine Pub, which is located at 801 Embarcadero, had been given a three-year lease in October 2020, after the former master lease holder, Burt Caldwell, gave the property back to the City. 

Caldwell tried three times to get a redevelopment project approved on that site including the site next door in one attempt, and finally gave up and reverted the lease site back to the Harbor Department.

That move by Caldwell left his tenant, Libertine Brewing Co., and owner Eric Newton, to take over the lease site. Due to the City being in the throes of the COVID-19 pandemic response, the City Council at the time, settled on the short-term lease to give Newton time to work on a project of his own.

Caldwell had one of the last of the old, so-called Pipkin Leases, which predated the City’s takeover of the Embarcadero tidelands leases, and had favorable terms for the tenants. 

The terms for this new lease are equal to $32,000 per year with standard percent rent, according to Harbor Director Ted Schiafone’s report. He also charged $1,680 to cover the City’s costs for the lease extension, which is being done under a “Consent of Landowner” or COL agreement. 

Newton now has until Oct. 31, 2023 to “obtain Concept Plan approval from the Planning Commission and City Council,” otherwise he will be fined $100 per day that he goes over that deadline, according to the new COL agreement.

And before any long-term lease will be approved by the City Council, he must “obtain evidence of available financing for completion of the project, acceptable to the Finance Director and City Attorney.” 

That evidence could be letters of interest or commitment by “accredited financiers” or proof he has enough cash reserves to pay for the project. He has until Dec. 31, 2023 at 4 p.m. to provide that proof or the City Council can deem the COL expired with 10 days written notice. 

He also has to give the City a “professionally-prepared business plan for the proposed redevelopment that includes industry-standard elements expected of such a plan,” on or before Dec. 31. The same written notice or $100/day fines apply to this provision too.

The COL also calls for him to produce a “professionally-prepared” marketing plan for the redevelopment, also by Dec. 31.

He will also have to take his City-approved concept plan to the Coastal Commission by Dec. 1. The Commission has “original jurisdiction” over all of the lease sites on the waterfront and no matter what, the Commission will have the final say on all redevelopment plans in accordance with the Coastal Act.

Other milestones include:

• Applicant must obtain a CDP and other permits on or before June 30, 2024 at 4 p.m.;

• He must file a completed application for a “Precise Plan” by the planning commission and City Council by Sept. 30, 2024;

• He must file for a Building Plan approval from the planning commission before April 30, 2025 at 4 p.m.;

• Must obtain Building Plan approval on or before July 21, 2025 at 4 p.m.;

• Must  “commence construction” on or before Oct. 20, 2025 at 4 p.m.  “Commence construction,” means spending a minimum of $100,000 on hard construction.

• The project must be completed before Oct. 30, 2026 with a “certificate of occupancy” issued by the City.

There is of course an out: “If, due to any reason within or outside the control of Applicant, as reasonably determined by the City Manager, then one or more extensions to any or all of these compliance dates may be granted by the City Council in its sole discretion.”

The company has already taken one bite at the apple when the Planning Commission reviewed a conceptual redevelopment plan in February 2022.

“The conceptual plans,” reads the report from that Feb. 1, 2022 agenda item, “show conversion of the second floor to a new 9-room hotel with room sizes ranging from 264 square feet to 825 s.f. Renovation of the existing first floor to include a 302 s.f. coffee shop; 1337 s.f. waterside restaurant/bar area; 328 s.f. banquet/meeting space; 661 s.f. of covered dining; 893 s.f. of private outdoor patio area; along with new lateral access where none currently exists by providing a 15-foot wide Harborwalk including 272 s.f. of west-facing outdoor patio seating.

“An existing basement would be used for brewing area and storage. The project would include an addition of 101 s.f. to the first floor and 900 s.f. to the second floor for a net increase of 1,001 s.f. of building square footage. In addition, the Libertine is proposing to assist with public plaza improvements in the adjacent street end.”

The project sounds a lot like what Caldwell had proposed in a previous attempt to redevelop the site.

The street end improvements are also part of a City concept in its plan for rebuilding the Centennial Staircase and Centennial Parkway (Giant Chessboard Park), that includes the complete redevelopment of the Market Avenue Plaza properties, which the City has been trying to sell to a developer for about a decade.

Community Development Director, Scot Graham cautioned that the planning commission sent Libertine’s conceptual design back for extensive changes.

“The Planning Commission,” Graham said, “provided direction at that meeting resulting in a significant redesign of the project. So plans associated with the staff report are no longer reflective of what the project looks like.”

The Planning Commission’s comments will mean the building will almost entirely be torn down and rebuilt. 

Such waterfront projects often suffer delays, especially with trying to get through the Coastal Commission’s review and approval process.

Among the issues that has arisen with other projects is the continuation of the Harborwalk, and the Libertine is one of the few remaining gaps in the pedestrian walking path that runs from Morro Rock to Tidelands Park.

For example, in the past, the City has approved an 8-foot walkway only to have the Coastal Commission change it to a 10-foot walkway. But Libertine is talking about a 15-foot walkway, which is half-again bigger than what’s currently required.

A 10-foot walkway “is still the requirement,” Graham said. “They are doing 5-extra feet as extra public benefit and will match the 15-foot width on adjacent Harborwalk Plaza project, which is currently under construction.”

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