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California County Ousts Cabin Concessionaire

November 3, 2011 by   - () Leave a Comment

Central Coast Cabins installation at Lake Cachuma in Santa Barbara County, Calif.

In 2004, Santa Maria, Calif., residents Ernie and Shirley Del Rio staked their future in an unkempt plot of ground at Lake Cachuma by transforming it into a cabin rental business with the hopes of expanding it to Jalama.

The couple thought the bucolic location, overlooking the lake, was ideal for cabins-for-rent. Santa Barbara County Parks agreed and approved a tentative deal with the Del Rios to form Central Coast Cabins, the Santa Ynez Valley Journal reported.

“We put in a lot of sweat equity here,” Ernie said on Oct. 28, when the Del Rios, their friends and family, set about a different laborious task: dismantling the business.

Meanwhile, directly behind one of their four cabins, sat a new one that had been “plunked down,” as Shirley put it, last year by the county. Over near the marina, three more county-owned cabins were situated, outwardly distinguished from the Del Rios’ cabins only by their lighter shade of cedar wood and satellite dishes.

As the couple took apart their cabins, they were also wondering how they’d piece together their future. On Tuesday (Nov. 1), the Park Ranger ordered the Del Rios to take down their sign posted on the front of their property or face a citation.

“When you’re going into any kind of business with a government agency, you’re likely to end up on the short end of the stick,” Shirley fumed.

The couple has until mid-November to vacate the property because of a contract dispute with the county parks department. Both Shirley and Ernie are retired and had hoped to not only make a continued livelihood, but help put one of their three sons through college. The standoff with the county has cost them nearly $30,000. They have had to turn away 1,100 guests, many of whom had booked their spots a year ago, and are trying to sell two of the cabins.

Background

The Del Rios are leaving, but not without a fight. They contend the county parks department breached an agreement that tentatively offered their business up to 20 more years of existence. They entered that agreement with the county in 2006, with approval from the federal Bureau of Reclamation, which oversees Lake Cachuma, and the county Board of Supervisors – who approved an agreement with the bureau this summer that authorized county Parks to operate Lake Cachuma for 25 more years.

As part of that anticipated agreement, in December 2010 the county notified all concessionaires at the park, including Central Coast Cabins, that their contracts would become month-to-month because the bureau had directed all concessions to be put out to bid in anticipation of a new master agreement, which hasn’t been updated since 1958. That agreement expired in January 2003 and has been extended five times, the latest through January.

The Del Rios say they should not have been put out to a request-for-proposal process because their contract, unlike those of other concessionaires, had not expired. They say they received assurances that their agreement would be ratified when the master plan is approved. Ernie said the couple, being the only bidder and wanting to avoid a court battle, reluctantly re-bid on their contract. But their offer was rejected in July because county parks estimated they could make nearly $14,000 more if they used the property instead for recreational hookups. Ernie, a former superintendent of San Luis Obispo County’s parks department, said its estimate is faulty because it’s based on 50% occupancy in the peak season and 30% in the off-season.

“Look around. It’s empty,” said Ernie, pointing to a handful of RVs connected to the hookup spot across the road from their cabins. “So the only reason they’re doing this is to put us out of business so they don’t have competition.”

Brian Roney, the interim parks department director,  told the Journal that extending the Central Coast Cabins contract “made no financial sense for either one of us.”

“We asked if they would be willing to match the amount or counter-offer and Mr. Del Rio declined, which ended negotiations,” he explained.

Ernie said the opposite was true. He said the county at first asked for a minimum 10% of the business’s gross revenue and considered the bid when he offered 12%. But the county later asked for 28% to compensate for the estimated lost revenue.

“We tried to negotiate a compromise and Mr. Roney just said ‘impasse,’” he said. “Instead of a compromise, we got a letter of termination.”

Roney stated county parks had always intended the location of Central Coast Cabins to become recreational hookup sites. The concession agreement between the county and the Del Rios does not mention the site’s intent.

And a letter in 2007 from then interim Parks director Jason Stilwell discussing the concession agreement acknowledges the Del Rio’s request for a “holdover” until a final agreement was reached between the county and the bureau, and ends with: “I look forward to your continued operations at the Cachuma Lake Recreation Area and hope your business will prosper and continue to add to the recreational opportunities offered at Cachuma Lake.”

At the same time, the concession agreement also allowed for the terms to change should the bureau impose any “processes, limitations or restrictions.”

“It was clear right after the 10-plus-10 year proposal that anything that might come down the pipeline in the future from the (bureau) could change things,” Roney stated.

One of the new federal laws, he noted, included barring exclusive concessionaires. But he wasn’t sure how this new law applied to the situation at Cachuma Lake and referred the Journal to bureau spokesperson Sheryl Carter, who initially referred the Journal back to county parks, but later stated that concession contracts must not give preferential treatment to any one concessionaire, provide for fair rates and offer “the best benefit to the public,” among other things.

Owner: County Emits ‘Smokescreen’

Ernie said Roney’s statement that the original intent was for RV hookups is a “smokescreen” so they could drive out the competition and install their own cabins. “That would be like plopping a grocery store right next to the existing store,” he said. “It’s just not good business.”

“Why did they even give us a contract in the first place or put us out to bid if it wasn’t their intent to have a concessionaire?” he added. “Why spurn our suggestion that we take a full hook-up site that they wouldn’t be making money on and let us improve this area? It doesn’t add up.”

The Del Rios have filed a claim with the county to reconsider the issue, but they aren’t waiting with bated breath.

The couple has not ruled out filing suit, which Ernie pointed out could cost the county more than it contends it will save by non-renewing their contract.

Ernie believes it’s no coincidence that the county has installed cabins and has expanded their presence to Jalama and elsewhere, a plan he broached with parks’ officials when he first approached the department with his business plan.

He also wants reimbursement for improvements he’s made to the property.

“It was a junk yard when I got here,” he said. “I put in irrigation, planted these trees, put in fencing, a shade structure, benches, a shed and planted the lawn.”

“I don’t know how people make those decisions and sleep well at night,” he said, shaking his head. “They got their story and we got our story, but the only problem is they’ve got the bigger stick.”

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