Bayside Café in Morro Bay faces big changes

The future of Bayside Café in the Morro Bay marina is up in the air as the California Department of Parks and Recreation prepares to open the bidding process for a new concession contract at the site.

Also in flux is what company will manage the kayak and boat rental as well as the 114 boats slips and dockage for about 22 skiffs.

Associated Pacific Constructors currently has one contract for both the restaurant and water-related operations, leasing out the restaurant facility to Bayside Café.

It’s unknown whether the state will move forward with one concession contract or two.

The terms of the new agreement and the rent and percentage of sales revenue that will be required also is yet to be determined.

Bayside Café owner Dawn Borst plans to make a bid to continue to operate at the facility that houses her restaurant, saying she believes the future arrangement will result in two contracts.

In question are what requirements the state will specify on the upgrades to the restaurant facility, and its hours of operation, in addition to how the separate marina operations are run.

“My opinion is that people really like Bayside Café the way it is,” Borst said. “They don’t want a two-story building. They don’t want to see something modern. We’re the last funky beach community on the coast. My personal opinion is that building it up wouldn’t make it quaint or cute anymore.”

As for adding more dinnertime hours to the Thursday-through-Sunday-night schedule, in addition to its daily lunch service, Borst said she’d have to significantly increase her staffing and calculate the profitability of supporting increased dinnertime service.

The new contract could mean adding the days that dinner is served.

A public meeting is scheduled for Thursday at 6 p.m. at the Morro Bay Veterans Memorial Building to solicit comment on future development and operations of the marina.

After hearing public comment, the state will prepare requests for proposals to solicit bids on new development and ongoing operation and maintenance of the facilities.

“Our next step is asking, ‘What does the community want to see in this location? What would they like it to look like?’” said Teresa Montijo, the concession program manager with State Parks. “We have to pull all that information together and consider that with what our feasibility study tells us.”

The Bayside Café has operated since 1986 along the waterfront near the Morro Bay Golf Course and Morro Bay State Park Campground.

The last long-term contract with Associated Pacific expired in 1993 — and a month-to-month agreement has existed since then.

“It has come to the point where our contracts need to be separated,” Borst said.

Bayside Café is currently on month-to-month lease terms, paying 5 percent of food and beverage receipts up to $12,000 and 7 percent of food and beverage receipts over $12,000.

The restaurant has paid the state between $70,000 and $85,000 per year in recent years and made upgrades to the patio, including a $20,000 refurbishment of the patio deck, according to an economic analysis completed for the state by the Burlingame-based consultant Pacific Group.

Plus, the restaurant must allocate 2 percent of gross sales for café maintenance.

The state has had an operating agreement with the city of Morro Bay since 2002, under which the city receives a 20 percent share of the marina revenues in exchange for operating and maintaining the facilities.

The land and marina facilities are owned by the state, but the payment is received by the city under the operating agreement that stipulates it will take on property improvement and dredging duties.

An additional 15 percent of marina revenues, beyond the 20 percent, is administered by the city to use toward major maintenance projects, including pricey dredging costs, and upgrades to docks and revetment walls.

The restaurant doesn’t pay the 20 percent rental fees; the property it sits on is solely owned and operated by the state.

The city of Morro Bay assumed operational duties because it had lined up public funding for dredging through state and federal sources, including the California Division of Boating and Waterways.

Morro Bay spent about $1.2 million in 2011 to dredge about 30,000 cubic yards of the marina area, disposing the sediment in a nearshore ocean area just beyond the bay a few years ago.

The cost for a complete dredging, another 60,000 cubic yards, would be about $3 million, but only if regulators allow disposal in the same nearshore ocean area.

Having to truck the silt would significantly add costs, said Eric Endersby, the city’s harbor director.

“Basically, the city was concerned because State Parks hadn’t dredged the marina in 60 years, so we entered into that agreement with the state to do that,” Endersby said. “But we’ve used up our public funding available for the dredging. We’ll have to seek additional grants and financing, but we’ll need a different model, a different revenue stream at the marina, to help pay for those costs.”

According to the economic analysis, the marina’s 114 slips are fully occupied and have a wait list of about 30 boats. Rent to the city has fluctuated between about $55,000 and $67,000 in recent years.

Montijo said the timeline for the contract award for the restaurant and marina will include advertising the bid in the fall with hopes of awarding the contracts by spring of 2016.

This story was originally published March 31, 2015 at 6:25 PM with the headline "Bayside Café in Morro Bay faces big changes."