State Lease Award Angers Old Town Merchants : Retail: Craftsmen say that after making Squibob Square a star in the parks system, they are being cast aside for the dazzle of Host International.

In 1969, Dennis Toler returned to San Diego from Vietnam with a Purple Heart and a shrapnel-shattered right arm, and began the difficult task of rebuilding his life.

Four years later, with $200 in his pocket, Toler rented a 100-square-foot corner of an antique shop in Squibob Square, a small shopping plaza in Old Town State Historic Park.

There he painstakingly crafted leather goods--belts, purses and handbags--to sell to the park’s visitors.

Toler’s store, Latigo Ltd., today is one of a dozen successful specialty shops that have transformed the plaza into one of the state park system’s most lucrative concessions.

However, a recent decision by the state Department of Parks and Recreation to award Squibob Square’s operating lease to Host International, a Washington-based division of the Marriott Corp., could leave the leather craftsman and other vendors out in the cold.

Toler and the other Squibob Square merchants have already received eviction notices and been told to be off the premises by April 30.

The merchants now rent space from Stan Minick of Squibob Square Enterprises, whose lease renewal proposal was rejected by the state in favor of the one submitted by Host.

Host spokesman Rick Sneed said the company has food and merchandise operations at 49 airports in the United States and abroad.

“The state is legally stealing 17 years of my hard work, my blood and sweat,” Toler said.

“We, the tenants, are the ones who are making money for the state . . . but we’ve been put at the bottom of the pile. There’s no compensation, nothing. I’m just out the door.”

The vendors say they have made Squibob Square what it is today. All state park concessions combined brought in $4.6 million to state coffers in fiscal 1988.

Squibob Square was the fourth-largest single concession among California’s 252 state parks, with $60,000 in rental income.

Now, Squibob’s tenants say, they are being tossed aside without compensation. And they question the awarding of a bid to Host, recently accused of conducting business unethically to gain contracts at Los Angeles International Airport.

The Squibob Square merchants have appealed the state’s decision. The appeal is before Administrative Law Judge Amanda Behe in Sacramento, who will submit a recommendation within 30 days to Henry Agonia, director of parks and recreation. Agonia will make a final decision after reviewing the judge’s recommendation.

The clash between Old Town merchants and Host International is more than a story of big business versus small. Rather, it centers on the process of how the state awards bids to concession operators.

Parks department officials say the process has always been controversial. In the past, the department was criticized for holding “old-boy network” negotiations that favored existing leaseholders and kept new bidders out of the loop.

In a step toward reform, the department was ordered by the Legislature in 1982 to develop an evaluation system that would objectively critique each bidder’s proposal. The evaluation system set specific grading categories and awarded points based on a bidder’s ability to finance operations and uphold contracts.

But now the solution may have become the problem. Critics of the point system say it places far too much emphasis on how much revenue an operator can generate and slights the state’s longstanding goal of promoting small businesses, especially those operated by minorities and women.

“It’s clearly apparent that the state was taken in by (Host’s) dazzling approach” of promising to deliver much more revenue to the state, said J. Michael McDade, a San Diego attorney who is representing Squibob Square landlord Minick and the merchants.

Minick’s bid offered to give the state 3% of gross sales--about $65,000 of last year’s $2 million gross. Host, however, says it would pay the park 10.3% of gross sales, or about $150,000.

Merchants say that, to achieve such figures, Host would have to dramatically raise prices.

“This is a state park, and their own guidelines state that the bid be given to the most responsible bidder who can comply with a contract that is in the best interest of the public,” McDade said. “Maximizing profit is not necessarily in the best interest of the public.”

Sneed, the Host spokesman, declined to comment on the controversy, referring questions about Host’s proposal to state park officials. “We’ve been awarded the contract, and we’re happy to have it,” he said.

Although most categories in the state’s scoring system earn the winning bidder up to 5 points each, the “rental to the state” category awards up to 10 points.

In this category, Host received 10 points and Minick received 3, according to Edward Navarro, district superintendent of the Old Town park. Navarro is responsible for the park’s day-to-day operations and oversees concession facilities.

The merchants say the point system is unfair, noting that they were awarded only 2 points for classifying as a small business.

But John Hillerman, a state analyst who reviews bids for the parks department, said such arguments place the state in a “no-win situation.”

“Before the point system was established, we were criticized because, well, I wouldn’t say the process was nebulous, but the director had a broader range of criteria,” Hillerman said.

“Now we have defined criteria that everybody knows up front that they’re going to be judged by.”

When the criteria were established, “and they were assembled by both concessionaires and state officials, everybody felt it was equitable and fair,” Hillerman said.

He defended the scoring system and its rental factor. “The process considers other factors, but you can’t ignore rental to the state,” he said.

“I also want the parks preserved so that they best serve the public,” Parks Superintendent Navarro agreed. “But in these tough times (the ability to award concession bids) is one of our best opportunities to generate more money. You don’t make as much by changing permit fees.”

Host says in its proposal that it will also operate specialty shops similar to those now found at Squibob Square.

But McDade argues that all of the shops will be controlled by one manager, who will hire employees. The craftsmen run the stores now.

“You can’t hire a college kid for the summer who’s going to give you that kind of experience,” McDade said.

“These are people who have lived and breathed their esoteric businesses. It might look superficially the same, but it won’t have the same character.”

If the merchants lose their appeal, more than 50 workers will lose their jobs, McDade said.

“Unfortunately, there’s nothing (in the state’s awarding system) that takes that into account,” said Navarro, the park superintendent.

Toler now faces the prospect of having to rebuild his life a second time, when once seemed more than enough.

“I don’t know--the thought of starting all over again at 47 . . . that doesn’t excite me,” he said.