Residents Fight Marina Center’s Lease Plan : Port of Los Angeles Is Negotiating to Allow a Restaurant to Run the San Pedro Facility
A community center like San Pedro’s would be a treasure anywhere, a hacienda-style building overlooking the water in Juan Cabrillo Marina.
But the center is especially valued in this area, which has plenty of grimy port industry but few public facilities. The community center is where local groups hold meetings and where wedding receptions take place.
That’s why many residents and boaters find it hard to believe that the Port of Los Angeles is negotiating a management lease that would allow an upscale Italian restaurant in the marina to operate the city-owned center.
They point out that the owner of Madeo’s restaurant previously filed bankruptcy for his other company in the marina, owing the city $1 million in taxes, and that the port never put the lease up for bid.
Even worse, they fear that Madeo’s will take the “community” out of the community center. A temporary management stint with the restaurant was ended, according to a marina official, after the restaurant tried to force people planning parties to use Madeo’s equipment and catering service. Restaurant managers will seek to fill the center with profitable receptions, residents complain, and make it less available for local meetings.
In November, when the management idea was first tossed around, port officials allowed Madeo’s to book weekend events for a trial period of three weeks.
The port’s own marina operations office reports that it was swamped with complaints during that time about Madeo’s management. Assistant Marina Manager Mario Almanza said many customers who had booked the facility before Madeo’s took over complained that Madeo’s insisted that it would have to provide the catering to ensure the rental. In addition, caterers complained that they had lost business because clients were forced to go with Madeo’s.
San Pedro resident Julie Nelson said that when she called to reserve a date for her daughter’s wedding, Madeo’s catering director, Carol Rugnetta, told the family that it would have to use Madeo’s catering services and pay an additional cost for furniture and cleaning to use the building.
Nelson said the fees, about $21 a person, were reasonable. But the family wanted to provide its own food for a barbecue reception on the community center lawn, which overlooks the marina. Nelson said Rugnetta told her that she could not rent the building without the catering services. So the Nelsons went elsewhere.
“Madeo’s was overstepping the line telling us we had to use their catering,” Nelson said. “This is a community building, paid for by . . . government funding. We were outraged.”
Desmond Edwards, who has lived on a 38-foot Viking in the marina with his wife, Catherine, for seven years, said he also got the runaround from Madeo’s. Commander of the community dock watch program, Edwards could not get Madeo’s to nail down a summer date for the club’s annual mixer. The Australian skipper said he also had trouble scheduling dock watch meetings. Bob Pollock, captain of the Westward Cruising Club, a group that uses the center monthly, said he encountered the same response with his club.
“When I spoke to Carol about changing a date, the [Madeo’s] secretary said it was no problem, but Carol said she had a tentative reservation,” Pollock said. “The handwriting was on the wall: These people booked up every weekend. What will stop them from doing this in the future?”
Rugnetta referred questions from The Times to Madeo’s owner Abel Galletti, who said he plans to run the facility under the same rules the port has, allowing renters to bring in their own food and furniture. He denied that there was a problem while Madeo’s was booking events in the facility.
“We’ve heard those rumors, about what we were going to charge, and they are all inaccurate,” Galletti said. “There are a few individuals who obviously misunderstood.”
Indeed, the five-year lease being negotiated with Madeo’s specifies that the restaurant must continue to rent the center under the same terms set up by the Harbor Department, said Mark Richter, assistant director of property management for the port.
Port officials also argue that the community is not losing its beloved center. They say that Madeo’s owner paid the taxes owed to the city, and that his management of the center would be tightly controlled by the lease agreement. In fact, they say, the port will save and make money by signing over the management lease. Under Madeo’s management, they say the center will be more accessible since it now is closed Sundays.
Still, locals contend that the community center was built for the people, not for profit.
“When [former Los Angeles Mayor] Tom Bradley decided to build this place years ago, he said this marina was something they wanted to give to the city and he insisted they would manage it,” Edwards said. “They did such a fantastic job up until recently. We wish they would just leave it alone.”
“The community center is one of the few things the Harbor Department has returned to the public,” Pollock said.
“They constantly build and make tons of money but never give anything back. Where does the public come in if they take the community center away?”
Madeo’s is expected to continue renting the space for $250 a function, $25 for nonprofit groups, and must pay the port $800 a month in rent or 5% of the gross retail receipts, whichever is highest. The restaurant also would be responsible for maintenance, landscaping and utilities, an average monthly cost of about $2,000, Richter said.
Should the lease be approved at the Port Commission’s April 10 meeting, Madeo’s will take over management June 1.
Galletti has had bigger ambitions in the marina before. In 1987, his Cabrillo Marina Co. began developing the $23-million Cabrillo Marina Center, a hotel with retail shops and the existing restaurant.
By 1994, unable to make ends meet, Cabrillo Marina Co. filed for Chapter 11 bankruptcy protection.
At the time of filing, the company owed the city of Los Angeles more than $1 million in taxes, which according to officials it since has repaid.
Madeo’s was the only profitable entity in the quaint Marina Center, and court documents show that at 11:59 p.m. on the night before Cabrillo filed bankruptcy, a business/lease purchase agreement between Madeo’s L.P. and Cabrillo Marina Co. was terminated to keep Madeo’s out of bankruptcy. Galletti was the principal investor in both companies.
Court records show that lender US Bancorp Financial questioned the legitimacy of such a transfer, saying the separation of the restaurant from the adjacent marina complex put Galletti into a conflict of interest and unfairly reduced the assets Bancorp could lay claim to.
Cabrillo Marina Co. defaulted on its agreement with US Bancorp in 1995, forcing the bank to foreclose on the Doubletree Hotel. Galletti, a longtime San Pedro businessman who has contributed to the political campaigns of Mayor Richard Riordan, former Mayor Tom Bradley and City Councilman Rudy Svorinich, continues to run the restaurant.
Despite Galletti’s rocky business history, Richter said the port expects to save 100 hours of management time a month by signing over the operation in addition to no longer paying maintenance fees. The center generates about $15,000 annually, but Galletti said that he hopes to up the rentals by opening the center on more days and toget some of the catering business from parties held there.
Boaters aren’t the only ones who have a bone to pick with the port. Marina businesses, such as the Upper Deck restaurant, are angered that officials plan to give Madeo’s, which still runs the banquet facilities in the Doubletree Hotel, exclusive rights to the center.
“If they were going to give [the community center] away, they should have let other people bid on it,” said Cyndy Kourmetis, general manager of the Upper Deck.
Richter said the port is not obligated to put management leases up for competitive bid.
Ezunial Burts, the port’s executive director, declined to comment on the lease. Harbor commissioners did not return calls from The Times.
Galletti said he has sacrificed financially to bring business to the San Pedro area. He asked to manage the community center because the building was underused, he said, and he felt that he could turn a profit for the port and the restaurant.
“I don’t understand what the concern is,” Galletti said. “The port is going to be able to have someone else manage it. It’s going to be open now on the nights it sits dark. No one loses in this; everyone wins.”
