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Palo Alto Online

Publication Date: Friday, July 18, 2003

Long-time cafÈ faces bitter end Long-time cafÈ faces bitter end (July 18, 2003)

Without a new lease, Verona will soon pour its last drop

by Jocelyn Dong

The owners of Caffe Verona in downtown Palo Alto are used to whipping up toasty cappuccinos and espressos for their customers. Now, they're asking the public to brew something in return -- help in persuading their landlord to give the cafÈ a lease that will keep the decades-old restaurant open.

Robin and Steve Campagna, who bought the business in 1997, are asking customers to sign a petition that will be given to Richard Gatley of Gatley Properties, the owner of 236 Hamilton Ave. On June 30, the Campagnas' lease expired, and last week they signed a month-to-month deal with Gatley, who rejected their request for a new long-term lease.

"It's devastating," Robin Campagna said. "It wasn't supposed to end like this."

Gatley did not return repeated phone calls for this story, but last week's contract stated: "Gatley Properties is considering and will continue to consider all of its options as owner of the building, and reserves its unilateral right to lease the property to another tenant in its sole discretion."

Robin Campagna indicated Gatley was interested in renovating the 6,400-square-foot building for an upscale restaurant. Public-relations firm Text 100, the other tenant in the building, independently gave notice it would move out Aug. 1.

Gatley lives in Oregon but has ties to Silicon Valley. He is reportedly holding the building in trust for his sons.

"We were just shocked," said regular customer Suesan W. Taylor, when the Campagnas told her the news. "What can we do? Palo Alto does not need another high-end restaurant. We have to keep this place."

The petition was created by a customer who's been frequenting Caffe Verona for 19 years. Some people have written letters of support and given them to the Campagnas. Others are watching and waiting.

"We consider this our second home," said Sasha Ilic, who signed the petition and who's been known to stop by twice a day with her husband, Dragan. If the place closes, she said, "I will go nowhere else. I would go home. No more Verona -- no more me."

The Ilics have been customers since the cafÈ's days on University Avenue, they said. In 1984, it moved to Hamilton Avenue, at the site of a former auto garage. Since then, the cafÈ has developed a reputation as a place where extended families gather, business executives work over deals, regular customers have become friends, and people seeking refuge bury themselves in books and caffeine.

With its high ceilings and walls decorated with oversized French posters and the latest works by local artists, it exudes a certain "funky" sensibility, Dragan Ilic said.

It hasn't been too modest, however, for the likes of Kenneth Starr, actor Patrick Stewart, Chelsea Clinton and Netscape co-founder Jim Clarke, who described the place in his book, "Netscape Time."

A Web site for visitors to the Stanford Computer Science Department, meanwhile, simply said this about the cafe: "If you're in Palo Alto for a few days, stop here at least once."

Trouble started for the Campagnas last year, after the economy tanked and their $1 million-plus annual business took a hit. They hired a financial advisor who started working with them on long-term planning. One option was to boost the business so it could continue; the other plan, to get the cafe in shape to be sold.

With a home in Roseville and a second child on the way, the Campagnas started exploring the option to sell. This past May, they signed a deal with a Los Altos family -- experienced restaurateurs who were willing to buy the bistro and keep it running as Caffe Verona. According to the contract, the new owners would have accepted a five-year lease with increasing rent annually, bringing the landlord an estimated $500,000.

The first wrench in their plans came when James Campagna, Steve's brother and the master holder of the lease, decided not to renew the lease with Gatley as of June 30. According to various sources, the decision came after years of dispute between James Campagna and Gatley over the lease.

The second wrench halted plans when negotiations to establish a new long-term lease between Gatley and Robin and Steve Campagna failed. Without the lease, the Campagnas could not sell the business. Without income from a sale, the family risks losing their Roseville home, they said.

"Everything we have is in this restaurant," Robin Campagna said. "We're at his mercy."

The rent schedule they've received from Gatley extends only through October.

Although they suspect the dispute with James Campagna has soured Gatley to the whole family, Robin and Steve Campagna said they've done everything they could to make the situation work for their landlord, including agreeing to pay rates on their month-to-month lease that exceed properties on University Avenue, offering $50,000 cash from the proposed sale of the cafÈ to offset costs from the legal dispute, and pleading with him.

Sympathetic customers are saddened, but also curious about Gatley's reasons for not giving a multi-year lease.

"It's complicated. There was a legal wrangling with a relative," Dragan Ilic said. "It would be helpful if (Gatley) had input. Otherwise, it's not clear" what's happening.

Gatley's attorney, Robert Maines of Bryant Clohan & Baruh, refused to comment, saying, "This is a private business property."

Caffe Verona regulars might take exception to the idea that the matter is private.

"It's a wonderful community place to meet," said Ruth Prehn, who holds family gatherings at the cafe. She's developed such a rapport with the staff, they gave her a slice of cake and a bouquet of flowers for Mothers Day, she said. Prehn lives in Mountain View and drives to the cafÈ with her husband, Marlo.

"If this goes, we'll be going to Mountain View for coffee," he said.

The Campagnas haven't made their final move yet. In addition to recruiting public support, they and their financial advisor have enlisted the help of Susan Arpan, Palo Alto's manager of economic resources planning. Together, they hope to present Gatley with facts and figures about the current market downtown that will persuade him to accept the Campagnas' offer instead.

"We're working to do what we can to bring this to a positive conclusion," Arpan said.

The Campagnas admit to a sense of desperation, but said they will not give up. They said they owe it to their kids, employees and customers to keep trying.

"You don't devote six years -- working 16 hours a day sometimes -- and walk away with nothing," Robin Campagna said. "We put everything on the line, because of the love."

Jocelyn Dong can be reached at jdong@paweekly.com.


 

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