Oakland City Council vote for bakery bailout

May 18, 2010 11:12:40 PM PDT
Oakland City Council voted on a controversial proposal by Mayor Ron Dellums to bailout the cash-strapped Merritt Restaurant and Bakery.

Some question whether a $150,000 loan to the bakery is going to be enough to help it actually turn a profit. The bakery owners believe it will help get them back into the black. However, many at City Hall wonder whether the bakery's financial problems are too many to solve.

The Merritt Restaurant and Bakery is a nearly 60-year-old Oakland institution.

"Strawberry shortcake, chicken, chocolate dream, cake, everything is famous at the Merritt," said general manager of 22 years, Susan Sotelo.

But this institution is now so far in the red, it needs a city bailout to stay open.

"Hopefully, with this loan, we can get over this hump that we're in and build ourselves back up," said owner Patricia Griffis.

Dellums asked the City Council to approve a $150,000 loan, that's on top of more than $200,000 in bailout money Oakland already loaned Merritt over the past eight months. Dellums' office says it is about more than saving a bakery.

"Not only that, but it saves 55 jobs in Oakland, and that's important for the community in this economic climate," said Dellums' spokesman, Paul Rose.

But a city-sponsored study found the bakery owes more than $800,000 to lenders, and the report says Merritt is not likely to pay the city back. It concluded, "At this time there are seemingly insurmountable inhibitors facing the company."

Broken equipment is just one of Merritt's problems. The owners say when the next door supermarket expanded in 2002, that killed business. Merritt lost nearly half of its parking, and City Hall concedes that a study showing the parking impacts should have been done before construction, but it wasn't.

"About 25 to 30 years I've been coming here," said customer Robert Mason.

"We're on our second set of waitresses. The first set has retired," said customer Barbara Ganitch.

A handful of customers still show up, but even they understand why so many others have stopped coming.

"The customers here, they can't handle walking through construction zones, so they went elsewhere," said Gantich.

The $150,000 loan is not going to do anything to solve those parking problems that still exist for the bakery. The terms of the loan -- exactly how much and when Merritt will be allowed to pay the loan back, if in fact this loan is approved -- also have not yet been worked out.

UPDATE: The City Council voted Tuesday night to loan Merritt Bakery more money to help it stay open.


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