Gazpacho Restaurant, a longtime fixture in downtown Durango, owes the city more than $14,000 in sales taxes and is at risk of closing, according to a co-owner.
Construction on a dual-branded hotel and the city’s unwillingness to compromise on a payment plan are partly to blame, said Gazpacho President Brennan McManamon.
The restaurant, located at 431 East Second Ave., has been bringing the flavors of New Mexico to Durango since 1991.
But recent financial struggles may mark the restaurant’s end unless a large, upfront payment can be made to the city.
Email correspondence in late September between McManamon and the city’s financial department indicated the restaurant must pay a $7,271.25 down payment – half of its total outstanding sales tax bill – to retain its liquor license and continue operating.
Gazpacho doesn’t have the funds to pay the down payment in full, McManamon said, largely because of declining sales and out-of-pocket repair costs he attributes to the nearby hotel construction, which has impacted the area for six years.
McManamon hopes to reach a deal with the city that would allow the restaurant to pay the outstanding balance in smaller increments.
“We’ve incurred thousands of dollars in repairs for issues like a damaged grease trap and sewage backups directly caused by the new construction,” McManamon said. “We’ve also experienced a massive decline in business leading to temporary closures, and we’ve been unable to get any meaningful response from the city on these matters.”
McManamon said trash and debris from the construction site frequently end up on the restaurant’s property, and that the constant backing in and out of cement trucks and other construction vehicles has damaged the restaurant’s parking lot.
The restaurant asked the city and developers to repave the parking lot and Gazpacho’s side of East Second Avenue. The developers also asked the city to repave that side of the street, but the city refused, McManamon said.
City spokesman Tom Sluis said the city has received only one complaint related to debris from the construction site.
“When City staff inspected the site in response to this complaint, there was no debris to be found,” Sluis said. “Community Development staff have been to the site regularly for inspections and have not noticed an unsightly condition of the project site or debris.”
Sluis did not respond to questions about whether the city denied a request to repave Gazpacho’s side of the street.
Pagosa Springs resident Cindy Libertion said she has watched much of the hotel construction unfold from Gazpacho’s patio.
Libertion visits Durango for medical appointments and always makes time to stop at Gazpacho’s – her favorite restaurant in town. She said the construction noise used to be worse, but it has lessened now that the hotels’ exteriors are complete.
Libertion said the recent lack of heavy foot traffic at the restaurant is one reason she enjoys eating at Gazpacho’s.
“It’s not real crowded – maybe from this,” she said, nodding toward the construction across the street.
McManamon said he was able to negotiate an incremental payment plan with the state for the outstanding sales tax, but the city has been less forgiving.
“The state has worked with us on similar issues, but the city has refused, and now they’re denying our liquor license renewal until the entire amount is paid,” McManamon said.
Sluis declined to discuss specifics related to Gazpacho’s sales tax payments, citing confidentiality rules designed to protect business owners.
McManamon said the city hasn’t prioritized the restaurant as highly as it has the new hotel chain.
“As a small local business, we feel overlooked in favor of a large corporate entity that seems to receive preferential treatment,” he said. “All we’re asking for is a flexible payment plan that allows us to continue our regular payments while addressing the outstanding balance – without requiring the full 50% upfront.”
Sluis said multiple projects are always underway across the city, and a focus on other projects “does not mean the city has been ignoring the hotel project and its impact on neighbors.”
As of early October, McManamon was still attempting to negotiate a payment plan with the city to keep the restaurant open – so far, without success.
“We’re deeply concerned that we won’t survive long enough to benefit from the potential long-term advantages of the 10-year hotel build, and instead, we’ll be forced out due to the financial strain and damages caused,” he said.
epond@durangoherald.com
