Chico >> Nine years after opening, Empire Coffee will be forced to close its doors next month so its landlord can open its own coffee shop in the renovated rail car next to the Chico train station.

Chico Art Center has been leasing — at no cost — the rail spur under its rail car from the city of Chico since the early ’90s, and purchased the rail car with a community development block grant around 2003. The Art Center’s agreement with the city, which expires in 2022, also includes the warehouse where it operates. It pays for utilities and basic maintenance but no rent.

It subleases the renovated 1948 train car to Empire Coffee and has been collecting monthly rent and a share of revenue. On March 7, the center informed the coffee shop by certified letter that it would not be renewing its three-year lease, which expires May 15.

Empire Coffee owner Lindsay Brothers says she felt blindsided, as she expected to renew her lease for another three years.

“I understand this organization is for the community. All I am looking for is to see if there is a way we can continue to do business at this location,” shes aid. “I simply want to keep Empire Coffee alive for the sake of its clientèle … We’ve loved being here. We have so much more to give to the community.”

Chico Art Center plans to open its own coffee shop in the rail car, as has been its plan since first purchasing it and funding its restoration, said director Klint Kittell. In opening a separate, for-profit corporation with the art center as shareholders to receive profits, it plans to replace or retain the existing employees, make new hires and grow the business to support the Art Center.

“Just like any other landlord who leases a piece of property to a business owner, you see signs all the time, ‘Lost our lease,’ and that is what our situation is,” he said.

On Tuesday, Brothers addressed the Chico City Council with a request for help, as the city is her landlord’s landlord and has some influence over the sublease. She was supported by two other downtown business owners, including Naked Lounge owner Alec Binyon, who got his start in the coffee business at the rail car, and Will Brady of B Street Public House and the Banshee.

“The idea that they would be removed for somebody else to do a like-kind business subsidized by the city is troubling,” Brady said. “I think there are lots of conflicting interests that would at least, at the very minimum, require us to look at re-examining the lease the Art Center has with the city.”

“If they feel they are going to get into the private business of running coffee shops then we should talk about the private business of leasing buildings, which is much more expensive than zero dollars per month” he added.

Brothers purchased Empire Coffee three years ago and received a three-year sublease. The cafe employs four people who earn a combined $115,000 annually and has become competitive in the speciality coffee industry, she said. It has the highest Yelp review of any Chico coffee shop, and last year, it even got a tweet of praise from celebrity chef Alton Brown.

In such a short time frame, she will not be able to relocate, Brothers said, adding that part of Empire’s charm and what has made it so successful is its novelty location.

On Wednesday morning about 10 customers were seated in the train car seats and tiny vintage tabletops. The espresso machine hummed with new orders as customers typed away on laptops, penciled in notebooks or chatted over steaming coffees. A stand-up piano in the entryway came from Brothers’ family and it’s not uncommon for someone to sit and play classical music, the notes bouncing off the orange rounded ceiling.

Brothers purchased Empire Coffee from the prior owners while working in corporate jewelry sales. As an artist herself, she said part of the attraction of buying Empire was it supports the arts in Chico through rotating artwork on inside walls.

Brothers thinks the non-renewal may stem from when she asked for a lease amendment in November. She pays Chico Art Center $575 per month in rent, as well as $44 for garbage and also gives it 3.5 percent of her gross sales, which she said did not reflect the current Chico rental rate.

Her proposed terms were not beneficial to the Art Center because it would reduce revenue. Additionally, the coffee shop has not been flourishing under Brothers’ tenure, with sales declining in the last three years, said Kittell, citing her monthly sales statistics.

The Art Center also is trying to compensate for lost revenue because of the city’s reductions in support in recent years,said office manager Debra Simpson. At its peak, the center received up to $15,000 from the city, but in 2013-14 it received $8,856, and just $4,138.65 this year plus an additional $4,499.99 through the North Valley Community Foundation.

“We are an arts organization and we are just trying to maintain the status quo,” Simpson said. “We are not trying to make a lot of money.”

Last year, its income from Empire was about $11,000, including rent and its share of gross sales.

The lease agreement will be agendized for the April 21 City Council meeting. Assistant City Manager Chris Constantin said the art center is within its rights not to renew the sublease.

“However they are supposed to consult with the city on any sublease, and the city may exercise its right to change the relationship with the Art Center depending on what the Art Center may choose to do with that property,” he said, adding that the city could also seek rent.

The city will have to evaluate any relationship the center enters into to determine whether it complies with the lease agreement, Constantin said. This conversation would have happened this summer regardless, because the council wants to take a closer look at its property inventory.

“We are really taking a look at the relationships and the terms with all our leases to determine if each is really in the public’s interests as established or do we need to make changes,” he said. “Now, timing is of the essence.”

Councilor Sean Morgan acknowledged the Art Center is within its right if it doesn’t want the coffee shop there, as it would be if it wanted to replace it with a museum or art project, or use it to hold art classes. And such uses would be within the spirit of the city’s lease agreement.

“But that’s not what they are doing. They are taking the business over and I have an issue with that,” he said. “The city in good faith has gifted you some property and some other things so you can do things for the arts community. But in response you are taking over a small business owner’s business?”

Brothers hopes supporters will make their position known to the Art Center.

“Empire for me has really felt like a second home. With all its difficulties and all its high points, it’s been like family,” she said. “I’m already grateful for the support the community has shown this business.”

Contact reporter Ashley Gebb at 896-7768.