OCEAN AVENUE — The slow unwind of Santa Monica’s Redevelopment Agency may take another casualty — Chez Jay.

The historic business, already facing the possibility of losing its spot on the edge of the planned Palisades Garden Walk park, could find itself with a new owner if the state Department of Finance forces its sale as part of the former Redevelopment Agency’s holdings.

City Hall announced its intention in April to put out a call to private operators to submit their ideas to revamp the restaurant into one that would complement the $47 million park being built by the old site.

Officials stopped short of putting the project out to bid, however.

According to City Hall records, the restaurant sits on land previously held by the Redevelopment Agency before it and over 400 other entities like it were killed by Gov. Jerry Brown to plug holes in the state budget.

The money and assets held by those agencies were transferred to “successor agencies,” in this case the city of Santa Monica, which then must figure out which funds from the former agency can be kept and which must be given back to the state.

Those decisions are then scrutinized by an oversight board and the Department of Finance.

Properties, with some exceptions for government-serving buildings like libraries, must be sold. The proceeds then go to other agencies like Los Angeles County, while the land or buildings stay with their new owners.

That means that Santa Monica, which currently rents the restaurant to Chez Jay owner Michael Anderson and Anita Fiondella Eck, may lose control of the parcel and its ability to preserve the space as an eatery.

“The state could force the property to be transferred to the Successor Agency and then sold on the open market, with the proceeds going to taxing entities,” wrote Andy Agle, City Hall’s director of Housing and Economic Development, in an e-mail.

That means the state can cash in while Santa Monica loses an institution that rallied community support when its existence was threatened at the local level.

When city officials informed the City Council that it needed to put out a public bid on the proprietorship of Chez Jay, the community came out in force to protest the potential loss of the iconic restaurant, said Abby Arnold, a member of the Chez Jay team helping to build a business proposal for City Hall.

“Just organically, so many people have expressed support for the restaurant,” Arnold said. “We have piles of letters from people saying this is an important place in my life.”

Other city groups have taken note.

The Landmarks Commission, an advisory body to the City Council on local historic resources, stepped in last Monday to put the building up for consideration as a landmark, which could preserve the look and feel of the building if not the business itself.

Commissioners argued that the building minimally deserves landmark status in recognition of the famous people that dined there, a peanut that went to space (literally) that’s still on the premises and the hand over of the Pentagon Papers by Daniel Ellsberg to New York Times reporters, which allegedly happened at the restaurant.

There’s also a case to be made regarding the architecture of the building, said Commissioner Roger Genser.

The exterior of the building, which has transitioned from an apartment building to a restaurant over the course of its history, is a good example of architecture from the 1950s, according to the 2004 environmental impact report for the Civic Center Specific Plan, which included the Chez Jay property.

“A compromise might be to save the front of the building, with the 1950s knick knacks,” Genser said.

Whether or not the building would qualify as a landmark under local law remains to be seen.

The 2004 report took a dim view of its chances, saying that the value of the establishment was the proprietor, Jay Fiondella, rather than the property itself.

It didn’t require any special treatment of the building in the 2004 specific plan because “the property is not considered a historic resource for the purposes of CEQA,” California’s environmental protection law.

Chez Jay is ready to work to keep its spot in the city, said Anderson, the co-owner.

“We’ve been here 53 years and we plan on being there another 53 years,” Anderson said.

ashley@www.smdp.com

Editor-in-Chief Kevin Herrera contributed to this report.

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