San Francisco Business Times
Wednesday June 10, 2015
The Mission District’s Roxie Theatre was constructed just after the city picked up the pieces from the 1906 earthquake, making it the longest continuously running movie house in the country. That distinction came under threat earlier this year as the theater faced the potential that rent could double as it negotiated a three-year lease option, from $12,000 a month to $21,000.
The theater eventually reached a tentative agreement with its landlord, in part because of contract language that prevented the building from changing uses, said Tracy Wheeler, a former Roxie board member who still works with the theatre as a consultant.
The Roxie, for now, avoided the fate of neighboring businesses like gay bars Esta Noche and the Lexington Club that have washed away after operating for decades.
With nonprofits and legacy businesses operating for generations in San Francisco feeling the heat from rising commercial rent, voters may get a say this November on whether the city should create a fund to help make landlord-tenant negotiations less contentious. Supervisor David Camposannounced Tuesday that the measure would have support of three other supervisors, enough to get it on the ballot.
“The Roxie has been able to be scrappy and find its way but the lease issue is the biggest existential threat,” Wheeler said.
“In three years, when we’re up against the end of this particular lease, the work that this legislation would be doing could be huge,” she said. “It has the potential to re-set the conversation between a landlord and a tenant to one that explores a mutual benefit.”
The fund would give teeth to last fall’s legislation unanimously passed by the board to create a registry of up to 300 businesses a year that have been around for at least 30 years and are considered cultural assets. That designation would be determined by the Historic Preservation Commission.
If voters approve Tuesday’s proposed ballot measure, the city’s legacy business fund (appropriated out of the general fund) would pay for $500-per-employee grants to those companies. And landlords would get a cut, too: $4.50 a square foot – a maximum annual grant of $22,500 – if they extend legacy businesses to a 10-year lease.
Jay Cheng, deputy director of government and community relations at the San Francisco Association of Realtors, said the incentives for landlords wouldn’t necessarily make up for the higher rents they would need to maintain buildings, but would “provide a path for a new conversation.”
“We’re broadly supportive of the concept,” Cheng said. “The city’s role in this discussion for landlords and tenants is to provide a framework where a positive, middle-ground conversation can be had.”
Often, those conversations can end up with long-time businesses looking for new homes.
Chinatown’s five-story Empress of China emporium last year announced it would close as its building hit the market. Bars like Club 21, the Elbo Room and the Endup have faced uncertain futures in the past year. As one character on the HBO show “Looking” lamented after Esta Noche’s closing, “San Francisco is so over.”
The complaints of high business turnover is backed up by the city’s report last fall that showed an 884 percent increase in business closures and relocations between 1992 and 2011.
Campos said this would be the first program of its kind in the country. The city has about 3,000 businesses that may qualify for legacy status, and his office estimates the Board of Supervisors would need to appropriate about $3 million a year to support the fund. The fund would likely shrink during a market downturn when rents get cheaper.
“When people have talked about historic preservation in the past, it’s been focused on the structure. This takes historic preservation to a different level and looks at what’s inside that structure – the people and the substance of the business,” Campos said.
“We helped Twitter, why not help these businesses that have truly given character to these neighborhoods?” he added. “Even though this won’t be the answer to every problem, and it won’t address every single challenge, it’ll help.”