San Francisco Tries to Combat the Business Side of Gentrification

Josh Stephans
Next City
July 2, 2015

(Photo by Rick Audet)

The grungy holes-in-the-wall of San Francisco’s Mission District have long been known for some of the world’s largest, most beloved burritos. But the neighborhood is also known for something a little less savory: gentrification. With an infamous influx of young, well-paid tech workers fueling higher rents, many businesses, restaurants included, are threatened. Even when they’re the size of a wrestler’s bicep, burritos can sell for only so much, and the merchants selling them must cope with increasingly high real estate costs.

“We’ve all heard about what’s happening on the housing front. A lot of tenants have been evicted, a lot of people are being pushed out because it’s so expensive in San Francisco,” says San Francisco Supervisor David Campos. “That’s manifesting itself on the business side as well.”

Campos has proposed a ballot initiative that, while it will not save every threatened legacy business, may buoy enough of them to prevent the city’s commercial landscape from being overrun by Starbucks and Chipotle. It’s an acknowledgment that local businesses can be community amenities and public goods even as they pursue their core capitalist missions.

“These long-term businesses … are not just businesses but really are part of these communities,” says Campos. “There’s a personal, emotional attachment that comes with a lot of these businesses.”

The city’s budget office estimates that San Francisco’s commercial property values rose 256 percent between 1999 and 2013; rents have been known to double from year to year. The same report indicates that closures and relocations of established business is rising, with an estimated 4,378 in 2014, compared with 3,657 in 2011.

The Legacy Business Historic Preservation Fund would provide up to $500 in annual assistance per employee and grants of up to $4.50 per square foot to landlords in exchange for 10-year leases to legacy businesses. Annual grants would be capped at $50,000 and $22,500, respectively. Funding for the program, around $3 million annually, would come from the city’s general fund, which amounts to roughly $3 billion annually. Longstanding nonprofit groups would also be eligible for support.

Incentives in these amounts might not save destitute businesses, but they could buoy those that are teetering on the margin between sustainability and perennial losses. The long-term leases can also create certainty for legacy businesses that are currently sustainable but loath to make long-term investments lest they be hit with unexpected rent increases.

“It’s important to note that this … interferes in no way with the landlord-tenant relationship,” says Mike Buhler, executive director of San Francisco Heritage, which supports the proposal. “The decision to pursue the grant is entirely up to the business owner and the landlord.”

(Then again, real estate is not the only expense that San Francisco businesses must weather. One estimate, by the libertarian Pacific Institute, contends that the city’s regulations, plus its impending $15 per hour minimum wage, means that every worker costs at minimum $19.95 per hour.)

Buhler calls it a new twist on historic preservation, which typically focuses on buildings but not on businesses or people.

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