By this summer, San Francisco’s new Legacy Business Preservation Fund is slated to start giving long-time establishments financial assistance to weather the city’s harsh real estate market.
That’s not soon enough for Supervisors David Campos and Aaron Peskin. They have co-sponsored legislation that would inject about $343,000 into the Preservation Fund before it officially activates in July, at the start of the fiscal year. That money would let the fund start working as early as April, helping protect certain businesses from being displaced.
Navarro’s Martial Arts Academy & Gym is staring down such a threat. Last May, the building’s new owner told the Navarro family that their business’ monthly rent would increase from $1,800 to $6,500. Since then the two sides have been locked in litigation, delaying the gym’s departure from 3470 Mission St., where its members have trained for more than 40 years.
But the gym’s future remains uncertain, said Rubie Navarro, who runs it alongside her father Carlos and is applying to get money through the Preservation Fund. Earlier this month, her lawyer told her that negotiations were starting to look more positive, partly because the fund might put new money on the table.
“It’s not a yes. It’s a maybe,” Navarro said.
She hasn’t been the only one to inquire about the fund. Since city voters approved its creation by passing Proposition J in the most recent election, at least 20 businesses have knocked on Campos’ and Peskin’s doors to find out when the money would become available and whether they would be eligible for it. The interest spurred the supervisors to jump-start the fund now.
“The voters’ wills were expressed in November. It is now March, and there are fires burning all over the city,” Peskin said, referring to establishments at risk of being displaced. His office has been approached by the owners of Macchiarini Creative Design, which has operated for more than 50 years, as well as Specs’ Twelve Adler Museum Cafe and Golden Gate Fortune Cookie Factory.
Hillary Ronen, legislative aide to Campos and a contender for his supervisorial seat in this November’s election, rattled off a list of businesses that had reached out to her office: Doc’s Clock, Dog Eared Books, Modern Times Bookstore, La Raza Centro Legal, Gallería de la Raza and others.
If passed, the legislation would reroute money into the Preservation Fund from City Hall’s general reserve, which can be used for just about anything if approved by a majority of the Board of Supervisors. The reserve’s current balance is about $73 million.
In addition to activating the fund ahead of schedule, that money would also pay the salary for a new full-time city employee to manage the fund for the foreseeable future.
Campos and Peskin introduced their legislation on February 23, and within the subsequent 30 days it must be scheduled for the Budget and Finance Committee to consider it — as of noon Friday, that had not yet occurred. The committee might amend it, and then pass it to the full Board of Supervisors for a vote.
Peskin was sanguine about its chances at the full board. “I can’t imagine that this would not get a supermajority, if not a unanimous vote,” he said.
A business can only receive money from the Preservation Fund after first earning the title of “legacy” business, and every year City Hall can grant that designation to 300 new establishments at most. To get that title, the business must have operated in the city for at least 30 years — 20 years in some cases — and receive a nomination from the mayor or any San Francisco supervisor. The business must also explain how it is significant to San Francisco’s history and identity. This application process can take about two months, said Regina Dick-Endrizzi, director of the city’s Office of Small Business, who is currently managing the process.
A legacy business could tap into the Preservation Fund to supplement its rent. The greater the business’ square footage, the larger its subsidy, and the highest possible single payout would be $22,500 in a given year. That money would go directly to the landlord.
The idea is for a legacy business to use the rental subsidy as a bargaining chip while negotiating for a new, long-term lease; the money would only be made available if the landlord agreed to retain the business in that commercial space for 10 years.
“Hopefully, that is enticing enough,” Dick-Endrizzi said.
As long as the landlord reapplied for the subsidy every year and neither the landlord nor the business violated their lease, City Hall would continue covering its share for the entire decade.
Some businesses have inquired about the fund because their leases are on the verge of expiring, Ronen said, and they’re starting to negotiate “in anticipation of this money.” And Dick-Endrizzi said that some property owners have inquired on behalf of their commercial tenants.
At this point, a month before the earliest time the fund could hand out financial assistance using the supervisors’ allocation, about 10 businesses have submitted applications to gain the legacy title. Dick-Endrizzi could not say how large those businesses were, because they weren’t required to report their square footage at this stage in the process.
But she said that if each received the maximum possible payout, then the fund would have enough money left over to pay full rental subsidies for only a few more businesses of the same size. In order to accept additional businesses into the pool before July, when the fund will replenish, City Hall would then have to reduce the amounts of each grant.
The Preservation Fund will ultimately be able to give another type of financial assistance directly to legacy businesses to cover their general expenses. But the city won’t start accepting applications for that money until July, even if Campos and Peskin’s legislation passes.
And of course, none of the fund’s money can go to businesses that have already shut down or moved out of San Francisco, or that are slated to do so before they can achieve legacy status. That means the fund won’t help Roosevelt Tamale Parlor make a comeback.
Rubie Navarro said that if her martial arts gym couldn’t tap into the Preservation Fund soon enough, then she wasn’t sure where her business would go from there. “We’ve been looking and looking and looking, but the rents are so outrageous,” she said.
Even if she got the money, the landlord might choose not to accept it.
“It’s a beautiful incentive, but it’s out of our hands,” Navarro said.
Legacy business application