Legacy Business Program: Help for Local Gems Struggling to Stay Open
San Francisco has a consistent lock on the top of many lists ranking the most expensive areas for housing in America. Many local business owners have to cut those pricey rent checks, too, threatening their ability to stay open. To help preserve those local businesses residents have come to love and rely on, the city is trying something new: a legacy business program.
California state law does not contain any provisions for commercial rent control, unlike the more common aid scenarios for residential rental units. Real estate prices in San Francisco have vaulted more than 250 percent since 1999. Landlords are also asking some tenants for larger deposits on top of increasing monthly payments.
“People have gotten greedy in this town,” says Kate Rosenberger, owner of Dog Eared Books. “It’s hard for long-term businesses to stick around because landlords have realtors calling them up saying you can get a whole bunch more rent.”
To address skyrocketing commercial rents, which have forced many legendary local establishments to shutter or move from their original neighborhoods, San Francisco has implemented the nation’s first Legacy Business Program, a sort of historic preservation program for local small businesses.
Dog Eared’s Rosenberger has owned several bookstores across the city. She says the recent pinch on businesses is the result of a number of factors, from the city’s undeniable geographic limitation—a small peninsula—to socioeconomic inequities, to the more fluid cultural triggers.
“There’s a lot of demand to be here because we have a really cool city,” she says. “We’ve become lopsided. The reasons people came here, those reasons are disappearing. If the city wants to help, I think it’s the city’s responsibility to balance what is happening.”
San Francisco’s Legacy Business Program
The Legacy Business Program consists of two parts.
The city’s Board of Supervisors first created the Legacy Business Registry. Supervisors or the mayor can nominate any establishment older than 30 years that has contributed to the historical essence of the neighborhood it calls home. Nominees then work with the Historical Preservation Commission and receive final approval from the Small Business Commission at monthly hearings.
San Francisco citizens approved the second phase of the program in a ballot measure during the November 2015 elections. Residents ratified the creation of the Legacy Business Historic Preservation Fund. Money from the city’s general fund will provide grant opportunities to business owners and their building owners based on square footage, number of employees, and lease extensions of at least a decade.
“I have two minds” about the program, says Kevin Ryan, one of the co-owners of Green Apple Books. “On the one hand, I believe in the free market. My first instinct was that it doesn’t seem right for the city to be subsidizing one business over another.
“But we live in unusual times, and people want to protect things that make the city unique, businesses of all stripes. I’m totally with them. I can name a half dozen businesses that if I found out they were going to close because the landlord had raised the rent, I’d be heartbroken.”
Ryan’s Green Apple Books will celebrate half a century next year, and The Booksmith marked 40 years during this past summer. Co-owner of The Booksmith Christin Evans says her local city supervisor announced the nomination at the anniversary party. Evans then submitted her application with details of the store’s ownership history, photos, and news clippings. The confirmation process took about three months.
“Since the program is just getting under way, we don’t have examples yet where the program has made the difference between a business staying open or closing,” Evans says in an email. “I know the city will be analyzing the data as the program is rolled out.”
The legislation limits annual acceptances into the program to 300. However, nearly a year after the proposition passed, the registry only includes 24 businesses. All of those have been added between August and October 2016.
“I was hoping we would be further along by October of the following year,” says Tim Frye, historic preservation officer for the city’s planning department. “I was hoping we’d be close to 300. The Office of Small Business is still getting ramped up. Once they start doing outreach, we’ll have more applications.”
Frye and his team vet the recommendations from supervisors and the mayor, and the Office of Small Business makes official decisions.
“Our Historic Preservation Commission sees a lot of value in this,” he says. “As a regulatory body, we’re limited in how we can get involved in the market. This is providing a meaningful tool for small businesses to the best of our ability to hopefully keep them around longer.”
The larger idea behind the entire program lies in studying and recognizing the value of small businesses that anchor a neighborhood. These institutions provide more than jobs and revenue for the city.
“There has been a growing interest within the broader preservation community on addressing living history — not just the bricks and mortar of buildings — the everyday activities, traditions, and events of the communities using these buildings,” Frye says.
Bookstores that have joined the legacy list in the most recent round of additions come with a little extra incentive. Big-box merchants and online discounters had squeezed independent sellers across the U.S. into widespread declines.
“Every single customer who walks into my bookstore knows that if they wanted to wait a day or two, they could get it cheaper,” says Ryan, of Green Apple. “They’re choosing not to because they want that store to be there. The awareness of that in San Francisco is higher than it is in other places.”
But customers’ shopping dollars, while necessary, don’t affect rent prices, which is the main problem the legacy program brings attention to through its recognition. Dog Eared’s Rosenberger says she’s watched the number of literary compatriots in her neighborhood dwindle from nine bookstores in as many blocks a decade ago to just two today. Her rent doubled with the last lease renewal, and she says she expects it to triple next time.
“People come up to me with tears in their eyes that their local bookstore has moved,” she says. “They’re social places. They serve many, many functions.”
That community-building purpose might be part of the reason behind some of the resurgence. The overall downward trend for independents appears to have leveled and the pendulum is swinging the opposite way. According to the American Booksellers Association, the number of indie shops has grown 30 percent since 2009.
“Bookstores have always been community gathering spots and places where people come together to discuss and engage with art and ideas,” says Evans, of The Booksmith. “It makes sense that three bookstores were among the first businesses nominated for that reason.”
San Francisco businesses and their building owners face what city preservation officer Frye called “extremely intense” development pressure.
Ryan, with Green Apple, says the empty retail corridors in the city offer a stark scene compared to the perception of overflowing wealth and prosperity flowing from the tech world.
“It’s really changing the way neighborhood streets look,” he says. “It’s true when a community loses its hardware store, it’s inconvenient. You don’t want that. When they lose their bookstore, they lose something more — they’re the cultural blood of any community.”
Ryan and his co-owners advocated at city meetings in favor of the legacy program, but he acknowledges that the official government effort represents a starting point, not a savior.
Legacy Business Program Manager Richard Kurylo told The San Francisco Examiner that the ideal world would put shop owners in a better position to own their properties.
The reality is more expensive.
“A commercial business loan is pretty tough,” says Rosenberger, of Dog Eared Books. “I wish there was more help in that long-term stability of owning your own building. There are a lot of empty commercial spaces all around.”
Yet when her building listed for sale, she couldn’t afford to buy it. The property started at $4 million and sold for more than quadruple that price.
San Francisco’s Legacy program is a thoughtful approach to a serious problem, but reining in the cost of housing will require a concerted effort on behalf of many stakeholders. Legacy businesses is, however, something that no other metro area has yet tried. It isn’t a magic bullet, but, hopefully, as more businesses are added to the registry, the program will result in increased small business and community survival.
For more on independent bookstores, check out our post on Independent Bookstore Day.