Jazz district loan comes at cost
By: Brent Begin
Examiner Staff Writer
February 17, 2009
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| Plan fizzles: The Redevelopment Agency purchased this Muni substation in hopes of converting it into a new jazz center or some other community resource. (Cindy Chew/The Examiner) |
SAN FRANCISCO — The cornerstone nightclub of the revitalized Fillmore jazz district is about to get a $1.5 million Redevelopment Agency bailout loan — but it comes at the cost of fixing a long-abandoned building in the neighborhood.
Officials are close to taking $3.3 million intended for revamping the abandoned Muni substation at Fillmore and Turk streets and instead offering the money as loans to struggling businesses, helping pay for restaurant consultants and funding an operating shortfall at a parking garage.
But questions remain about how The City plans to revamp the dilapidated substation once it’s turned over in a deal with the Redevelopment Agency.
The agency purchased the building from The City in 2003 for $900,000, in hopes of converting it into a new jazz center or some other community resource.
Much of the Fillmore district — once considered “the jazz Harlem of the West” — was razed 40 years ago in response to what some considered “blight.” The Fillmore Jazz Preservation District was created to help revitalize the commercial district of Lower Fillmore.
Officials hoped the Muni substation would be part of that effort. However, when the Redevelopment Agency invited developers to pitch proposals for the project last year, only two came in and both were determined to be inadequate or fiscally sound.
The Redevelopment Agency now wants to use the money intended for the substation revamp to keep businesses in the district afloat.
The package would provide about $1.8 million in revolving loans to three main dinner clubs along Fillmore Street: Yoshi’s, Rassales Jazz Club and Sheba Lounge. Yoshi’s will receive a majority of the money, $1.5 million, and will start repayment in 2013.
Yoshi’s, opened in 2007 to be the anchor of the Fillmore jazz district, previously received two loans totaling $5.7 million from the Redevelopment Agency to help pay off its reported $15 million construction cost. The latest $1.5 million loan will also help pay outstanding construction costs.
Yoshi’s has “creditors at the door,” said Redevelopment Agency Deputy Director Stephen Maduli-Williams.
Supervisor Ross Mirkarimi, however, said he would not approve the legislation unless The City has a plan for what to do with the long-vacant substation, which he said has been “dilapidated and [in] disrepair for years.”
The City will have to change the restrictions for the substation in order to court developers, Mirkarimi said. That could mean housing or other financially viable uses.
The Redevelopment Agency will vote today to transfer the deed for the Muni substation, along with valuable certificates of redevelopment, back to The City. As of now, city officials have no plans for the aging property.
The sale of certificates of transferable development rights, which are tied up in the restoration of historical buildings, could net The City between $2.5 million and $5.2 million, according to terms of the agreement. Restoration of the Muni substation will cost about $9 million.
The transfer requires approval by the Board of Supervisors, as does the redistribution of the $3.3 million. A Budget and Finance Committee meeting is scheduled for Wednesday.
Facing the music
City officials are considering rededicating $3.3 million meant to revitalize a Muni substation for other uses in the Fillmore jazz district.
Yoshi’s: $1.5 million loan
Sheba Lounge: $90,000 loan
Rassales: $251,000 loan
Mayor’s Office of Community Investment: $675,000
Office of Economic and Workforce Development: $500,000
Operational deficit for the Fillmore Parking Garage: $240,000
Muni substation maintenance and cleaning: $20,000
Improvement district taxes on redevelopment property: $40,000
Restaurant financial consultant: $75,000
Jazz restaurant marketing consultant: $25,000
Source: Budget Analyst’s Office
