An arts organization is struggling to remain in its San Francisco location amid a hot commercial real estate market, highlighting a reality many other nonprofits are facing as they seek help from The City.
Anthony Williams and Anne Brodzky run Meridian Gallery on Powell Street near Union Square. The organization includes an art program for low-income youths.
On the walls of the gallery hang works produced by 14- to 17-year-olds who receive stipends and are taught visual arts by accomplished teachers. The program has served 500 youths since it began 17 years ago.
Facing eviction, the husband-and-wife team is calling on The City to lend a hand while it also engages in an aggressive fundraising campaign to help pay for a $1,000-a-month rent increase the landlord is seeking. The couple currently pay $5,000 a month.
On top of that, their landlord wants a year's advance payment as well as a sizable security deposit, Williams said, amounting to about $100,000.
The last time San Francisco nonprofits felt such a widespread impact of rising rents was during the previous technology boom in the late 1990s.
During the current technology boom, from 2011 to 2013, vacancy rates have decreased citywide from 12.4 percent to 9.3 percent while the average commercial rent increased by 32.8 percent, from $39.67 per square foot to $52.69, according to a city report.
“The best thing The City can do for nonprofits is make money available so that if anyone gets in the situation we are in, they will have a place to ask for funds to tide them over,” Williams said from inside his gallery last week.
The couple's situation became uncertain after their seven-year lease expired last year. The 25-year-old gallery first opened in a Sutter Street location and moved to its 535 Powell St. home seven years ago.
In response to the impact of soaring rents on organizations such as Meridian Gallery, the Board of Supervisors is expected to vote today on $4.5 million for Nonprofit Rent Stabilization services.
Brian Cheu, director of community development for the Mayor's Office of Housing, said the money would likely help 200 nonprofits in varying ways during the next three years.
A new report from the Working Group on Nonprofit Displacement, which was assembled by The City, has identified 30 recommendations, of which eight are short-term strategies in conjunction with the funding proposal.
“Strategic, focused implementation is required in order to preserve San Francisco as a vibrant center for arts and culture, while simultaneously providing other essential services vital for the health, well-being and economic self-sufficiency of its residents,” the report says.
The recommendations are intended to create a more stable environment for the nonprofits that can weather up-and-down economic cycles, Cheu said.
“What we would like to see is permanent affordable space for our nonprofits,” Cheu said. That could mean more sharing of spaces, and operations, among various entities.
Measures include funding to rehabilitate or purchase buildings, rental stipends, and free technical assistance to help with lease negotiations, financing options and real estate searches.
Another recommendation is to have city contracts with nonprofits include an automatic cost-of-living adjustment to help with rising expenses. But that could get costly. A 1 percent increase would cost The City
$4.5 million alone, according to the City Controller's Office.
Tenant improvement funding would help groups such as Lutheran Social Services, which provides financial management for those living in supportive housing. Deputy Director Nancy Nielsen said her organization had to move when the landlord doubled rent to $32 a square foot because a technology company wanted to move in.
After a real estate search, Lutheran Social Services found a building at 191 Golden Gate Ave. at $18.50 a square foot. It also needed $500,000 in upfront tenant improvements. Nielsen said she will apply for the city funds, if approved, to help with costs.
“We've all struggled,” she said. “It's been a huge amount of work on top of everything else we do. We are not leaving. We are moving back into the Tenderloin while others are moving out.”
Nielsen said The City has crafted policies that have encouraged growth of the technology industry, but now it has to deal with the “unintended consequences” that nonprofits have been dealing with. The Working Group on Nonprofit Displacement's recommendations are “a good first step,” she said.
San Francisco has about 6,000 nonprofits, of which some 700 receive city funding.