Posted Nov 21, 2008, 5:58 PM
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Join Date: Jun 2006
Location: San Francisco & Tucson
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Friday, November 21, 2008
Fillmore businesses ask redevelopment agency for loans
San Francisco Business Times - by J.K. Dineen
Restaurants and music clubs in San Francisco’s fledgling Fillmore Jazz District may need cash infusions to stay afloat as customers stay home or spend less due to the economic downturn, according to the San Francisco Redevelopment Agency.
Thus far, four nightlife establishments that received funding from the agency — Yoshi’s, 1300 On Fillmore, Sheba Lounge and Rassales — have all approached the agency looking for additional loans and to restructure debt to survive what may be a prolonged economic recession. All four businesses are seeing revenues 10 percent to 20 percent below projections, according to the memo.
“Fueled by cost overruns and scarce operating reserves, all of the businesses have struggled to break even on a month-to-month basis,” stated a Nov. 18 staff memo on the subject to the Redevelopment Commission.
The four night spots in question all received public financing as part of the Redevelopment Agency’s efforts to resurrect what was once a thriving black neighborhood lined with jazz clubs, restaurants and Victorian homes. Much of the neighborhood was razed during the urban renewal of the 1960s and replaced with public housing projects, leaving longtime residents with a bitter distrust of city government and redevelopment.
Given the history, it’s that much more important that businesses working to bring back the area be given a chance to succeed, said Redevelopment Agency Director Fred Blackwell.
“Just like the other retail establishments, times are hard for folks doing business in the Fillmore Street corridor,” Blackwell told the Business Times. “The thing that is a double-challenge for those is they have been pioneers in efforts to rebuild the corridor. It isn’t as if these are places located in Union Square or Fisherman’s Wharf. We view the reinvestment in these restaurants as not just restaurant investments, but neighborhood investments.”
The four establishments are looking to borrow a total of $2.4 million in new loans. Yoshi’s, which originally borrowed $5.7 million for its $15 million build out, is requesting $1.5 million for debt related to construction; 1300 On Fillmore, which received $2.5 million from the redevelopment agency, is asking for another $624,000 for immediately working capital and tenant improvements; and Sheba and Rassales are looking for a combined $280,000 for improvements.
Most pressing among the needs is 1300 On Fillmore, a restaurant on the ground floor of Heritage on Fillmore, an 80-unit condo development that also includes Yoshi’s jazz club, according to Blackwell. The upscale soul food restaurant recently informed the agency that it had “exhausted its limited working capital and has not been able to borrow additional working capital from private lenders like Wells Fargo, Union Bank and Citibank,” according to the redevelopment memo.
On Nov. 18 the Redevelopment Agency authorized an emergency $100,000 loan to allow 1300 On Fillmore to meet payroll and pay off vendors. The restaurant’s budget crunch is partially driven by construction costs that went over budget by $930,000 to a total of $3.4 million. The restaurant has 42 employees and is expecting revenues of $2.4 million this year, according to the redevelopment agency.
Monetta White, the owner of 1300 On Fillmore, said every restaurant in the city is down 10 to 20 percent.
“We are still trying to get the word out about our new corridor, to put the jazz district on the map,” she said. “A lot of people don’t know that the jazz district is here. ... It takes time and people have to know about it and see it come alive.”
She said the agency has been a partner. “That is why we went to them to say ‘hey, we need some help here,’ and with this banking crisis nobody is giving anybody loans, let alone a restaurant.”
Blackwell said all the businesses “have different needs that are quite immediate,” but said the agency “also takes seriously at a staff level and at a commission level our fiduciary responsibility.”
He said the agency would work closely with the business to “reduce costs and increase revenues so we are not just throwing money, but being smart about working with the restaurants.”
The agency memo said “the Jazz District suffers from a perceived stigma as an area plagued by crime and potentially dangerous.”
[email protected] / (415) 288-4971
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Source: http://sanfrancisco.bizjournals.com/...ml?t=printable
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