At a recent celebratory dinner in the Mission, Astrid and Jorge Lopez (photo, far right and far left) were joined by their two grown children and their pro bono attorney, Jeff Maso (photo, center).
While breaking bread, Astrid turned to Maso and asked him to share their communal, rollercoaster ride of an experience of the past few years — an experience that ultimately led to the Lopez’ 28-year-old business Mission Street business being secured in its same location for another decade.
The Lopez children — who had been mostly uninformed about what was occurring with the family business — were shocked to hear the details of the hard-fought experience of their parents.
Elite Sport Soccer has been a Mission mainstay since the spring of 1990 when Jorge’s avocation turned into a labor of love: a sporting goods store focused on soccer, by far the most popular sport in his homeland of Colombia.
The location at 2637 Mission St. was ideal, with many other Latino immigrant families living nearby and showcasing a similar ardor for all things fútbol. While not leading to affluence, Elite Sport Soccer provided a way to pay the bills for the Lopezes, their dedication leading to a popular business that started seeing a second generation of families stopping in for their favorite team’s jersey, a new soccer ball or that perfect pair of cleats.
Also helpful was a good relationship with the longtime owner of the building, an Italian immigrant.
That all changed in 2014 (reread original Elite Sport Soccer blog) when a new owner bought the building. Knowing their store’s lease would expire in mid-2017, and knowing that rents in the neighborhood were already at an all-time high, Astrid and Jorge became justly concerned for their future.
At a loss for what to do, and having seen many similar family-serving businesses displaced from the neighborhood, Astrid turned to MEDA. They were assisted by longtime MEDA Business Development coach M. Teresa García (photo, second from left), now on the nonprofit’s board, who referred them to Legal Services for Entrepreneurs (LSE), a project of the Lawyers’ Committee for Civil Rights of the of the San Francisco Bay Area. LSE matches small entrepreneurial businesses needing legal assistance with experienced business attorneys who agree to provide their services free of charge. Maso, at the time a real estate partner at the law firm of Coblentz, Patch, Duffy & Bass, LLP in San Francisco, offered to represent Astrid and Jorge in seeking to negotiate a lease extension with the new landlord.
As García hopefully stated when Maso generously offered his services pro bono: “Astrid, we do not always have to lose. It’s about time we win.”
A win would prove not to be easy, and took many hours of meetings, negotiations and drafting of documents — all, amazingly, at no cost to Astrid and Jorge.
“Our family could never have paid a lawyer for so much of their time. We would have reluctantly closed the business, which has been a part of our lives for so long,” admitted Astrid.
Maso’s first step was to talk to the landlord’s broker; unfortunately, the owner’s initial proposal was either to buy out Elite Sport Soccer’s lease, at a price that was way too low, or to extend the term for five years, but for a much higher rent (including a share of the much-higher property taxes resulting from the purchase of the building). Negotiations followed, but made little progress at first. For several months, the landlord and its contractors performed the work needed to complete a City-mandated soft-story seismic retrofit of the building and then put the property back up for sale. With the building on the market, the owners withdrew from the lease extension negotiations, so as not to limit the options of the hypothetical next owner. By October, 2016, however, the building had been sold for a second time, and the negotiations resumed with the new new owners.
In the meantime, Maso had retired from his former firm and become a semi-retired part-time solo practitioner. In his extra time, he began researching the San Francisco Legacy Business Registry, and its Historic Preservation Fund, which had been passed by San Francisco voters in the November 2015 election.
This innovative program offers financial assistance to businesses that have existed for 30 years or more (or have existed for 20 years or more, but face a significant risk of displacement), are nominated for Legacy Business status by a member of the Board of Supervisors or the Mayor, obtain a recommendation from the City’s Historic Preservation Commission and are approved by the City’s Small Business Commission. At the time, this was a new program. The City’s Legacy Business Program now has over 75 small ventures granted such status to date. Like Elite Sport Soccer, these businesses are linchpins of their communities, ranging from populars bars and beloved eateries to longtime nonprofits and mom-and-pop bookstores. (Read registry.)
Discussions with the new owners progressed and an application for Legacy Business status was prepared. District 9 Supervisor Hillary Ronen, who represents the Mission, agreed to nominate Elite Sport Soccer. The necessary hearings were held and final approval was obtained in August 2017.
The new owners, an investment group, were actually more amenable to keeping a long-term commercial tenant in place. The Legacy Business rental assistance program pays $4.50 a square foot per year (plus CPI adjustments), for up to 5,000 square feet of leased space, for new leases or lease extensions of 10 years or more. The parties agreed to a 10-year lease extension for Elite Sport Soccer, with the resulting Legacy Business Rent Stabilization Grant (including a 3.1 percent Consumer Price Index adjustment) going directly to the new owners to be applied to the increased rent.
A few weeks back, however, the 1904 Victorian, which showcases three storefronts and eight residential units upstairs, went up for sale yet again. The price? Now a staggering $8.95 million.
While Elite Sport Soccer is partially protected, the quickly escalating sale price of the building creates another issue: Even though the business receives no economic benefit from the appreciation in value of the building, like many businesses renting commercial spaces in San Francisco they must pay a portion of the property taxes based on their percentage of the square footage of the building. When the owners of a given building remain unchanged from year to year, Proposition 13 prevents taxes from rising more than about 2 percent per year. Property owners do not pay taxes on the appreciation until they sell, but when they do, their tenants who remain behind often must pay the price.
In the case of Elite Sport Soccer, a building that paid property taxes of $6,787 in 2014-2015 (just before the first sale of the building), when sold again could have an annual property tax bill of nearly $105,000, an increase of over 1500 percent in four years. That’s a massive increase that could compel family-serving businesses to shutter their doors — a big loss for the community.
Despite this issue, Elite Sport Soccer is determined to stay and serve their community. Their story exemplifies why it is important to support our San Francisco small businesses, especially in the era of e-commerce coupled with skyrocketing rents for brick-and-mortar spaces.
Astrid and Jorge definitely feel blessed that Maso came into their lives.
“There are still good people out there!” concludes Astrid, who can easily smile again as she ponders Maso’s efforts on behalf of Elite Sport Soccer.
MEDA is working to keep the Mission Street commercial corridor a place where our family-serving businesses, such as Elite Sport Soccer, can thrive (Read blog on this topic).
This is part of our Result 5: The Mission is a Strong and Supportive Community for Latino Residents, Businesses and Institutions. Read details of Result 5 in our online Strategic Plan.
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