Three Castro leaders on what it will take to save the neighborhood

Castro, Duboce Triangle

In recent years Castro businesses of all types have struggled to stay open.

Just two weeks ago Dapper Dog (417 Castro St.) and Slurp Noodle Bar (469 Castro St.) closed within a day of each other, adding to the growing storefront vacancy problem.

According to a count by Hoodline, there are currently 67 ground floor vacancies, including 10 spaces either under construction or temporarily closed, in the neighborhood.

2019 was an especially difficult year, with 32 business closures, 18 of which had been open for more than 10 years. Included on that list was Does Your Mother Know, which just reopened last week.

On the other side of the ledger, between 2018 to the present, 34 new businesses have opened in the Castro: 11 in 2018, 21 in 2019 and 2 in 2020.

Hoodline sat down with District 8 Supervisor Rafael Mandelman, Castro Merchants President Masood Samereie and Castro/Upper Market Community Benefit District (Castro CBD) Executive Director Andrea Aiello to discuss the problem and how they plan on addressing it.

District 8 Supervisor Rafael Mandelman

In a recent Hoodline article about the first year of operations for several new businesses in the Castro, bureaucracy and red tape emerged as a common concern.

Mandelman told Hoodline he plans to work on removing some of the red tape, and pointed towards Supervisor Aaron Peskin's discussion around fee reductions as one solution.

Mandelman said he's also looking at other ideas like creating a small business ombudsperson and beefing up the Office of Small Business.

Last year, in order to spur new businesses, Mandelman relaxed zoning restrictions along Upper Market to principally permit ground floor restaurants, art galleries and some non-profits.

However, the two blocks of Castro between Market at 19th Streets were not included in that change. Recent closures have demonstrated that the area is not immune from the vacancy problem. Mandelman says he's considering zoning changes for the area as well.

"Each of these business has its own story and its own unique set of factors and contributing things that made it hard for them to survive," said Mandelman about the growing number of vacancies. "But the common denominator for me over the last several years in the Castro is the declining street environment that I think depresses foot traffic."

Mandelman said people that live in the neighborhood are not going out as much. "These establishments and their employees are finding themselves engaging with really difficult, challenging, sick people coming in all the time," he said. "Each day is a struggle in a way that I don't think it was 10 years ago."

Mandelman acknowledges this situation exists in many neighborhoods, however he specifically pointed toward the Mission, Tenderloin and the Castro as most affected.

"Hayes Valley, the Marina and the West side are not dealing with a similar situation," said Mandelman.

Mandelman said he and his staff spend a majority of their time on street conditions. "The list of homeless people we know of who are super-sick is growing unfortunately."

Mandelman acknowledged that so far the city's response has not been strong. "We don't have a good strategy for doing that," he said.

"Is there a tipping point that if we do enough we start improving conditions," Mandelman said, "or is the strategy fundamentally flawed in some way that we don't see?"

While Mandelman said he's seen some impact in certain areas of the district since he's been in office, the retail area of the Castro has not gotten better. "The situation on 16th Street has never been worse," he said.

"We have a pretty sizable minority of folks who passionately feel it's inhumane to displace them from where they're staying," Mandelman said about sidewalk encampments. However, he said, "we have more folks who want to be humane and are also unwilling to continue to have these encampments."

"What the city is functionally saying to those people right now 'is you are on your own'," Mandelman said. "It's not right, it's not acceptable."

"It's upsetting for me as a public official in this city that we are not able to meet what seem to me like basic standards of decency, humanity and civilized life," he said.

To address these concerns, Mandelman, along with Mayor Breed, introduced a resolution last week for a proposed Community Hummingbird Place, a shelter for SF residents experiencing homelessness and behavioral health issues, in District 8 at 1156 Valencia. If approved, the former Salvation Army would be converted to a 30-bed facility and could be open by Spring. A community meeting on the proposal was held earlier this week.

"It is my hope that the Valencia Street Community Hummingbird will make a positive contribution to solving the crisis on our streets in District 8 and citywide, and that this model will be replicated across the City," Mandelman said.

Last week Mayor Breed's office also announced plans to open the city's first meth sobering center at 180 Jones. A meth sobering center was the number one recommendation from Breed's Methamphetamine Task Force, which Mandelman served on.

Mandelman also pointed towards the addition of a Navigation Center in the Upper Market area. A former City College of San Francisco site at 33 Gough is slated to be converted into a 200 bed facility by year's end.

Castro Merchants President Masood Samereie

Since taking over as Castro Merchants President last year, Masood Samereie has settled into the role.

At the time, a March 2019 report from the Board of Supervisors' Budget & Legislative Analyst found that 9.5% of retail spaces in the Upper Market/Castro District were vacant

Samereie told Hoodline he believed the multiple retail closures were a 'coincidence'.

Now a year later, Samereie said that after getting more involved and learning about the city politics and market forces, he's understanding why so many businesses have closed.

"There are multiple factors why everyone is closing," said Samereie.

According to Samereie, "times have changed, people's habits have changed." Samereie pointed towards the increase in people shopping online and ordering food through delivery apps.

Just eight years ago San Francisco had the largest number of restaurants per capita at 39.3 restaurants per 10,000 households. Samereie believes the market is now correcting itself after nearly ten years.

"I'm trying to take small steps," said Samereie. "Everybody talks about vacancies, you gotta remember and appreciate all the new business," he added.

Samereie is currently working with Supervisor Mandelman on streamlining the permitting process. He said he believes improvement will require a group effort from neighborhood organizations including Duboce Triangle Neighborhood Group, Eureka Valley Neighborhood Group, Dolores Heights Improvement Club and Neighborhood Action Group.

One idea Samereie said he's considering is finding a way to relax the city's formula retail rules.

"We could use a Trader Joe's and an Apple Store in this neighborhood," said Samereie. "They bring foot traffic and they provide services to residents and other merchants."

Samereie said he hopes to see Supervisor Aaron Peskin's Prop. D Retail Vacancy Tax pass in March, and believes it could alleviate some of the problems. "Peskin's office actually implemented most of our ideas into the legislation," Samereie said.

He said he supports efforts to help people in the community experiencing homelessness, behavioral health and substance use issues, like 33 Gough, Community Hummingbird and the Meth Sobering Center.

With approximately 30-40 beds at 33 Gough dedicated to District 8 and the entirety of Community Hummingbird, Samereie said he believes that's a good start.

"If [...] 2-3 homeless people who need help get treatment, it would be a victory," said Samereie.

Conservatorship is another topic Samereie hopes to work on more in 2020 with newly elected District Attorney Chesa Boudin.

Prior to the November election, Samereie worked with previous District Attorneys George Gascon and Suzy Loftus on the subject. Now with Boudin in office, Samereie said "it's a whole new ballgame."

Castro CBD Executive Director Andrea Aiello

Currently the Castro CBD is in their first renewal period after forming in 2005.

"The CBD's core role is cleaning and making a welcoming neighborhood," said Executive Director Andrea Aiello.

Aiello told Hoodline they recently conducted a Retail Strategy report in partnership with a Cushman & Wakefield retail researcher. Reaching out to neighborhood groups and local merchants, public safety and creating more foot traffic were the top two requests.

The Castro CBD collaborates with local businesses to fund an SF Patrol Special Officer in the neighborhood In the evening hours. The private police force patrols public spaces in the Castro including Jane Warner Plaza, Harvey Milk Plaza, the bikeway behind Safeway and the public restrooms.

Aiello said the Castro CBD is working on securing additional funding for additional public safety.

In order to address some of the storefront vacancy issues, the Castro CBD has also received funding to hire a Commercial Corridor Manager.

"The Commercial Corridor Manager will work closely with merchants, brokers and landlords to retain existing business and help new business get through the approval process. "They'll also help find new businesses that want to expand to the Castro," she said.

"We learned from Retail Strategy brokers are hesitant about working in the Castro," said Aiello. "They think it takes so long to get anything through approvals that they'd rather spend their energy downtown where it's easier."

Aiello hopes this new Commercial Corridor Manager will help turn around the neighborhood's image. She said they're currently working on the contract paperwork with the Office of Economic and Workforce Development, and don't yet have a starting date.

"We want someone who's going to show people what it's going to take to get through all of this," said Aiello about preparing prospective business owners.

While Aiello acknowledges its unfortunate to see many long-time businesses depart the Castro, the Castro CBD does not have the funding to assist.

"I don't see us having the resources to start a negotiation with any business not doing well," said Aiello.

The Castro CBD is funded through an assessment fee based on a formula calculated using linear frontage, building square footage and lot size.

With a FY19-20 budget of $1.1 million, $534,000 is funded through assessment fees and the remainder is funded through the city, donations, service contracts and sponsorships.

Beginning January 2021 Aiello says assessments will increase to approximately $819,000, with a total budget of $866,000.

Aiello told Hoodline renewal petitions are in the mail. In order to move on to the ballot phase, 30% of the weighted total assessment must be approved. Aiello is confident the Castro CBD will achieve 30%.

Some time in April or May the Department of Elections will mail out the official ballots. At that time, 51% of the weighted assessment is required. The official tally won't be made until the envelopes are opened at the hearing.

A hearing date has not been set, but it needs to be done in time for the Assessor's Office to send out assessment rates by August.

"We feel positive about it, it's just a matter of making sure people mail in their ballots," said Aiello.