San Francisco J-Town merchants fear end to eviction moratorium

Story update: Gov. Gavin Newsom signed an executive order Sept. 23 to extend the commercial eviction moratorium through March 31, 2021. San Francisco Mayor London Breed said later that day in tweet that she would also extend the city’s moratorium. She also issued a statement Sept. 29.

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Tenants of two major Japantown property owners have raised their fears of eviction as a San Francisco moratorium on evictions for small businesses was set to expire Sept. 14. While San Francisco Mayor London Breed has granted a short reprieve in the form of an extension to the end of the month, both tenants, including those that have been in the community for decades, and city politicians hope the governor will extend the moratorium even further.

News of potential evictions first made waves Sept. 11 after KQED published a story detailing the impact of potential evictions on the city’s Asian American small businesses. According to the article, San Francisco’s Japantown merchants face a specific threat, as two property owners control much of the Japan Center, the ethnic enclave’s main commercial hub.

Allan Low, partner at Perkins Coie, said his firm has agreed to represent more than 40 tenants in Japantown, as well as other Asian American small businesses located throughout the city’s Chinatown, Little Saigon and SOMA Pilipinas neighborhoods. In collaboration with Asian Pacific Islander Legal Outreach, Asian Pacific Islander Council and the Asian American Bar Association, the attorneys are representing merchants pro bono to stave off the threat of eviction.

The former site of MoYo’s Frozen Yogurt in the Japan Center West Mall. photo by
Kenji G. Taguma/Nichi Bei Weekly

“Our focus has been preserving small businesses in communities of color to avoid displacement and at least give those businesses the chance to recover,” Low told the Nichi Bei Weekly over the phone. “Otherwise, once we come out of this pandemic, we may not have a Japantown or Chinatown. … On Oct. 1, by the terms of our own commercial eviction moratorium, landlords can start bringing eviction actions and collecting back rent, and that could set off a tidal wave of eviction actions, not just in J-Town, but in Chinatown and throughout the city.”

Negotiations Far From Over

Negotiations between merchants and the property owners in Japantown, however, are far from reaching a conclusion, with just days left on the moratorium. 

The legal team has worked with tenants in the Japan Center East and West Malls since July to negotiate with Beverley Hills, Calif.-based 3D Investments. While Low said the two sides are in discussion, he said they have yet to come to an agreement. Meanwhile, Low said the malls’ owners had sent out letters to their tenants demanding tenants pay their rent in full. 

Stephen Jordan, owner of Sakura Sakura, said paying all the rent due is a non-option, noting he closed his shop after the shelter-in-place orders were issued March 16 and only reopened for two weeks in July before the city shut down again due to spiking infection rates. He said he had just reopened his store during the weekend of Sept. 12.

“How can we (pay rent)? How can anybody?” he asked.

3D Investments declined to comment to the Nichi Bei Weekly.

The attorneys started working with the Kinokuniya Building’s tenants earlier in June, but Low said they have had less luck with Kinokuniya Book Stores of America, who owns the building.

The former site of Japantown Acupuncture in the Kinokuniya Building. photo by
Kenji G. Taguma/Nichi Bei Weekly

“Since we’ve been retained, we’ve sent letters, e-mails, left voicemails with the landlord’s attorney, and we have not gotten any response,” he said. He added he sent a formal proposal two weeks ago, which also has been ignored. 

Tenants Express Frustrations

Ryan Kimura, owner of PikaPika, said he is concerned about the rent he owes his landlords since he has had zero income since closing in March when shelter-in-place began. 

“Originally at the beginning of the shelter-in-place orders, we had asked our landlord for some sort of relief to help with rent payments as all businesses were closed due to the shutdown,” Kimura said. While the photo booth store owner said early on in the pandemic, the property owners offered to defer one month of rent — to be paid back in installments — he said many merchants said that was not enough. “We received correspondence back from property management alerting us that this was not a negotiation and that we should be grateful that we got the initial offer.”

While the moratorium keeps evictions at bay, several tenants have already decided to pack up, citing the mounting costs. Some have closed altogether, while others have relocated.

Joe Watanabe, general manager of SuperMath, said his abacus school decided to move out this summer due to steadily increasing rent and common area maintenance fees. While he said his school was able to continue paying for the space, he received no relief from the property owners during the pandemic and the landlords only came to negotiate after he had found a new location at half the rent price in Japantown. 

“We’ve been always on time, and never once had one late payment,” Watanabe, a decade-long tenant, said expressing his frustrations with the lack of relief. Watanabe said Kinokuniya had stopped working with tenants after they hired Davis Partners as their property manager in 2018. Kimura and other tenants expressed frustration with the lack of response from their landlords since the switch.

Kirsten Fletcher, property manager for Davis Properties, said she has been unfairly blamed for the lack of action since she spoke to KQED. She told the Nichi Bei Weekly over e-mail that there have been no discussions of eviction and expressed her hope that tenants and Kinokuniya will be able to work things out amicably.

“From my observations, eviction is not an instrument of any interest to the ownership,” Fletcher said. “My opinion is that the owners see eviction as a failure of a relationship, an American solution that is not a way to conduct business, nor a way to treat friends and neighbors.”

Low said Fletcher’s response was “encouraging” to hear, but he remains concerned with Kinokuniya’s lack of interest in negotiating on relief itself.

“So what do you do about all that back rent?” he said. “We’re seeing in the economy that this is not a V-shaped recovery, it’s a long U. So, how do you address the rent relief structure from this point forward?”

Next Steps

As negotiations for Kinokuniya have yet to start, and with the East and West Malls’ negotiations still far from settled, the city has moved to suspend state law and extend the moratorium. San Francisco Supervisor Aaron Peskin, who presides over Chinatown, introduced an ordinance at the Sept. 22 Board of Supervisors meeting to further extend the eviction stay for another 60 days, should Gov. Gavin Newsom fail to renew his executive order by the end of the month.

“If all goes well, the governor of California will take his own action, … because what we really need is relief from the state to untie our hands,” Peskin said. “If the governor does act, we won’t have that hearing next week.” 

Kimura, meanwhile, has started a Change.org petition to rally support for fellow small businesses. The petitions, with more than 1,000 signatures, expresses “San Francisco’s Small Businesses are barely hanging on.” Kimura asked city leaders to go further and asked they prevent landlords from “charg(ing) late charges or default interest on rent not paid during the moratorium, and …  give tenants at least one year after the emergency order is lifted to repay any rent deferred” in the petition.

Dean Ito Taylor, executive director of APILO, said lawmakers have placed the eviction moratorium for small businesses on a lower priority during the pandemic, leading to this last-minute push.

“I think the immediate priority and, it should be, are homes, right? Residential evictions,” he said. “But the second priority that people sometimes overlook are evictions of small businesses, especially in communities of color, especially in cultural districts that are kind of central to our communities, especially Asian and other communities of color.”

And while an extension on the moratorium would stave off an immediate threat, Ito Taylor said the state must also extend financial relief to both tenants and landlords, either in the form of grants or loans to ease the financial burden in the long run. He also called for stronger language to dictate that landlords should “negotiate in good faith rent reductions based on the inability of businesses to be open.”

“We’ve already lost a lot of (the community) due to redevelopment and turnover, but I’m not sure that we can even think of a way to recover if we let this thing just play out like capitalism often does,” Ito Taylor said.