San Francisco’s Japantown community has come together to support its retail and restaurants in light of the ongoing pandemic. Such aid has been essential to helping keep many businesses afloat, but a looming threat of evictions for tenants in the Japan Center Malls and the Kinokuniya Building, as well as the unpredictable outlook of the economy, keeps many merchants on edge.

The Japanese Cultural and Community Center of Northern California’s Picnic at the Plaza initiative has continued to attract visitors to the ethnic enclave since the program started in July. According to Paul Osaki, executive director of the center, more than 18,000 people have used the outdoor tent seating area in the Peace Plaza. His organization provides seating for customers ordering takeout food from Japan Center restaurants.

Even as restrictions for restaurants have eased over the last few months, Osaki said the businesses were grateful for the dedicated outdoor seating space since the reduced indoor capacity for diners would not have made indoor dining viable for smaller restaurants in the malls.

The program, funded by the Henri and Tomoye Takahashi Charitable Foundation, was initially meant to last through September, but had been extended through November 29 with the Japantown Community Benefit District pitching in to pay for November.

JCBD Resiliency Fund Provides Some Relief
The JCBD raised $500,000 through its Heart of Japantown Resiliency Fund. Portions of the fund went toward purchasing and distributing sneeze guards and other protective equipment for merchants, as well as for the final month of Picnic at the Plaza, according to Grace Horikiri, the district’s executive director.

Horikiri said her organization, which began soliciting donations in May, will continue to collect funds and disburse them as needs arise. Recently, she said the funds helped build a roof for the Kinokuniya Building’s outdoor seating area on Post Street ahead of California’s rainy season. The bulk of the money, however, went toward 80 individual $5,000 grants to small businesses meant to pay for rent, wages and other expenses.

Horikiri said business is gradually improving in the ethnic enclave and that most restaurants that have not opened for indoor dining have done so out of concern for safety for staff and patrons. She added, however, that Buchanan Mall is doing well, especially since the pedestrian mall allows for more customer seating.

Linda Mihara, owner of Paper Tree, concurred with Horikiri. While pedestrian traffic on the weekdays is slow due to a lack of tourists, she said the amount of customers dining in Japantown on the weekend sometimes resemble pre-pandemic levels.

“It’s like the perfect setting for outdoor seating; it’s a pleasant place to walk, it’s a pleasant place to wait. You don’t have a parked car right next to your table like some other places on sidewalks, and it’s really a beautiful street,” Mihara said.

Mihara, however, said she still expects the holiday shopping season to be quiet. A recipient of the JCBD grant, Mihara said she would spend the money on wages for her employees.

Many businesses expressed their gratitude for the money, and said the grant has allowed them to carry on through the pandemic.

Anne Matsuno said she appreciated receiving the grant for Kissako, located in the Kinokuniya Building. She said she used the money to help pay rent and other expenses.

“We’re just grateful we were able to receive it, because the we weren’t able to qualify for (the Payment Protection Program) or any other thing because we’re still a new business. So to us, as a small business and a first-time business, it’s helped us,” Matsuno said.

Still, for other businesses, the grant is far from a panacea and many businesses expressed ongoing hardship.

Toshi Sueishi, owner of Futaba Hair Salon, said he was able to break even by using the grant to pay for outstanding rent. While his landlord has offered to reduce his rent for November and December, he said he has days where he has no customers at all. Sueishi’s salon, located in the basement of a commercial building on Post Street, catered to a majority senior clientele. Although he said his salon has ventilation, his customers are reluctant to come in.

“I need things to get back to normal next year or I won’t be able to continue,” Sueishi said.

Down the street from the salon, Christy Hwang runs YakiniQ Cafe, which has also seen a drastic drop in customers. The cafe owner currently works alone six days a week, but is able to stay in business after negotiating a reduction in her rent. She said the JCBD grant money went to paying her landlord for the months she owed. Hwang said her cafe, which relied on customers working and taking advantage of the free Wi-Fi, lost 80 to 90 percent of its regular business.

“I started using delivery services, such as Grubhub or Doordash, … but that didn’t do much. So the business has been quite slow and I barely make money to pay the rent,” she said.

Kathy Nelsen, spa director of Kabuki Springs and Spa, located near the corner of Fillmore Street and Geary Boulevard, expressed gratitude for the money, but added that the funds are “a leaf in the wind.” She said her business had been closed for seven months and that she had spent $10,000 to ready it for reopening. Despite the investment, she said her sales figures last month were 17 percent of what she made last year and that she also had to significantly reduce staffing.

“When we closed in March, we had 84 employees, and over half of them were full-time and had full benefits. Now that we are open only for massage, we have 25 employees, and only six of us are full-time,” she said.

Businesses such as Pika Pika in the Kinokuniya Building and Playland Japan in the West Mall have remained closed since March. Although they are unsure whether their businesses will be able to reopen, the JCBD also awarded both businesses with a grant.

Aaron Nakahara, owner of Japanese video game arcade Playland Japan, said he planned to use the JCBD grant to pay for training new staff when he reopens. His plans, however, were dashed Oct. 29 after the city halted relaxing restrictions in the city.
“This is a constant frustration and increases the likelihood of the store not reopening at all,” Nakahara said in an e-mail to the Nichi Bei Weekly.

Ryan Kimura, owner of Pika Pika, said expenses, such as insurance and utilities, continue to accrue despite his business being closed. Kimura said when applying for the grant, he let the JCBD know he was unsure whether he would be able to reopen.

“I told them that, ‘I don’t really know when we would be able to open, number one. But secondly, how long we would be able to operate as a business much longer,” the Japanese photo booth store proprietor said.

While Horikiri expressed concern for the future of Kimura’s business, she said the JCBD presented a grant to all applicants who have applied thus far.

Although Kimura is thankful for the grant and hopes to figure out a way to continue doing business, he and other tenants in the Japan Center Malls and Kinokuniya Building are deadlocked over rent and common area maintenance charges with their respective landlords.

Stephen Jordan, proprietor of Sakura Sakura, said he plans to use his grant from the JCBD for inventory. The West Mall tenant, however, said he won’t use the money to pay for his outstanding rent.

“I don’t care if someone gives me $100,000,” he said. “I wouldn’t pay that back rent and CAM charges because it’s not justified.”

Negotiations Sought with Landlords
Kimura, Jordan and other tenants are working with attorneys from Asian Pacific Islander Legal Outreach and Perkins Coie to negotiate with their respective landlords. Allan Low, attorney at Perkins Coie, told the Nichi Bei Weekly Kinokuniya Bookstores of America continues to refrain from responding to their tenants’ request to negotiate, while negotiations between the East and West Mall tenants and Beverly Hills, Calif-based 3D Investments have become “acrimonious.”

According to Low, 3D Investments has demanded tenants pay any back rent due once an eviction moratorium expires Nov. 30. Initially set to expire Sept. 30, Mayor London Breed extended the commercial property eviction moratorium after Gov. Gavin Newsom signed an executive order allowing the moratorium to be extended through the end of March next year. Now, Kimura and other tenants are working with their pro bono attorneys to extend the moratorium through March and add additional relief for tenants.

Legislation Proposed to Help Merchants

During a Nov. 2 press conference at the Peace Plaza in Japantown, San Francisco District 3 Supervisor Aaron Peskin, along with District 5 Supervisor Dean Preston, announced their intent to introduce legislation that would help the malls’ tenants gain some leverage to negotiate.

Under the proposed legislation, the moratorium would be extended to March 31, 2021 and small businesses grossing less than $25 million in revenue and with up to 50 employees, may be given extra time to repay outstanding rent. For businesses with 50 or fewer employees, the rule would give an additional 12 months to repay rent after the expiration of the moratorium. For those with 25 or fewer, the business would have an additional 18 months. For businesses with 10 or fewer employees, tenants would have an additional 24 month to repay rent and also have the option to terminate their leases without penalty.

According to Peskin, more than 80 percent of San Francisco’s small businesses employ 10 people or fewer.

The legislation would also provide a hardship exemption for small landlords who own less than 25,000 square feet of property in San Francisco who can demonstrate financial hardship.

Preston, a co-sponsor to the legislation, acknowledged some landlords did the right thing, but others had not.

“We need to look at the refusal of the owners of this crucial property, that is the heart of Japantown, … to take into account the hardship of their commercial tenants,” Preston said. “We will not step back and wait for all of these commercial property owners to do the right thing.”

Peskin discussed the legislation later that day during the Land Use and Transportation Committee. He introduced a slew of amendments to an existing piece of legislation from September that would enable the protections he promised during the press conference.

Citing additional pending amendments to the legislation, the committee tabled the item to next week’s meeting Monday, Nov. 9 at 1:30 p.m.

Kimura and other tenants said the extension to the moratorium would relieve merchants from facing eviction Dec. 1, and the additional time to repay the back rent would give businesses a fighting chance.

“People can’t expect that a business that has been closed for, let’s say four or five months, … to just suddenly open up on day one, and be able to pay back five months worth of rent. It doesn’t make sense,” Kimura said. “… I feel, by putting into legislation that a business is allowed two years to pay back their rent, hopefully this also forces landlords, … to open up the lines of communication a little bigger with our tenants.”

Jordan said he is awaiting the city leaders’ decisions on the legislation before figuring out his next steps. He said the moratorium’s extension to March 31, 2021 would let him formulate a plan. Personally, however, he hopes to negotiate paying a percentage of his monthly sales instead of owing all the deferred rent “If you want to defer my almost $6,000 rent, and then you want me to start paying, divided up to 12 months what I owe, then I’ll be paying something like $10,000 of rent (a month). Not possible. It’s not going to happen.”

Jordan works at his store with his wife and one other employee. His shop had been closed for most of the pandemic through mid-September. If Peskin’s legislation passes, he could walk away from the lease, but he said that is not his intention“I feel like I’m walking into the dark by not knowing what’s going on here. … And I don’t want to declare bankruptcy. But that’s the option,” he said. “(Closing) is not our intention, but if it’s something that’s going to strangle me, what do I do?”