San Francisco Arts Groups on Path to Becoming Property Owners

The Calling All Choir sang sweetly recently for a small crowd in The Tenderloin National Forest, a tiny jewel of a park in the heart of San Francisco’s Tenderloin — a neighborhood better known for single room occupancy hotels and drug deals than for choral splendor.

This was a fundraiser for San Francisco dance presenter Counterpulse. But Executive Director Tomas Riley said it was also something more.

“It’s a fundraiser yes,” Riley said. “It’s also a friendraiser.”

A friendraiser, because Counterpulse is moving into a new home just around the corner on Turk Street.

“This event is free and open to the public,” Riley said. “We invited all our potential collaborators from the community serving organizations in the neighborhood just to introduce ourselves and let them know we’ll be here in the fall.”

Counterpulse’s new home is a former porn movie theater, The Dollhouse. The dance company will eventually own the building.

So how did this little arts organization end up finding the right space at an affordable price in boom town San Francisco?

It got a loan from a team led by CAST- the Community Arts Stabilization Trust.  The organization purchases and leases space for the exclusive use of nonprofit arts groups.

Counterpulse’s move to The Tenderloin is the unexpected culmination of a two-year process that makes the group’s artistic director Julie Phelps feel like one of the luckiest arts presenters in the city.

“When we began to consider what our next move was going to be, it was beyond our wildest dreams that we would purchase a building, do a $3 million renovation on it, and have our dream home at the end,” Phelps said recently while sitting in Counterpulse’s current performance space located on a dingy block of Market Street.

Two years ago, Counterpulse faced a problem common in a fast-rising real estate market like San Francisco’s. The company couldn’t get its landlord to negotiate a lease extension, because, Phelps thinks, he had other plans for the property, located just a block away from the social media company Twitter’s headquarters on Market Street.

“You can look around at the number of cranes in this neighborhood and take a pretty good guess that their property will probably be developed to the height limit and be condos,” Phelps said.

So that’s CAST’s Formula: Match a well-run arts group in danger of losing its lease with a landlord willing to sell. Buy the property. Then have the arts group rent to own for seven to 10 years, while it raises the money needed to pay off the CAST loan…with no interest.

“When they purchase the building from us they’re purchasing it  at the price that we originally purchased it,” said Shelley Trott, director of arts strategy and ventures at San Francisco’s Kenneth Rainin Foundation. CAST is a project of the Foundation, which is backing the program with $5 million. The trust has also tapped the expertise of the Northern California Community Loan Fund (NCCLF), which has been consulting for Counterpulse and other arts groups for years.

“They’re really good at looking at a distressed piece of real estate and seeing it’s potential,” said NCCLF’s Senior Real Estate Consultant Liesa Beckham of the majority of cultural organizations. But they’re not good, Beckham said, at figuring out how to finance their dreams.“We always say, ‘our clients are really good at what they do and real estate is not what they do.’ That’s where we come in.”

NCCLF played matchmaker, hooking Counterpulse up with CAST. CAST is also working with the San Francisco’s Arts Commission and the mayor’s office to develop this subsidized ownership model for arts groups.

The city is providing tens of thousands of dollars more in the form of lease subsidies and relocation help for Counterpulse and another of NCCLF and CAST’s very willing guinea pigs: The Luggage Store Gallery (which developed The Tenderloin National Forest).

The gallery is currently undergoing a major renovation.

CAST provided $1 million  to Luggage Store Gallery co-owners Laurie Lazer and Darryl Smith to purchase and upgrade The Luggage Store’s building in the Mid-Market neighborhood, now a booming tech corridor, even as the property doubled in value.

“We’re not paying any more monthly than we did before the deal,” Smith said.

Another reason Smith and Lazer like the CAST model is that in years to come, the building’s future will be secure, even if the two quit the arts scene.

“There’s a deed restriction on the property,” Lazer said. “So this building can only be used for non-profit arts and nothing else.”

In fact, Smith and Lazer will rent the first floor of their building to  Hospitality House, which provides arts programs to people with low incomes and the homeless.

A property trust for non-profit arts is so compelling an idea that Clay Lord, Vice President of Local Arts Adancement with the group Americans for the Arts, invited some of the CAST principals to a national conference in Chicago last week.

“We get a lot of questions about how to help artists and arts organizations to maintain their place in communities that are fast gentrifying,” Lord said in a phone interview, adding Lord said that San Francisco is facing a bigger crisis than most cities.

One bonus for these projects is that they bring the arts to under served communities.

Remember that Counterpulse friend-raiser? The friends now include the families and single room occupancy residents of the Tenderloin. The community is represented by Pratibha Tekkey of Central City SRO, a non-profit organization that represents Single Resident Occupancy housing in the Tenderloin area. “They find it very hard to get out of their house in the night to walk around and explore this neighborhood,” Tekkey said.

Tekkey said that Tenderloin residents are scared of the rough crowd of panhandlers and drug dealers, and that art galleries and dance presenters are not a sign of gentrification, but rather of a healthy community.

“It might be a place where it’s a real inner city,” Tekkey said. “Where there’s a mixture of lower and middle class folks living together.”