City May Intervene in Spiraling Shop Rents : San Francisco Official’s Plan for Mediation, Binding Arbitration Scheduled for Hearing

The signs say: “They raised our rent! We lost our lease!”

Different versions of this complaint have been appearing more and more in this city’s small-store shopping neighborhoods. Shops that for years have lined up on Clement Street, Irving-at-the-Avenues, Polk and along Union are being forced out by higher rents.

Recently, rent rises spread almost in wholesale fashion to the colorful bar-coffeehouses, ethnic restaurants and small shops of North Beach. And even though many landlords protested that they were only trying to keep abreast of rising maintenance-rehab costs, this may have been going too far.

Proposed Legislation

Last month, backed by community pressures, Supervisor Harry Britt introduced legislation tantamount to commercial rent control--the city’s first outside the residential field. The proposed ordinance would require landlords (in a 10-block area of Columbus Avenue and adjacent streets) to submit to arbitration if rent increases for new leases exceed the cumulative Consumer Price Index percentage during the former lease.

Legislative researchers say in many cases long-term leases using the cumulative CPI figures would allow hefty increases--sometimes as much as 100%. But many of the current “ups” have gone considerably beyond a figure of this kind. In fact, many shop tenants say that some of the increases will put them out of business.

Binding Arbitration

Britt’s plan would force mediation in these rent disputes and freeze rents for a 90-day period. After that, if no results are obtained, the dispute would go to binding arbitration under supervision of the American Arbitration Assn..

The measure is scheduled for hearing Tuesday before the Board of Supervisors’ Planning, Housing and Development Committee. If it eventually becomes law, real estate analysts believe similar measures may be adopted for other city areas where shop rents are rising in a way deemed detrimental to tenants.