‘Gentrification’ Pressures Small Business

August 20, 2015 by · 5 Comments 

Amada Decoloma cried helplessly when she saw water dripping from the ceiling of her beauty salon when it rained last month.

Emilia Salvatierra is still in shock after learning just five months after buying her business that her rent may double.

Juan Galvez is looking to lease a new location for his appliance store after being told by his landlord he had to move.

These are just a few of the scenarios playing out along a commercial corridor in Highland Park, and other nearby areas.

Lea este artículo en Español: ‘Gentrificación’ Presiona a Pequeños Negocios Locales

On Saturday, a coalition of community groups will hold a march and resource fair to call attention to what they call the gentrification-fueled displacement of local residents and businesses in Northeast Los Angeles by “outsiders.”

It’s a complicated issue with many sides to the same story. For some, the term gentrification evokes images of greedy developers throwing people out of their homes. For others, it represents the revitalization of the community and a chance to make some money on their property.

Caught in the middle are the people who don’t own land but nonetheless pay for it in rents and lease agreements.

“I’ve seen people coming from other states – Texas, Iowa, Utah – who want to rent here and now we are being kicked out,” said Galvez, who was recently forced to move out of his appliance store on North Figueroa Street after eight years in the same location.

Galvez said he had no choice but to leave because his tenancy was month-to-month, which worked fine with the previous property owner. “We got along well so I never renewed my lease when it expired a few years ago,” he told EGP.

He admits that the new landlord –Engine Real Estate LLC – offered to help him find a new location in the area and to help him move, but said what they showed him was not suitable. He also doesn’t have the money it would take for a new security deposit and move-in costs.

(EGP photo by Jacqueline Garcia)

Emily’s Shoes and Hot Stuff Haircutting and Spa are among the businesses being displaced along the Figueroa corridor. (EGP photo by Jacqueline Garcia)

David Walker of Engine Real Estate told EGP they “do not want to be responsible for anyone going out of business or losing their livelihood” and they try to help tenants who cannot afford new higher rents to relocate. “Our people spend four, five days to help tenants find a new place in the same area, so they don’t lose customers or incur too much more in costs,” he said. “It’s a gesture of goodwill.”

But in the end they are in business and want to make a reasonable return on their investment, $10 million in the area between Avenue 57 and Avenue 59 on Figueroa, he said, explaining why they can’t just keep rents the same.

In the interest of full disclosure, Eastern Group Publications, publishers of this newspaper, is one of the businesses that will soon have to move from its location on Avenue 59 that is now owned by Engine Realty. As in Galvez’s case, the cost to stay was too high, and EGP decided to move to nearby Lincoln Heights. Throughout the process, Walker’s team was helpful, but there was no financial payout to move.

Decoloma’s situation is somewhat different: she still has three years left on her lease and says the new owner is trying to force her out by making her stay difficult. He removed the air conditioning unit even though she told him it was working fine. In the process, the roof was damaged and water came pouring into her shop the last time it rained, said the owner of the Hot Stuff Haircutting Salon on North Figueroa near Avenue 57. Then he refused to make repairs or replace the air conditioner because “the AC wasn’t part of her contract,” she told EGP. “He wants me to get fed up and leave,” she said angrily.

Her neighbor, the owner of Andrea’s Shoes, says her situation is worse. Not only does Salvatierra no longer have air conditioning, the month-to-month tenant says she’s in danger of losing everything because the owner wants to raise her rent from $1,830 a month to $3,457, if she signs a three to five year lease.

In an Aug. 12 letter, property manager Clint Lukens Realty cited “recent changes in the neighborhood and the market rent of retail spaces” for the large increase. “We are happy to keep you…until we find a tenant to lease at market rent,” states the letter. When that happens, Salvatierra will receive a 30 day-notice to vacate.

“I still can’t believe it; I left my job, my husband is sick. This business is all I have,” she told EGP emotionally.

Salvatierra and Decoloma have the same landlord and therefore deal with the same property manager. In an email to EGP, Clint Lukens Realty said the air conditioner was removed because, “per owner, AC never worked and was not connected to any space. New roof was installed and disconnected AC equipment was removed.”

Lukens took over management of the property in June 2015 and denies ever harassing a tenant, but could not speak for the previous management company.

According to Decoloma, she turned down a $35,000 offer to leave because it’s not enough. “I spent $24,000 to beautify this space … I provide work to two employees, I support the economy,” she lamented. “They are not just kicking me out, they are also leaving my employees and their families without income,” she said angrily.

Clint Lukens disputes her account and says he’s not made any buy out offer, but again, “I can’t speak for previous management company.”

Organizers of Saturday’s march and resource fair say they are angry and tired of the impact of gentrification on low-income, mostly Latino neighborhoods. They are demanding elected officials take a stand on what they call the “violence of displacement.”

Galvez' appliance store was temporarily relocated sharing space with a mechanic shop in the alley behind his previous location. (EGP photo by Jacqueline García)

Galvez’ appliance store was temporarily relocated sharing space with a mechanic shop behind his previous location . (EGP photo by Jacqueline García)

Organizers include the Friends of Highland Park, Concerned Community Members, Eviction Defense Network, BKR Gang and Drug Intervention Program, NELA Alliance and the Northeast Business Economic Development.

“[Politicians] call it revitalization and it is not, it’s gentrification. They are displacing our community,” Priscilla Falter, one of the organizers told EGP. “We will ask [Councilman Gil] Cedillo to address the issue, he can’t ignore what’s going on any longer,” she said.

A majority of Highland Park’s 60,000 residents are Latino, though many consider the community diverse. Thirty-eight percent of residents live at or below the poverty line and the influx of new property owners, higher-end businesses and “large-scale luxury development projects,” residential and commercial rents have skyrocketed, according to event organizers.

Rick Coca, spokesperson for Councilman Jose Huizar, told EGP that even though Saturday’s event “isn’t in our district, staff will attend to listen to people’s concerns and offer whatever assistance we can.”

Organizers have criticized Cedillo for what they claim is a lack of response and for his holding of a Latin Jazz festival at Sycamore Grove Park that has been a year in the planning on the same day as their event, which according to Falter “will offer legal services, translations, a food bank and a mobile clinic with mental health services.

“Why are they having a jazz festival instead of addressing the real problems of the community?” she asked. “They are so afraid to talk about the issue.”

Cedillo told EGP via email that his office is studying the issue and is working with city departments to determine what action is within his jurisdiction, “since this is a private matter.”

“My office continues to look for outside the box ideas to address the ongoing issues of rent increases throughout the district and the City,” he said. “We are concerned that commercial tenants are seeing their rents increase in Highland Park.”

According to Cedillo Spokesman Fredy Ceja the issue is not unique to Highland Park and is growing.

“We are now seeing developers not just buying one piece of property, but wanting to buy whole blocks in Highland Park, Lincoln Heights and even El Sereno,” Ceja said.

Protestors want elected officials to reform and establish new rent control regulations to include businesses, and to raise the cost to “unscrupulous” landlords who evict tenants. They want them to put a stop to developments that do not address the housing crisis and to limit business permits and zoning that do not address the 38% poverty rate.

What the city can do, given private property rights, remains to be seen.

“The problem with owners is that instead of coming and talking to us, they are very cold-blooded,” Decoloma told EGP. She said the most frustrating part for her is that she is being asked to leave the location to make room for another hair salon.

“It doesn’t make sense to me,” she said.

Walker said he doesn’t understand why people paint all development with the same brush and see it as always bad.

“I don’t understand their objection to our purchase of Frank’s Camera [on Figueroa], for example. It was vacant for 8 years, run down, a drug den and we are spending a lot of money to clean it up, to attract new businesses that are going to bring new life and businesses to Highland Park,” Walker said. Not to mention a lot of new tax dollars that “we won’t see most of.”

Saturday’s protest will start in the corner of York Boulevard and North Figueroa Street by the flagpole at 4pm, stopping at Cedillo’s office and ending in the parking lot behind Antigua Café where the resource fair will be held.

Volunteers will include pro-bono attorneys, translators and mental heath workers.

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Twitter @jackieguzman

jgarcia@egpnews.com

Update 8/21/15 2:50 p.m.: spelling error

Winners and Loser In Gentrification

August 20, 2015 by · Leave a Comment 

Much is being said and will continue to be said about the displacement of residents when real estate in a neighborhood suddenly becomes hot.

As property values go up and buyers are willing to pay more, a growing number of residents find they are facing higher rents and the real prospect of dislocation,

Depending on who’s talking, someone in these transactions is doing something wrong; or right.

Unfortunately, there will always be winners and losers when real estate is involved.

But is it fair to criticize homeowners who want to sell their properties for more than what they were worth during the mortgage crisis?

Studies have shown that for Latinos, their greatest source of wealth comes from home ownership. It’s what they depend on to get them through their retirement years or to pay for a child’s college education.

On the flip side, the cost of rent is a deterrent to eventual home ownership or saving for the future, because a large portion of a lower-wage workers’ income goes to cover housing expenses.

The issue has become more critical as housing has become less affordable and fewer affordable housing units are being built.

Residential housing is not the only area where the impact of “gentrification” is being felt.

In Highland Park, small businesses are being displaced when commercial buildings are sold to investors who buy at top prices for commercial property in hot areas.

Many small businesses that have managed to survive during tough economic times now find themselves on the outs because they did not have long-term leases in place and cannot afford the higher rents developers need to charge to cover their costs and to see a return on their investment.

In many ways, the unfolding story is one that sheds light on the inequality of business acumen that exists in this changing market. Small business owners used to doing business on a handshake and a promise are finding that hard work alone will not keep them alive.

The reality is that many small shops and cafes just don’t have the resources to be able to move and pay rental deposits for a new location. They work on lean margins, because for a long time the majority of their customers were low-income and unable to afford high prices.

It’s a vicious circle.

Who’s to blame? There is no easy answer.

New mortgages must be paid; taxes and the cost of refurbishing old buildings to their former glory require large investment of capital.

What’s the solution? Again, there’s no easy answer.

What’s clear is that small business owners, many who are Latino or Asian and have English as second language, need assistance gaining the business skill sets that will allow them to protect their businesses and to stay in business.

To often, local city officials talk about helping small businesses, but that’s as far as it gets.

It’s not likely to go over well, but perhaps what we need is to require new businesses owners applying for their first business license to attend a boot camp that will help them get the skills they need, like what’s involved in leasing property, in this marketplace.

As a society, it’s in our interest for our government to provide services to small business owners who are in danger of losing their investments and equity, after all they do the bulk of hiring in this country..

If thi suggestion sounds to paternalistic, we’re open to suggestions.

We believe that property owners should be entitled to sell and new owners should be entitled to make a reasonable return on their investment.

It’s a tough situation we at EGP know first hand. The offices where we are located have been sold and we must undertake the heavy cost of moving to another location.

It’s no ones fault; it’s just the way things are. We understand the financial risk investors are taking when they enter a new market, and empathize with those who feel the burden of paying for the risk.

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