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Last Street Standing
Lauren Smiley | Photo: Stephen McLaren | February 24, 2014
The scruffiest thoroughfare left in S.F. is transforming—one contested high-rise and storefront at a time. But the battle of Mission Street is far from over.
Which brings us to the savvy way. San Francisco developer Dean Givas knew that he had an uphill slog in front of him to develop Vida, luxury condos in the heart of Mission Street, near 21st. The project had been controversially gifted 20 feet over the 65-foot zoning height limit in a haze of high-profile allegations of city hall cronyism with the initial developer, Gus Murad.
Before he even bought the property, Givas met with Supervisor Campos and a number of community nonprofits. “I’ve never met another developer like him,” says Hernandez, who ended up presenting the project alongside Givas to neighborhood groups. “He’s a man and a developer who was willing to think outside the box and work with us.” Really, such a saint? “He’s a smart businessman. C’mon, we know that.”
Very smart. Givas hired a former Mission nonprofit director as his land-use attorney and commissioned associate architect Sandra Vivanco to imbue the design with Latin influences. Over two years of negotiations with community groups, Givas agreed to buy a plot on nearby Shotwell Street for the city to develop 40 units of affordable housing, dwarfing the 14 units that would have been required within the Vida building. He was already on the hook to pay $1.4 million in city-mandated impact fees, yet the community got him to agree to much more. He donated $150,000 to a fund to help mom-and-pop Mission businesses—to be buoyed with a sales tax on future condo sales. Then, in what the project’s attorney called an unprecedented move by a developer in the Mission, he donated $650,000 to 23 community groups, a strategy that drew sellout criticisms from purists in the nonprofit community and shakedown charges from pro-development forces worried that his philanthropic palm greasing would set a precedent. Next, Givas donated $1 million for the Texas-based Alamo Drafthouse Cinema chain to renovate the long-shuttered New Mission Theater next door into a five-screen dinner-and-a-movie cineplex. The Texans agreed to hire 50 percent of its staff from the neighborhood and to let nonprofits host at-cost benefits at the facility.
The result? Last year, the tallest condo complex yet seen in the Mission—all market-rate—was approved unanimously by the Planning Commission, with 44 letters of community support and one phone call of community dissent.
The building is already under heavy construction, with a crane circling overhead. Asked if it will indeed set a new bar for developers coming into the Mission, Hernandez nods avidly. “Yeah. Oh yeah.”
4. THE ONLY COLOR THAT MATTERS IS GREEN
In December, Louis Cornejo—wingtips, DayGlo tie, a nose that looks like it caught a few right hooks during his childhood in Queens—unlocks the padlock to the vacant Tower Theater. Closed since the early ’90s, it’s a ghostly dump: sloped concrete floor, faded conquistador wall paintings above scrawled graffiti. Cornejo’s Urban Group Real Estate, which he heads with Foreign Cinema landlord Colleen Meharry, handles many of the neighborhood’s larger deals. He forbids me from snapping photos: It would be just his luck, he says, if someone saw something of historical interest and stuck him with a preservation battle.
With Cornejo’s client asking for $13,900 in rent, the building already has enough challenges. The size of the building footprints on Mission—and the specter of a money pit like the Tower—creates a paradox: It takes very rich people to develop a downtrodden commercial street. Cornejo heard that the Jang family trust, which had owned the plot at 16th and Mission, got $25 million out of Maximus. (The sale is not yet final.) “In the last three years, what’s changed in the Mission is that you have big outside money going in,” he says.
That was hardly the case when Mark Kaplan started dealing in real estate in the neighborhood in 1989. National investors were scared away by what they perceived as a near ghetto. “I worked here because nobody else wanted to work here,” Kaplan says. He recalls that the street attracted “mercenary landlords”: low-grade investors who covered the mortgage and made a modest profit from a rotating cast of dollar stores and hair salons. A different type of landlord buying along Mission in the late ’90s was the Cort family, which snatched up the vacant Cine Latino theater and the nine-story bank at the corner of 22nd, the tallest building in the Mission. After the family ousted several Mission nonprofits to move in a tech company called Bigstep, protesters slingshot paint balls at the side of the building—the marks are still visible. “We just call it artwork,” deadpans landlord Vera Cort.
It wasn’t until three or four years ago that a new class of speculators began showing up. Buoyed by low interest rates and a red-hot neighborhood that was gentrifying almost everywhere except for Mission Street, these investors weren’t interested in the street’s grimy status quo—they wanted to see it go upscale. From 2011 to 2013, 17 properties sold on Mission Street, compared to 7 in the three years prior. Kaplan says that the purchasers are betting on rents that haven’t yet materialized—Mission Street rents are about $3 per square foot, as compared to an average $7 on Valencia— with long-term plans to build up to the street’s 55- and 65-foot limits and then sell. Investors are especially interested in one-story, retail-only buildings, because any attempt to demolish the rent-controlled units that exist above many Mission Street retail stores would draw Planning Commission scrutiny.
Phillip Lesser, a major pro-development player whose family roots in the Mission go back generations, has pushed through permits for upscale venues like Tacolicious, West of Pecos, Urban Putt, Ken Ken Ramen, and the Valencia condos with Mission Cheese on the ground floor. He’s waiting to develop his own 85-foot-zoned property, neighboring the 24th Street BART plaza, until he sees if the Vida condominiums are successful. (Its units are expected to sell for close to Valencia Street prices.) Kaplan concurs that Vida is key. “If those succeed, that’s going to wake up a lot of people,” he says.
The market is hot enough already that some people who are rich by most standards are getting outbid. Former San Francisco port director Doug Wong has scooped up five buildings in the Mission. He eyed one at 19th and Mission, but “because I blinked, a guy came and paid $2.3 million. A normal person,” he says (referring to himself, a man who says that he owns 17 buildings in the city), “can’t buy that much real estate. It’s in all cash. I don’t buy in all cash.”
The building’s buyer, according to sellers tracked down by San Francisco, is former Facebook COO Owen Van Natta. Van Natta was briefly on record as manager of Mission Street Ventures LLC, before being replaced by Tom Van Loben Sels, a Silicon Valley tax consultant who is the agent of the LLC that bought Facebook billionaire Mark Zuckerberg’s Palo Alto mansion for him. A property deed lists the corporation’s contact as a woman who identifies herself on LinkedIn as the personal assistant for the Van Natta family.
Van Natta has bought four buildings on or near Mission Street in the last year and is set to buy another. Four of the properties are on the block between 18th and 19th Streets, including the 99 Cent Depot, the Christian Science church, and the Bollyhood bar around the corner on 19th—leaving the Beauty Bar and adjoining Little Baobab bar as the only holdouts on the corner. Kaplan says there’s a plan to turn the 99 Cent Depot into a ramen restaurant. The fifth property, currently under construction, is between 21st and 22nd, directly across from the Vida condos. It’s set to become an office space—a tech incubator, some say.
Van Natta’s broker, Bennett Mason, says, “His idea is a cool thing, contributing to the community and doing something that would make his two daughters proud.”
Jorge Perez, who works at the 30-member Christian Science church, says that he had approached Kaplan about finding a new space for his church. The brokers brought in Van Natta. Perez relates a tale that in any other market would seem unlikely: that Van Natta and the brokers not only looked at the property, but also attended two or three church services. They ended up paying $2 million for the building, according to county records. Perez says they also made a “five-figure” donation to the church, are charging him “modest” rent, and have promised to help with renovations at the church’s new location.
“It’s not just the money involved,” says Perez. “It’s the goodwill they are showing to us.” He opens Miscellaneous Writings by Mary Baker Eddy, the Christian Science founder. “I just want to read these two lines to you. ‘When the heart speaks, however simple the words, its language is always acceptable to those who have hearts.’ I feel they are speaking through their heart to us. I’ve been very blessed by them.”
The Christian Science church isn’t the only long time Mission staple to be so blessed. Take the long-vacant discount store next to Gracias Madre at the corner of 18th, its clock tower stuck at 5:36 for three years. Even in-the-know onlookers have been puzzled as to who owns it. The answer walks into the Tower as Cornejo is inspecting it: Guadalupe Hernandez.
Hernandez wears a crocodile belt, Velcro shoes, and a handlebar mustache (none ironically). Since emigrating from Nayarit, Mexico, in the late ’80s, he and his brothers have accumulated an empire of four produce markets, including El Chico Produce Market #4 on 24th Street. “You can’t hide your money under the bed,” Hernandez says. In 2010, they bought the 20,000-square-foot property at 18th, planning to create an organic produce spread rivaling the Berkeley Bowl to lure in the gentrifiers—plus a bakery, butcher shop, and taqueria, like a Mexican market. They’d turned at least 10 speculators away over the past two years.
Then came Mark Kaplan, who saw the potential of the corner lot to draw people down the 18th Street gourmet gauntlet from Dolores Park and protect Van Natta’s expanding empire down the street. He tracked down Ricardo Hernandez, Guadalupe’s brother, at the 24th Street market and made several offers before landing on $5 million—for a blighted property that the Hernandez brothers had bought for $1.4 million.
Guadalupe Hernandez is cautious with words, but his eyes sparkle as he sits in the back office at the 24th Street market, a wooden rendering of the Mexican flag on the wall, two cash trays stacked before him on the desk. Was he surprised to receive an offer that he’d sell for? “You know, I was. I don’t regret the decision.”