Beleaguered Castro seeks signs of hope

  • by John Ferrannini, Assistant Editor
  • Wednesday March 1, 2023
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Cafe Flore at 2298 Market Street, is set to become Fisch and Flore this summer. Photo: John Ferrannini
Cafe Flore at 2298 Market Street, is set to become Fisch and Flore this summer. Photo: John Ferrannini

January's abrupt closure of Harvey's — the restaurant and bar named for the slain supervisor Harvey Milk, also known as the "Mayor of Castro Street" — lit a fire under mounting anxieties that San Francisco's storied Castro LGBTQ neighborhood is in decline.

The apprehension had been growing for years, fueled by the rising number of vacant storefronts and business closures, street conditions that have similarly outraged San Franciscans across the city, and the ongoing effects of the COVID pandemic.

"I know people who don't go to the Castro," Cleve Jones, a longtime gay activist who was a former aide to Milk and was a co-founder of both the San Francisco AIDS Foundation and the AIDS Memorial Quilt, told the Bay Area Reporter. "They don't want to go — gay and straight — they don't want to see what you'll see on Castro Street. The last time I went out in the Castro, I walked three blocks. I saw rats. I saw unconscious people sprawled on the sidewalk who'd soiled themselves. I saw a fight."

And Jones isn't alone. Rafael Mandelman, a gay man who holds the job Milk once held representing the Castro on the city's Board of Supervisors, agreed that the neighborhood is in need of renewal.

"There's still a lot that's great about the neighborhood — businesses, it's a draw for queer people, it has gay bars, some great restaurants — but I would have to agree with Cleve: it's not nearly as vibrant as when I was coming out 20-30 years ago and that's a loss not only for the neighborhood but for all who are connected to the Castro."

For this report the B.A.R. spoke to neighborhood stakeholders about those vacant storefronts, new developments on the Harvey's, Cafe Flore and other spaces — and signs of hope for a neighborhood renewal.

Among those signs, the former Cafe Flore (2298 Market Street) — soon to be Fisch and Flore — will be having a celebration from 11 a.m. to 3 p.m. Saturday, March 4, to say goodbye to the restaurant that opened 50 years ago and say hello to the new tenant in the space. Also, a new cannabis dispensary at 268 Church Street is set to be approved at Thursday's meeting of the planning commission.

'They won't budge'

Cheryl Maloney, an agent with Vanguard Properties, is interviewing prospective tenants for at least two Castro-area properties, including the former spaces of Hamburger Mary's (531 Castro Street) and El Capitan Taqueria (4150 18th Street). Maloney said the Castro presents unique challenges for both property owners and prospective tenant businesses.

"In the Castro it's high rent; it's the same rent as Chestnut Street," Maloney said, referring to the business corridor in the wealthy Marina neighborhood. "Castro attracts young kids; people come here to party so it needs to be the right kind of fit — retail needs to be the right kind of fit, bars and restaurants need to be the right kind of fit. And the gays are a tough crowd. If you're ostracized by the gays, you're screwed."

And it's a distinctive neighborhood in a unique town. From the Gold Rush to the dot-com bust to the latest tech exodus, San Francisco is a "boom town," Maloney said.

"Everyone exoduses, everyone comes back," Maloney said. "I've seen it three times."

And therein lies the rub: both Maloney and Mandelman agreed that the reticence of property owners to lease to new businesses now is due to the expectation of better times in the future. Maloney used the Harvey's space (500 Castro Street) as an example. A Compass listing shows Harvey's is for sale at $475,000. Mandelman said owner Paul Langley and his partner, Richard Dingman, are asking $17,000 rent a month.

Maloney called the current proposed rent "insane."

"The business lost money in the current climate in the Castro," she said.

"I'd be really leery unless I had super-deep pockets — and I'm fearless," she added. "They know it's a high traffic, in good times, and high-tourist area and they won't budge."

Mandelman said that Dingman told him the $17,000 figure is what "they [Langley and Dingman] were getting before the pandemic."

"I did comment that seemed to me to be high and more than most businesses would pay in the current circumstances," Mandelman said. "I am hoping they are flexible."

Mandelman said that, in general, "I think landlords believe they should get more rent than market."

"It creates an impasse," he said. "At some point I have to believe the landlords will lower the rent. In the near-term, it's a problem for the neighborhood, it's a problem for many neighborhoods in San Francisco, and as each landlord doesn't lower their rent, it makes it less likely rents will return in the medium-term. It's a collective action."

Mandelman said that while there are prospective business owners with established track records who want to open up shop in the Castro, they "have found they can't make their concepts work with the rent being asked."

Mandelman called this holding pattern a problem of "collaboration."

"Landlords seem to be OK with the appreciation they are getting from the value of the asset and do not need active use," he said. "I think there's several different actors who I think need to be more aggressive in renting out their spaces — though I don't want to comment on any in particular — but it would be in the interest of the neighborhood and of all the property owners collectively because if they are ever going to collect that rent, we have to turn around the neighborhood. The neighborhood is suffering."

The B.A.R. called the Paul Langley Co. for comment. Misha Langley (no relation to Paul) answered the phone and referred the B.A.R. to realtor Steven "Stu" Gerry for comment, except to say that the rent being asked is not "insane."

"That's categorically not the case," Misha Langley said.

Gerry did not respond to a request for comment, but within minutes of the call with Langley, Gerry's colleague, Realtor Guy Carson, called. He said that the $475,000 is for the liquor license and the "privilege" of using the space. As for rent, he denied a price had been set.

"That hasn't been set yet," Carson said. "That'll be determined later."

Carson also said he did not know if Paul Langley and Richard Dingman were legally married; they'd been married in 2004's Winter of Love in San Francisco (those marriages were later voided by the California Supreme Court), but it's unclear from publicly available records online if they were subsequently married in a ceremony recognized by the state of California.

A representative of the Paul Langley Co., who has since stepped away, provided the B.A.R. with a statement credited to Paul Langley about the decision to close Harvey's. The statement read that "despite the extraordinary financial contributions from Harvey's owner and founder, Paul Langley, to remain open for the sake of our community, the challenge of doing business in an era of high inflation, mandated benefits, lack of tourism, urban decline, and an impending recession, has caused a degree of losses that could no longer be sustained."

The statement continued in thanking customers for their support.

"Since the pandemic, we made every effort to maintain operations in order to support our staff, our performers, and our neighboring businesses, while continuing to provide you with an experience that reflects how much we have valued your patronage for the past 27 years," the statement continued.

"The amount of recognition, love, and support that Harvey's received since closing our doors on January 22nd, has been simply overwhelming," it stated. "Words can't express how much we'll miss you too, how grateful we are for the joy you brought, and how much we appreciate you for being such a wonderful part of Harvey's for all this time. We don't know what will come next for this cornerstone of the LGBTQ+ community. Whatever it is, we hope that you will cherish it as much as you have cherished your moments with us, here in the heart of the Castro. Love, Harvey's."

Posters for the Castro Community Benefit District's "I'm Available" campaign appear on the now-shuttered Harvey's Bar and Restaurant at 18th and Castro streets. Photo: John Ferrannini  

Opening this year
Harvey's isn't the only longtime restaurant space in the Castro to sit vacant. Cafe Flore, which first opened in 1973, quietly closed over the 2019-2020 holiday season.

However, it is planning on being open again this summer. Serhat Zorlu, a straight ally, announced last year he's opening a cafe in the space. At that time, however, it was reported in Hoodline that the cafe would be open by the end of 2022.

"We're pretty much close to getting permits," Zorlu told the B.A.R. in February, adding that his concept is "a sustainable seafood restaurant."

Zorlu and Castro Merchants Association President Terrance Alan, a gay man who held the lease for Cafe Flore from building owner J.D. Petras, told the B.A.R. that the permits are necessary to do construction on the inside to replace aging plumbing and electric fixtures.

Zorlu is leasing directly from the landlord, Alan said, adding that he had to give up his lease during the COVID lockdown due to the piling rent cost.

"The construction project is to update the entire facility so it's [Americans with Disabilities Act] accessible, put in an ADA bathroom and update the 75-year-old electric and plumbing systems so it's up to snuff," Alan said. "It will retain its charm and be improved for the next 50 years, because this is the 50-year anniversary."

The project will "require moving everything inside the building around" for the time being, Alan said.

"The look and feel of the building will all be retained and not taken down. Really, it's just an interior update," Alan continued, though there will be new outdoor heaters for the patio, too.

Zorlu said that "if everything goes well," he's looking for an opening in June or July.

Alan said the March 4 event will celebrate the space's history and say goodbye to the old interior before the changes are made, as well as introduce people to Fisch and Flore. There will be finger food, but not lunch, he clarified.

And the Cafe Flore space isn't the only one planning a renaissance. Q Bar (456 Castro Street) told the B.A.R. on February 8 that it plans to reopen in the spring.

Les Natali, a gay man who owns the former Badlands, Hamburger Mary's, and now-closed El Capitan spaces, told the B.A.R. last month that a deal was near with gay nightclub owner T.J. Bruce (owner of Badlands Sacramento and Splash San Jose, among other haunts) for Bruce to take over the former Badlands space (4121 18th Street), saying Bruce could open a club there in as little as two months.

The former Hamburger Mary's and El Capitan spaces both have prospective tenants, Maloney told the B.A.R. for a previous report.

However, as the B.A.R. reported last week, Natali has stopped returning the B.A.R.'s calls to ask if a Badlands deal has been signed, and Bruce said he could no longer speak on the topic.

Natali is also in the process of surrendering the nightclub's liquor license, though Bryce Avalos, a communications analyst with the California Department of Alcoholic Beverage Control, told the B.A.R. that "If the location is able to immediately begin operations, re-activating the license could be immediate."

Jones singled out one person he thinks is doing her best to try to ameliorate the situation.

"I think there's some real heroes in the neighborhood, including Andrea Aiello," Jones said, referring to the lesbian executive director of the Castro Community Benefit District. "I think she has really stepped up."

The B.A.R. spoke with Aiello, who with Alan and the merchants' group is spearheading the "I'm Available" campaign to let business owners know the finer points of coming to the neighborhood and which spaces are available.

(Posters for the I'm Available campaign have already appeared on the old Harvey's space.)

"We had some grant money to do work around vacancies," Aiello said. "We knew from previous work we'd done that brokers were not really excited about working to get vacancies filled in the Castro, pre-pandemic. It became really clear in a focus group that it was just too hard to open a business in the Castro and was more worth their time to get vacancies filled downtown. The Castro had a bad reputation for neighbors stopping projects."

That reputation "still lingers" as COVID enters its fourth year, and Aiello hopes that the campaign will help change that perception by showcasing the neighborhood as welcoming to new businesses.

The campaign's page on the CBD website "provides a convenient one-stop shop for anyone looking to open a business in the neighborhood," the CBD stated. This includes a map of commercial, ground-floor vacancies, and information on the city departments that help entrepreneurs.

"The website has all the demographics about the neighborhood, why you'd want to be in the Castro and links to all the neighborhood associations," Aiello said. That same website shows 66 vacant spaces, of which some have since been occupied.. A 2016 count by the B.A.R. had found at least 19 vacant ground floor spaces for lease and another 13 empty storefronts where businesses were trying to move in.

Aiello said the campaign spent $30,000 from a grant from the Mayor's Office of Economic and Workforce Development.

As for how long the posters will be up, "we have not determined that yet." When asked if she'd call the project a success, Aiello said, "it's just started" but added that she has had positive feedback from prospective renters.

The posters, which feature an anthropomorphic cartoon character of a building with a purse and black high-heeled boots, are being put up by Ralph Hibbs, a gay man who lives in the Castro and is a member of the CBD's retail committee.

"I have the time," Hibbs said, adding he spends it by doing "a lot of walking around the district, verifying the data that we have is correct. ... In a lot of places, a space is vacant and the previous tenant has the lease."

Hibbs gets joy trying to make his community a better place.

"It's exciting watching people walk by and seeing them interact with the posters, because the posters are kind of cute," Hibbs said. "It's a play on a dating app. It's pink; it's vibrant; it caters to people's eye. There's a QR code."

Hibbs said if any property owner is interested in having the poster on site, "I can be there in 15 minutes to hang the posters."

Masood Samereie, president of Aria Properties in the Castro, is a straight ally who is a past president of the merchants association. He said of the new campaign, "it's good to see, but it's not the only thing."

"I hope it's successful but there are challenges — cleanliness, security, and safety of the business corridor, which the city has not been able to overcome and then, when someone signs a lease, there are so many hoops they have to go through of the city bureaucracy and red tape — and that's after they have to negotiate a deal with some, not all, but some unreasonable landlords," Samereie said.

Samereie added that despite many meetings with city officials over the years, "we haven't been able to make that much of an impact."

"It's better than not having done anything so hopefully it will be successful and hopefully we'll see more progress," he said.

Mayor's office responds
Jones said that the neighborhood's current woes are from a confluence of factors, and that Mayor London Breed should get directly involved.

"This is not something that can be solved by the [Castro] Merchants Association or by Supervisor Mandelman," Jones said. "The buildings that house the businesses of the Castro are old. They're very old and they're deteriorating. When you take that and the need for upgrades and you add the corrupt incompetence of DBI [the Department of Building Inspection], and landlords who think they can still charge these enormous rents, what you have is this combination of an insane permit process, astronomical rent, deteriorating infrastructure, it's created the perfect storm."

DBI has been plagued by scandal for several years, with former employees accused of accepting inappropriate gifts and favoritism, as the San Francisco Chronicle has reported.

When asked for specifics, Jones said that "the permit process must be streamlined and made into something that can be navigated. You have to hire an expediter to get you through the process? That's ridiculous. I don't pretend to be an expert but I've heard this over and over and over from people who want to open businesses and it's a nightmare."

For its part, Jeff Cretan, a spokesperson for Breed, told the B.A.R. in response that "the mayor has implemented significant reforms around small business permitting in this city over the last two years," including Prop H, the Small Business Recovery Act, and a new permit center "which has brought together all the permitting agencies under one roof (not just for small business but also for home construction and others) to improve the ease for small businesses seeking to open."

Cretan and Kathy Tang, executive director of the San Francisco Office of Small Business, said that the new small business permit specialists have replaced the need for hiring an expediter.

"They help small business entrepreneurs with everything from the initial exploration phase, to advancing permits that are in the queue but 'stuck' for some reason, to the last phase (e.g., coordinating inspections) to be able to open," Tang stated. "In addition to helping businesses navigate the city's permitting process, our small business permit specialists are constantly looking out for ways to make the process easier. The small business permitting service is something that we have been publicizing through multiple merchant walks each week, social media, newsletters, and other outreach efforts, and we would appreciate your assistance in helping us publicize this free service as well."

A spokesperson for DBI did not respond to a request for comment for this report as of press time. The B.A.R. could not locate small business owners who've had trouble opening who wished to speak about their predicaments with the city on the record.

"I think it's fantastic there's a new permitting center that's one-stop shopping," Aiello said. "At the same time, we have had high-profile vacant storefronts at key locations leased for years and they're still empty. Why is it taking so long?"

Jones, who first came to San Francisco as a 19-year-old Arizonan, said that there are at least a few reasons for hope, though.

"San Francisco remains an incredibly beautiful city, and despite the incredible cost of living in San Francisco, it still remains the home of an enormous number of extraordinarily creative and innovative people," Jones said. "San Francisco goes through its cycles — we're going through another one now — but it's still one of the most beautiful cities on earth."

Updated, 3/1/23: This article has corrected Supervisor Rafael Mandelman's description the holding pattern among Castro landlords as a collective action.

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