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Mission District Restaurant Landlord Keeps Rent Low, Flavor Local

| November 14, 2013
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By Sam Harnett

Ayutla restaurant now operates in the old Casa Sanchez space in San Francisco's Mission District. (Sam Harnett / KQED)

Ayutla restaurant now operates in the old Casa Sanchez space in San Francisco’s Mission District. (Sam Harnett / KQED)

San Francisco’s longtime tenants count on rent control to keep their housing costs down. But if you’re a small business owner in a hot neighborhood, there’s not much to stop a landlord from jacking up your rent once the lease is up.

In the Mission District, many landlords of commercial spaces are raising rents. They’re cashing in on the demand for new businesses that serve tech workers. But at least one pair of landlords in the neighborhood is not going that route — Bob and Marta Sanchez.

When their mother passed away two years ago, Bob and his sister Marta inherited the old Casa Sanchez restaurant on 24th Street, between York and Hampshire streets. The siblings decided they didn’t want to just rent to the highest bidder. Instead, they rented to a local family of Latino restaurateurs who had been displaced from their previous restaurant, also on 24th Street, when the owner redeveloped the building. Marta Sanchez says she and her brother wanted to give them one last shot in the neighborhood.

Lower 24th Street, where 89-year-old Casa Sanchez sits and which still has the highest concentration of Latino-owned businesses in the city, is the heart of the Latino Mission district. It stretches from the BART station on Mission Street east to Potrero Hill. It runs perpendicular to Valencia Street, which has seen rapid gentrification and an influx of new restaurants and shops over the last decade. And it is now at the front line in the city’s growing turmoil over tech-driven gentrification.

This stretch of 24th Street has had a tumultuous past. It was known in previous decades for gang violence and drug dealing. Marta Sanchez says that in the ‘80s, tortilla companies fought for turf at the street’s taco joints in what came to be called the “tortilla wars.” She says it grew so heated that tortilla delivery men were said to carry guns.

Those years also saw a burst of Latino pride and activism on the street. Community and arts organizations sprang up, like the Precita Eyes Mural Arts and Visitor Center and Galeria de la Raza, a gallery that displays Latino and Chicano art. The alleyways and storefronts up and down the street are still covered with giant murals painted by graffiti artists during that time.

Outdoor art at Galeria de la Raza depicts the "death" of the Mission due to evictions. (Sam Harnett / KQED)

Outdoor art at Galeria de la Raza depicts the “death” of the Mission due to evictions. (Sam Harnett / KQED)

Today, upscale restaurants and cafes have popped up. On weekends, a long line forms at Wise Sons, a Jewish-inspired deli where Mark Zuckerberg has been seen dining — he is reported to have bought a house several blocks west toward Noe Valley. Tour groups now come through to see the murals, and Google employee buses stop near the BART station on their way to the tech campuses on the Peninsula and in the South Bay.

At a rally last month, protesters marched down 24th Street to call attention to the impact of the Mission’s rapid gentrification. “24th Street is not for sale!” they chanted. “No more evictions!” One speaker demanded that “the city provide incentives to keep long-term businesses in the Mission.” The message was clear: This isn’t just about displaced residents, but displaced businesses. The march started by Casa Sanchez.

Marta Sanchez says the restaurant has always been a family business. Her grandparents made tortillas initially, but during the tortilla wars, they concentrated on chips and salsa instead. It was safer. They concocted their first batches at a table inside the restaurant. Later, the company made national headlines by offering free lunches for life to anyone who got a tattoo of the Casa Sanchez logo — a boy in a sombrero riding a corn cob rocket.

Sanchez’s mother ran the restaurant for years. A neighborhood matriarch, she held sway from a chair in the corner of the room – she actually died while sitting in that chair. When she passed away in 2011, they made a shrine for her in one of the patio booths out back. Inside the restaurant, there’s a picture of her up on the wall, painted like an old Mexican fresco.

Since then, Marta Sanchez says she and her brother have been flooded with offers to lease or sell the place. She says a chef from a famous San Francisco restaurant came in and offered her $200,000 up front just to sign the lease. But she and Bob decided to turn it down.

“We had a family meeting,” Sanchez says, “and I just gave a lot of credit to my brother, because he was paying the mortgage after my mom passed away and he didn’t have to do that — he could have taken the $200,000.”

In the end, they decided to go with the Banuelos family, who opened a taqueria called Ayutla in the Casa Sanchez space in mid-2012. The family is paying far less than market rate to rent the space. But Marta Sanchez and Maria Elena Banuelos knew each other from grade school, and knew each other on 24th Street.

‘If you have to pay a mortgage and you really need the money, and people keep waving money at you, eventually you are going to take it.’

Emilia Estrada is part of the Banuelos family. She says “the owner Bob Sanchez, he’s a very nice man, and he was able to accommodate us.”

The Banuelos have run restaurants in the Mission for almost 40 years. Their most recent was La Posta, on 24th Street. “It was so sad when they demolished La Posta,” Estrada says. “That one was really, really nice.” Now, where the restaurant used to be, are condos and new retail spaces.

Erick Arguello runs the Lower 24th Street Merchant & Neighbors Association. To illustrate the rapid gentrification, he points out two properties side by side on the street. One was left to a brother and the other to a sister. The brother’s property was turned into condos, while the sister kept her building as an independently owned boutique. All up and down the street you can see this kind of uneven development.

Arguello says the reason 24th Street hasn’t changed entirely is because many businesses actually own their buildings — that’s how the Latino barber shops, churches and knickknack shops can afford to stay. Without them, Arguello says, this would be the Mission in name only. Maybe it would be called “Mission Viejo” (Old Mission), he says, or some other kind of made-up real estate term.

The Sanchezes made an emotional decision about renting Casa Sanchez, not an economic one. They are keeping the rent low so a local business can stay in the neighborhood. But not everyone has the resources to rent below market rate.

Marta Sanchez at Casa Sanchez. (Sam Harnett / KQED)

Marta Sanchez at Casa Sanchez. (Sam Harnett / KQED)

“It’s not easy,” Marta Sanchez says, “because if you have to pay a mortgage and you really need the money, and people keep waving that amount of money at you, eventually you are going to take it.

“You can’t be blamed for it,” she says, “because there is only so much you can do on behalf of your values with the community.”

Across the bay, Berkeley became one of the few U.S. cities to ever attempt to impose commercial rent control in the late 1970s and 1980s. But its laws, which denied landlords the right to occupy their own property when leases expired, were struck down in federal court for violating the U.S. Constitution’s contract clause. Berkeley amended its ordinances to satisfy that shortcoming, but the state then enacted a law pre-empting further local attempts at commercial rent control.

The impact of the law is that in San Francisco, as elsewhere, businesses live or die at the whim of their landlords.

Casa Sanchez has been hosting punk music and other live music events at nights, free for patrons of Ayutla, and partly to help make ends meet. Marta Sanchez says what the Banuelos family pays in rent barely covers the mortgage. She hopes some of the young hipsters and techies moving into the neighborhood will come in for burritos and help them stay in business.

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  • mamiel

    “This stretch of 24th Street has had a tumultuous past. It was known in previous decades for gang violence and drug dealing.” Uh, there’s still plenty of gang violence there. I lived two blocks from there and witnessed many gang shootings, one within the last year.

    • david

      While there is remnants, it’s nothing like when I was growing up.

      • mamiel

        I believe it. I lived in that neighborhood for most of the past 20 years. It seems to have gotten better. Some blocks are “hot spots” for shootings but overall seems better. Having teenage sons now though I still find the number of shootings worrisome,

    • Ghost of the gipper

      Its not nearly as violent as it was even 5 years ago. You are probably just some dumb yuppie who is scared because he isn’t in the suburbs or his prep school anymore.

      • mamiel

        Hi Ghost of the Ripper. I have personally witnessed 3 shootings in the last 5 years in that neighborhood. 2 resulted in fatality. All victims were young Latino males. My son is a young Latino male (16 ) who was raised in the Mission. Less than a year ago he was followed and harassed on Harrison St by bangers who questioned him about the colors he chose to wear that day. He felt as if his life passed before his eyes. He knew he could easily be shot in that situation. If you are a young Latino male who is living in the Mission then I am interested in your perspective that my “yuppiness” has an impact on my perception of the mission being dangerous for young Latino males. If you are not Latino or male then you are the one who sounds incredibly sheltered in terms of your understanding of how safe the Mission is for Latino males.

        • mamiel

          BTW, I raised my son in the Mission but he has always maintained that he doesn’t feel safe there. I feel entirely safe there because I am female and white. I don’t fear for myself but (rightly) for my son, who is a Mission native.

  • T.J. Diggs

    As a San Franciscan who was forced to leave due to economics.. I’m torn. The mission used to be the place for artists, dancers, musicians, and yes even techies. Back then (the 90′s) the first tech boom had come, but didn’t have the same effect that it has now. Now it’s bringing in money to the city (good!) but it’s also feeding landlord greed (bad!). I applaud the Sanchez’s for doing their part to keep the areas ethnic flavor viable. It’s just scary.. I would hate to visit someday and find the Mission I remember a former shadow of itself.