Mission District Restaurant Landlord Keeps Rent Low, Flavor Local

By Sam Harnett

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.

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.

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.

“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.