The Freedom to Go Out of Business

By Allison Pheteplace

San Francisco is one of the most expensive cities to live in. But thanks to residential rent control, once you’re in a place you can rest assured that as high as your rent might already be, it won’t shoot through the roof overnight. But for a city that values small businesses so much that it has outlawed chain stores in many of its neighborhoods, why is there not the same security for our mom-and-pop shops?

Has San Francisco ever had commercial rent control? The answer, bluntly, is no.

In the 1980s, then-president of the Small Business Network in San Francisco, Peter Hanson, set out to explore the idea of rent control for small businesses. But in 1989, after some big commercial real estate companies took the issue to Sacramento, commercial rent control was prohibited in California. This law also overturned Measure I, voted in place in 1982, which created commercial rent control in the Elmwood District in Berkeley. The measure had been pushed, in part, to save Ozzie’s and Elmwood Pharmacy, a soda fountain and pharmacy dating back to 1921 that finally closed its doors this year.

Ozzie’s owner, Victoria Carter, told the Daily Californian, “I feel that eventually this neighborhood will be just chains and restaurants. They are the only businesses that can sustain themselves with these rents.”

But surely there must be a reason why commercial rent control has been met with so much adversity, and why no other city in the country has it.

The reasons lie just below the surface of what might appear to be a pro-little-guy idea.

Businesses are supposed to grow and change with the neighborhoods, and the businesses valued by frequented by locals should be able to withstand a changing economy. Locking businesses into long contracts at a low price might mean locking in businesses that are not benefiting the community.

“We live in a free-enterprise system,” said Art Swanson, current president of the Small Business Network. “Where else are your costs definitively controlled? It seems unfair to pick out a single industry and to regulate their costs. If you’re a smart landlord you will charge a fair market price.”

It seems that the most we can do to ensure our favorite local spots continue to exist is to support them—to shell out that extra buck for a gallon of milk, or dig through that stack of used books instead of scoring a deal at Borders.

So go forth, consumers, and let your monetary voice be heard. In our free-market economy it is the only voice we have.