Shortly after John Moriarty opened his Elmwood District jewelry shop nearly three decades ago, the two-block shopping district on College Avenue had a cobbler, pharmacy, gun store and the most restrictive business regulations in Berkeley.
Those shops have all since closed, and now Moriarty, head of the Elmwood Merchants Association, is at the forefront of a neighborhood-merchant alliance working to undo the quota system designed to protect neighbors from losing shops they rely on and merchants from rising rents.
“It just didn’t work,” Moriarty said. “The city has never enforced the quotas, several of the neighborhood serving shops have closed and rents have gone up.” Moriarty pays $3,500 a month for the storefront he rented for $400 in 1978.
The Elmwood Business District Advisory Committee, comprised of merchants and leaders from surrounding neighborhood associations, has proposed scaling back the quota system from nine business categories to two: food service and beauty salons. The group also recommends barring businesses from expanding into neighboring shops as the clothing store Jeremy’s did earlier this year.
“We believe in the free market,” said Kimberly Tinawi, owner of the Elmwood Market and the co-president of the Claremont Elmwood Neighborhood Association (CENA). “The quotas didn’t allow businesses to adapt to changing needs of customers.”
Tonight (Tuesday) the City Council will vote whether to send the group’s recommendations to the Planning Commission for review.
The most vocal opponent is Tad Laird, who recently bought the struggling Bolfing’s Elmwood Hardware Store. “Eliminating the quota system will force my business out,” Laird said.
He predicted that open competition would lead to higher rents that would make a neighborhood-serving hardware store on College Avenue unfeasible. Laird, who owns the building housing his shop, also called for easing zoning restrictions so he could build condos above the store to help him underwrite the hardware business.
“I bought this store under the premise that the community supported neighborhood-serving stores,” Laird said. “Now the feedback I get is that maybe we’re not supposed to be here anymore.”
Laurent Dejanvry, co-president of CENA, said the notion that Elmwood stores should primarily serve local residents was “a very old view of Elmwood. I think it’s a combination of neighborhood-serving stores and a regional destination area—much like Fourth Street,” he said.
Quotas Never Enforced
Jason Wayman, owner of Elements, an Elmwood District clothing store, said he refused to participate in crafting a new quota system out of frustration with the city. “In reality, there has never been a quota system because the city refused to enforce it, he said. “This is like closing the door after the cow done left.”
Last year Wayman was one of several merchants who fought unsuccessfully to keep Jeremy’s from expanding its Elmwood clothing store into neighboring storefronts. Even though the quota for clothing stores had been filled, the city allowed the expansion, which Wayman said has cut into his bottom line.
“If Jeremy’s is going to expand to five units, then the quotas don’t matter,” said Desiree Alexander, owner of the Elmwood clothing store Dish.
Dave Fogarty of the city’s Office of Economic Development acknowledged that “the city has misadministered quota system permits.” He said that by simplifying the system, city officials would be better able to enforce the rules.
According to Moriarty, the district already is beyond its quota for full-service restaurants. He said restaurant owners got around quotas by opening as take-out restaurants when there were open quota slots in that category. Then, once they were established, they went to the Zoning Adjustments Board to get a variance to install tables, Moriarty said.
Rationale of Recommendation
The proposed system has been written primarily to prevent a repeat of Jeremy’s expansion and to close the restaurant loophole. Instead of dividing restaurants into three categories—carry-out, quick-service and full-service—the new system will have food service as a single category, in theory preventing full-service restaurants from starting out as take-out establishments. Twenty-one restaurants will be allowed in the district.
For many Elmwood merchants, restaurants pose the biggest threat to their businesses because they typically can pay higher rent and attract patrons at night when other shops are closed.
As an example of the lucrative restaurant business climate in the Elmwood, Tinawi said that the deli counter at her market, which features Middle Eastern products, constitutes about 80 percent of her business. “People aren’t supporting a neighborhood grocery store here,” she said. Under the new rules, Tinawi, who already has a quota slot as a carry-out restaurant, could turn the business into a full-service restaurant if the changes pass.
Moriarty said the Elmwood committee chose to eliminate shop expansions because they feared it would lead to a few dominant retailers and the loss of diverse stores.
“If Jeremy wanted to sell his shop, its big enough now for something like The Gap to move in,” he said. “That’s not the kind of store we want here.”
Elmwood shops have held up fairly well during the recent economic slowdown, Fogarty said. City reports show that sales tax revenue from the district has remained virtually unchanged over the past two years. The only commercial vacancies are in a building at College and Ashby avenues being refurbished by Berkeley Real Estate Developer John Gordon.
The Elmwood committee is hoping to fast-track the changes so they are in place before Gordon rents out all of his spaces. The committee reasons that if the new quota system is in place, Gordon will probably have an easier time finding non-restaurant tenants and will have less incentive to seek variances to bring in more restaurants. Gordon has already contracted for an ice cream parlor to rent one of the spaces in the new building.
“I think the new rules will help me get my building rented,” Gordon said. “I’ve gotten a lot of calls from clothing stores and shoe stores and I’ve had to tell them that I can’t put them in because the quota is full.”
Councilmember Laurie Capitelli will probably have to recuse himself from the council vote tonight because he owns commercial property in the Elmwood District.