The Jewish Community Federation this week decided to proceed with plans to purchase two buildings next to its current San Francisco location.
The acquisition of the interconnected buildings just to the south of 121 Steuart St. will enable the JCF to offer less-than-market-rate rents to Jewish agencies getting pummeled by soaring real estate costs.
“A lot of people have been talking about buying buildings for nonprofits and putting them in, but I think we’re the first one in the city to actually do it,” Phyllis Cook, the interim executive vice president of the JCF, said Tuesday.
Cook is the director of the Jewish Community Endowment Fund, which is putting $3 million toward the $27.85 million purchase price.
The $3 million will come from above and beyond the normal spending ceiling of the JCEF, an action Cook called “a once-in-a-lifetime exception.”
She said by doing that, the JCEF won’t cut into the funds it uses to make grants to Jewish and general community agencies. The JCEF has assets of more than $610 million, and awarded $85.3 million in grants during the fiscal year 1999.
“This is what the endowment fund is really for: an emergency, or in this case, an opportunity you don’t want to miss,” Cook said.
Former Bank of America President Richard Rosenberg, the chairman of the JCEF committee, and real estate experts Gerson Bakar, Ron Kaufman, Paul Stein and Mike Podell were instrumental forces in getting the deal done, Cook said.
The close of escrow is set for Nov. 2, said John Goldman, the JCF president.
“We have made the nonrefundable deposit that was due [Monday] and completed the first round of due diligence that was necessary…We are now progressing with the solidifying the financing.”
A community fund-raising goal of $15 million has almost been reached; as of Tuesday, approximately $14.15 million had been secured from a very select group of donors, according to Cook and Goldman.
“We wanted to make sure the [JCF] annual campaign and the myriad capital campaigns going on in the region right now were not hurt,” Goldman said.
The balance of the purchase funds will come from a bank loan. The original sales price of $28.25 million has been lowered by $400,000 after negotiations with the seller, Honolulu-based Persis Corp., which the JCF said needed to do some maintenance work.
The buildings have about 75,000 feet of rentable space, although almost all of it currently is being leased. However, Goldman said, “in the next five or six years, quite a few [leases] will turn over.”
As that happens, yet-to-be-determined Jewish agencies will begin to move in.
Although some tenants might have concerns about not being able to renew their leases, Cook said “a committee will be formed, and each situation will be dealt with on a one-on-one basis. All we know now is it will be at least 51 percent nonprofits.”
Among the few businesses at 131 and 141 Steuart St. with long-term leases are the three restaurants there: Shanghai 1930, Long Life Noodle Co. & Jook Joint, and Chaya. The JCF will become the landlord of all three.
“I’m glad it’s the Jewish federation that’s buying the building. I think we’ll be able to get along fine,” said Shanghai 1930 owner, George Chen.
Chen also rents about 2,000 square feet of office space, with the lease expiring in a couple of years. Asked if he thinks JCF will renew the lease, he responded, “Hopefully we’ll come to some kind of agreement.”
Regarding the future, Cook emphasized that the JCF wants to bring Jewish agencies together at affordable rents under adjacent roofs.
“We’re not making this decision in terms of a business deal,” she said. “It’s what’s in the best interest of the community in the long term. We want to protect nonprofit agencies in San Francisco that need to be in San Francisco.”