OCII Approves 10‑Year Lease Extensions for Yerba Buena Gardens Cafés to Preserve Small Businesses

The Commission on Community Investment and Infrastructure on Sept. 1 conditionally authorized 10‑year lease extensions, with 15‑year options, for two café spaces at Yerba Buena Gardens occupied by Samovar Tea Lounge (West Café) and B Restaurant & Bar (East Café).

OCII staff said the measures aim to preserve small businesses that have operated in challenging, upper‑floor locations in the Gardens and to secure a continuing revenue stream to fund park operations and capital needs. Marie Munson, OCII senior development specialist, presented an AECOM market study that evaluated 20 comparable downtown leases and concluded that upper‑level secondary spaces have significantly lower market rents than prime street‑level sites. The study found average asking rents of about $58 per square foot for ground‑floor space in the area, with high‑visibility locations commanding up to $80 per square foot and difficult upper‑floor spaces as low as $30 per square foot.

Under the First Amendments described to the commission, Samovar's West Café (about 2,000 sq. ft.) would begin a 10‑year term on March 1, 2016, with a 15‑year extension option; OCII staff presented an unadjusted year‑one rent figure of $88,555 ($45.32 per sq. ft.) and an adjusted first‑year rent of $59,000 ($20.21 per sq. ft.) reflecting a tenant‑improvement credit amortized over 12 months. Samovar's estimated tenant improvements were presented at about $50,000. The East Café (about 2,100 sq. ft.), occupied by B Restaurant, was presented with a 10‑year term beginning June 1, 2016, a one‑year adjusted rent reflecting a TI credit and an estimated $75,000 in tenant improvements.

Owners Jesse Jacobs (Samovar) and Kevin Best (B Restaurant) told commissioners they have reinvested in their spaces and value longer leases to justify capital upgrades such as a glass partition on the patio, heaters and kitchen equipment. "It's been a great past 10 years and we've appreciated being part of the city," Jesse Jacobs said.

Commissioners questioned comparables and methodology; AECOM economist Kelly Raton said she analyzed citywide and Yerba Buena submarket rates, cross‑checked primary versus secondary space differentials (about 50 percent) and used the larger downtown market for additional context, but declined to identify confidential lease comparables. Staff said the City and Oversight Board will review the First Amendments; the Oversight Board is scheduled to consider them Sept. 14, and the State Department of Finance has statutory review windows.

Commissioner Bustos moved approval of each First Amendment and Chair Rosales seconded. Both items passed on 2–1 votes (Commissioner Singh voted no; one commissioner was absent). Staff said the amendments are categorically exempt from CEQA as leasing of existing public facilities with negligible or no expansion of use, and that next steps include oversight and potential DOF review.