Nightmare on Second Street

The vision of the 2nd Street District becoming a high-end Downtown shopping center took a blow last week when eight store owners were served with lease-default notices on their properties. Ground-floor retail tenants in the AMLI Downtown and CSC vertical mixed-use buildings claim that AMLI and property management firm Urban Partners distorted and inflated their rent bills and provided guesstimate spreadsheets instead of accurate utility bills based on meter readings.

"Everyone's struggling, but AMLI is denying any wrongdoing on their part," said April Lohse, co-owner of DJ-culture store Gomi, who found herself locked out of the shop on Oct. 9 with no additional warning. She said the store owed $9,000 in back rent but had been working with the management firm's accountants since August to develop a payment plan. However, when the doors were locked, the management told them they owed $22,000 in rent. "I'm back on three months' rent, not seven," Lohse said. "I told them those four months had been paid for, but they wouldn't let me back in my store to get my files." When the management company finally agreed to let the owners back into their store on Oct. 12 to collect their records and personal effects, the company's representatives were almost an hour late. When Lohse tried to negotiate a new plan so she could reopen, management rejected it. "Their idea of a payment plan is that I pay them in full."

This is not the first time Urban Partners has been accused by its Second Street tenants of being heavy-handed. In April, several retailers contacted the Chronicle on condition of anonymity (see "Red Ink on Second Street: Default or Confusion?" May 4). They had received final demands from the management company for utility, property tax, and common area maintenance fees. But these final notices were also the first time they had been asked for the money. The retailers complained they were suddenly faced with bills of up to $20,000, some backdated to 2005, and even after that, bills arrived erratically or only after multiple requests from the tenants.

"The story six months ago seemed to be, oops, it's a computer error," said Lohse, "but it's incompetence going back over the last two years." Speaking under conditions of anonymity, another retail tenant called the closure of Gomi "a warning shot to the other retailers. They're going after the weak ones, the ones without lawyers." AMLI and Urban Partners were contacted for comment but did not return multiple phone calls.