Land lovers

Ask Chico real-estate investors if they could own any piece of commercial property in Chico, what would it be, and most of them would probably name a building downtown. Yes, downtown, with its pigeons, public urination and random swarms of tiny flies. It’s historic, it’s lively, it’s fun—and it’s in the hands of relatively few owners, both local and absentee.

It’s somehow special to own property downtown, and most of the owners know that.

“These properties were acquired by my grandparents before the turn of the century,” said Mendel Tochterman, the octogenarian part-owner of no fewer than 10 parcels in the downtown core, including the large, pink Waterland-Breslauer building at Fourth and Broadway. His grandfather was German and a furrier by trade, but in Chico he opted to open up a men’s clothing store at 113 W. Third St., the current site of Art Etc. “There’s an emotional attachment,” Tochterman admits, to owning downtown buildings.

Tochterman, an attorney, is in charge of managing land held in the Breslauer Family Trust, a corporation that consists of himself and his sister and the descendants of his aunt and uncle. “I do it all,” he said.

Betty Jane Roth, whose family trust owns some seven parcels scattered about downtown and likely the greatest square footage of any single property holder, was born just one block off Broadway, at her grandmother’s house at First and Normal streets. She still keeps shop at an office on Salem Street, where the dàcor is vintage not so much to look neat but because it’s been there so long. She remembers when she and her husband would window-shop downtown in the evenings.

The James F. Roth Family Trust owns almost all of the block bordered by East First, Main, East Second and Wall streets.

Enjoying coffee in Peet’s coffee shop, Betty Jane Roth notes without a shred of arrogance that she owns almost this entire block, plus the Zucchini & Vine building (perhaps her favorite) across the street, and still more a ways down.

She and her late husband, who was in real estate, acquired the property gradually. “We’ve always loved downtown,” she said. “[Mr. Roth] just believed in downtown. Anything that looked like it was possible to acquire, [we’d try].”

With a couple of exceptions for city land such as the Downtown Plaza Park, downtown is private property. But arguably it’s private property that’s in the public interest. If one owner fixes up a half-block, it can really shine. If that same owner lets his or her half-block disintegrate into , grime and crumbling brick, it can stand out like a rotten tooth and hurt the appearance of the entire neighborhood.

With the look and economic success of the downtown in mind, the Downtown Chico Business Association collects annual fees (anywhere from $8 to $500 a year) from businesses there and uses the money to clean up downtown, put on events and otherwise market the area to visitors and locals.

The association is about to step up its efforts, with the hopes of increasing the assessments and applying them to the property owners themselves—if the DCBA can get those owners to agree to the deal.

It’s called a Property-based Business Improvement District, or PBID. Cities such as Stockton and Bakersfield have succeeded in passing PBIDs and then using the money to keep up their historic downtowns.

The PBID would generate money—more than the DCBA assessment’s current $30,000 a year—for daily cleaning, security, a comprehensive marketing program and other things that DCBA Executive Director Katrina Davis calls “critical components for what makes and breaks a downtown.”

The initial phase of a $25,000 consultants’ study funded by the city of Chico found that a PBID could improve the downtown’s image, increase business and stave off blight and crime. DCBA leaders are wary of worrying the cost-conscious by naming numbers too soon (any assessment on property owners would likely be passed along to the tenant businesses), but it will probably be based on square footage and tiered according to how close businesses are to the retail core. Early estimates are 1 cent or less per square foot. Beginning with a workshop tentatively scheduled for mid-November, the next year will be spent explaining how the PBID would work and holding the election by October 2004. If approved by the owners and ratified by the City Council, the assessment would have to be voted on every five years.

“We have a strong skeleton. Now we need to start fleshing it out,” Davis said. “I know that we’re in for an interesting few months. … The key is delivering what we say we’re going to deliver.”

A few merchants own the buildings from which they do business, such as the Lucenas of Collier Hardware, the Malowneys of Bird in Hand, the Tofanellis of Nantucket Home Furnishings, David Halimi of Diamond W Western Wear, Doug Roberts of Duffy’s Tavern and the Corwin family of Corwin & Son Clothiers.

But for the most part, the owners are local or out-of-town investors or people who inherited the holdings from old-timers.

In casual conversation, downtown tenants agree the longtime owners can be a good or bad thing. Owners of properties that have long been in their family don’t always have the time, money or energy to do the full-scale renovations that downtown newcomers often do. However, there is a general feeling around downtown that local property owners in general tend to keep up their holdings better than out-of-towners.

Roth, for example, invested more than $400,000 in 1996-98 to renovate two properties at Second and Main (including the old J.C. Penney location, now Peet’s, that still sports dollar signs from when it was the National Dollar Store) and Salem between Third and Fourth.

“I think when they have local owners they’re kept up better,” Roth observed. “I know right away what needs to get done. If I own the property, I just feel I have to keep it up. I’ll even acquire property that’s connected to mine if I see it getting run down.”

Myron “Buzz” Buzzini doesn’t own property downtown, but he’s been in charge of a building so long that sometimes he feels like he does.

More than 25 years ago, he was living in the Chico State dorms where his roommate, Ron Marchand, was managing a parcel at 120-128 West Second St. (Riff Raff Pizza, by way of reference) for his grandmother, Georgina Norton. When she passed away and Marchand graduated and moved away, Buzzini agreed to collect rents, pay bills and keep up the properties.

Now, the properties are in the process of being sold. At first, the buildings—one of which hosted the first Western Union telegram office in town and later an Arthur Murray dance studio—were going to go to outsiders after being in the family since the 1880s, but at the last minute Kathy Marchand, of Pennsylvania, decided she’d rather hang on to them, Buzzini related.

“We put it out to the highest bidder and we had a lot of bids on it,” he said. But Marchand decided to buy her brothers out on the four units valued at about $425,000.

Buzzini, who will no longer be managing the properties, said downtown-watchers should expect to see improvements to the buildings under the new ownership. “Kathy was born in California, and she did graduate from Chico State,” he said. “She said, ‘I really want to do Chico right with these buildings".

The problem before, Buzzini said, was a classic dilemma for property owners who have both capitalism and altruism at heart: “It should be kept up and look nice for downtown,” he said. “But do you raise the rent and hurt the local businesses to keep it up? It costs a lot of money. [We’ve kept rent low] as an ethical decision. It’s not even a dollar a square foot.”

Architect Steve Gonsalves, whose office is downtown and who has done work for downtown property owners, agreed that there indeed is the rub. “Whenever you take a property and improve it, the rents go up accordingly.

“Most of them are in trusts now, and the trustees don’t live in Chico or come to Chico, and they’re getting a significant rent check and they’re not interested in making improvements to their property,” Gonsalves observed. “[One day], that will change and people will get excited about fixing up [their properties].” Also, if a new generation takes over from aging property owners, that could spark a trend.

“I think there’s a trend of improvement in the downtown,” Gonsalves said. “The downtown’s getting better. I feel we have a way to go. … I think you might see more turnover in the future. I think owner-occupied properties are generally better maintained.”

Observers note that rent has been rising for both retail and office space downtown. Some tenants speak of their rent going up 50 percent in one month’s time.

Davis, of the DCBA, said few rents reach the square footage rate charged by the Chico Mall, and renting downtown is cheaper than building new.

Several local owners of downtown property guard their privacy, and details about their holdings, tightly: Wayne Cook, Michael Ballou (he owns the Subway property and part of Second Street), Mike Hart and his brother, Eric, aren’t much for talking to the press.

“I’m just a regular family guy,” said Mike Hart, declining to be interviewed last month.

Cook, known for fixing up historic properties, is in the midst of renovating the dilapidated Diamond Hotel on West Fourth Street, affectionately known as the “Pigeon Palace.” Cook has purchased properties at Fourth and Broadway (the RawBar and Clifford’s area) and once sought to purchase the old City Municipal Building, hoping for a low-interest loan from the city.

He’s also engaged in a contract involving a prime bit of property at Third and Main, the former Sports LTD site known as the Oser’s building because of the department store that was long located there.

Cook is still in negotiations for the large parcel, and downtown is buzzing with rumors of what retail business he hopes to draw there. (In downtown Chico, there seems to be a rumor, as there is a mural, around every corner.)

Cook was raised in Durham and attended Chico State, never dreaming that one day he would own part of the downtown. “The financial end has not been the prime motivation. I buy things that look like they have the potential to be interesting,” he said. “I’m having the time of my life.”

He said that so far most of his Chico projects have been long on historic character and short on profit. “This old stuff just eats the capital,” he said. “Even when you spend the kind of money we do on a building, they’re usually not worth more than what they were when we started.”

Cook supports the PBID idea ("It’s going to change the type of retail and the type of life downtown") and envisions a downtown that will host more upscale shops and properties in better condition.

“I have faith in the future of downtown Chico. I believe we’re on the verge of some major improvements,” said Cook, who is also eager for the city to reconstruct downtown Park Plaza and also build another parking structure. Cook believes he is tapping into a different market force, with an interest in properties that have been fixed up and have higher rents that reflect that. “We don’t raise rents with tenants in them,” he said. Usually, Cook will have the tenants move out, and, after an extensive renovation, “it’s a different marketplace. It’s a different building.”

Recently, Sports LTD left the downtown for a Mangrove Avenue strip mall after 22 years, its owner citing parking as the main reason. Then, it was learned that Clifford’s Jewelers would be eschewing its home of more than 100 years for the same Park Plaza strip mall. In a huge blow, Chevys on Sept. 30 closed up shop in its 14,000-square-foot renovated bank building at Second and Broadway.

“We hate to lose any store in downtown,” Davis said. But at the same time, new businesses are always moving in, old ones are expanding (such as The Upper Crust and Jasco’s Heights), the vacancy rate is low and, even more encouraging, existing businesses elsewhere in town are stalking downtown hoping to find a space to add a store. “We’re getting far more calls in the last six months than I’ve ever received here,” Davis said.

Speaking of vacancies, the Breslauer Family Trust owns much of the vacant lot at First and Main streets, a baffling bit of missed opportunity at the gateway to The Esplanade.

“It’s a financial drain not to have something there,” Tochterman said. For many years, the trust has preferred to offer the property only as a long-term lease, not an outright sale. Someone would have to build there and own only the building, not the land. But Tochterman said there could be room for compromise on that.

One thing he doesn’t want to do is sell off the family’s holdings. “It would not be profitable for us to dispose of the properties,” Tochterman said, for tax reasons.

Similarly, Roth says she has no interest in selling any of her properties, although management will be shifting to her son-in-law, David Nasaw, of Marin County, at the beginning of next year.

Gonsalves, the architect, has long had his heart set on owning property downtown, and he’s worked hard for the payoff: a $3.9 million project that will be the first major addition to the downtown since the early 1980s.

Unlike many downtown property owners, who inherited their holdings or bought them with family money, Gonsalves grew up in foster care and worked his way through Chico State. “I kind of look at this project as my reward for a lot of years of personal sacrifice—vacations and my personal social life. It didn’t come without a price. I look at it as a reward and a blessing. A big chunk of the downtown properties are owned by people who have owned them for sometimes generations.”

He and a handful of other investors are going in on the construction of a building at Sixth and Main streets, near the Senator building, which is technically in the “B” zone just outside the downtown core. Now a steel skeleton, the building should be done next spring. Longtime locals may remember the corner as the 1950s site of Cal’s Drive-In and, later, Fireside Books.

“It’s the vitality of the downtown—kind of the heart and soul of the city,” Gonsalves said about why he picked that location. The Nichols, Melburg & Rossetto offices can be on the ground floor and he and his wife can live up top—something he’s surprised not more downtown business owners care to do. Before World War II, downtown was a community where people lived and worked and played.

“I’m an urban person,” said Gonsalves, who grew up in San Francisco’s North Beach and Telegraph Hill neighborhoods. “Now I’ll have the shortest commute in Chico: down one flight of stairs.”

Once Sixth and Main is completed, Gonsalves vows to keep it up—and not just so he can show his face in the supermarket.

“I think it’s a civic obligation to try and keep assets that are important to the community and a sense of pride in the community,” he said, especially if it is a “high profile” piece of property.

Roth said she’s enjoyed watching the downtown grow and change, even if people are a bit too dependent on cars these days.

“There are a lot more things related to college kids, and I think it’s good. This is the center of the college now," she said. "The downtown is always changing. It seems like every 10 years it changes, and you have to keep up."