Frisky business

The city is laying off workers, closing down firehouses and generally going down the tubes. That hasn’t stopped the Economic Development Department from cooking up a plan to give $5.75 million to most favored downtown developer David Taylor to build three new night-life spots on K Street.

One will be a “posh nightlife destination for the 30+ crowd.” It’s tentatively called “Frisky Rhythm.”

All together now: Ewww …

Another is an “adult pizza lounge,” and the third spot, called “Dive Bar,” will feature actresses dressed up like mermaids swimming around in an indoor swimming pool. How could this not succeed?

All three would be operated by out-of-town nightclub owner George Karpaty, who runs, among other enterprises, the megaclub Ruby Skye in San Francisco. The funds would come from a pot of money set aside just for projects involving David Taylor. A year ago, the city sold the Sheraton Grand Hotel to Taylor and netted $50 million. Half of that money went in the city’s general fund, but then the city took the other half and set it aside just for downtown projects. Call it the David Taylor slush fund. It seems that back in the good old days of 2008, nobody thought the city might need that money for something else.

Believe it or not, some downtown restaurant and bar owners are a little worried that the city would subsidize a competitor, especially an out-of-town competitor, especially in this economy.

“Look, David Taylor has done a lot for downtown. And as a developer, I don’t want to oppose any project,” says fellow developer Kenneth Fahn, who developed Mason’s and The Park complex at 15th and L streets, and the nearby Firestone building where a California Pizza Kitchen is now under construction. “But this proposal has pitted people who are invested in downtown, people who have skin in the game against each other.” Fahn, along with a good chunk of the downtown and Midtown hospitality industry, worries somebody is going to go out of business because of the deal.

Fahn argues that downtown and Midtown have reached a restaurant and nightclub-saturation point—at least for now. “They’re cannibalizing each other,” Fahn says.

It’s one thing, he says, for business to compete on a level playing field. It’s another for someone to enter an already crappy market with the competitive advantage of a fat city subsidy under their belt.

He and his cohorts say the city should instead be looking for the “game changer” downtown. “We need more housing, more activities. An art academy, a big bookstore, a fashion institute.” Something that will bring in people from the suburbs who aren’t already coming downtown.

Here’s the strangest, and in some ways most troubling, part of the deal. The redevelopment agency will get 50 percent of the cash flow from the mermaid bar, the pizza joint and the cougar den, er, over-30 nightclub. It’s a new thing the city has been trying out. They also partnered with the Citizen Hotel and The Cosmopolitan. Suddenly, the city is in the bar and nightclub business. That makes the city a competitor against established businesses and puts it in the position to profit when one of those businesses goes under.

“The idea is to grow the pie,” says Leslie Fritzsche, Sacramento’s downtown development manager. “If you travel around, if you look at the Gaslamp district in San Diego, or look at Denver or Austin, you see a lot of examples of how restaurants and nightclubs reinforce each other.”

So it comes down to a philosophical disagreement. Critical mass vs. oversaturation.

“The argument is that it’s going to bring people downtown that weren’t here already. I don’t believe that,” says Fahn. Unfortunately for some downtown merchants, there may be only one way to find out.