San Jose official fights small business displacement

High rents and new development have caused a number of small businesses across San Jose to close shop or to cease operations entirely.

That’s why San Jose Councilmember Peter Ortiz is asking the city to draft a policy to protect small businesses from being displaced. There are about 60,000 small businesses in San Jose, roughly 7,000 of which occupy storefronts, according to city staff. A small business is defined as any business with fewer than 36 full-time employees.

“Our historical and cultural mom-and-pop-owned small businesses in the city of San Jose are experiencing increased vulnerability to displacement due to gentrification, our city’s continued growth, as well as incoming transportation infrastructure,” Ortiz told San José Spotlight. “If our landmark businesses continue to be displaced, our city will lose its history.”

A number of small businesses in San Jose fear displacement from proposed or upcoming projects. Antique shops along San Carlos Street will have to find another place to run their business if a proposed residential project is approved. Recently, business owners on East Santa Clara Street expressed anxiety over how the BART extension to Santa Clara could affect their operations. In addition, a cluster of businesses downtown will need to close or relocate to make way for BART tunnel facilities.

Ortiz is not sure when city staff will return with a draft on the small business displacement policy, but he identified at least seven businesses in his district that are at risk of shutting down, including Vito’s Pizza and Zuñiga’s Restaurant & Cakery.

“This is not a problem secluded to District 5,” Ortiz said. “Working and middle-class families, along with the small businesses that anchor our communities, need champions in their corner to push back against the forces of displacement.”

The main causes of business displacement are property development and increases in commercial rents, said Carlos Velazquez, spokesperson for the city’s economic development department. A shortage of commercial spaces can drive up rents in a particular area, or even across the entire city. In either case, rent increases can make operating a storefront in San Jose unaffordable for many business owners.

Antonio Morales, owner of Mariscos Playa Azul and Mexican Grill at 1170 E. Santa Clara St., said small businesses like his need more protection than those operated by large corporations. Morales has friends who had to close their shops due to high rents, as well as the ongoing effects of COVID-19 pandemic restrictions.

“The times right now are so bad for business,” Morales said. “Big companies, they can (carry on through bad times), but for small businesses, they need a little help from the city.”

The San Jose City Council approved a pilot study of small business displacement in 2019, resulting in a city report in 2021. The study, which analyzed small businesses in San Jose’s Alum Rock area, found that the biggest factors driving displacement risk are new housing developments and the BART extension from the Berryessa neighborhood through downtown. Roughly 40% of small businesses in the city closed or faced severely restricted operating conditions in 2020, according to the report.

Suren Sellamuttu, owner of Kumar’s Island Market on East Santa Clara Street, said a small business displacement policy would help maintain the diversity of the city’s population and stores.

“San Jose is made up of a lot of mom-and-pop specialty ethnic stores, and that’s what makes it special,” Sellamuttu told San Jose Spotlight. “Mom-and-pop stores heavily rely upon families and smaller communities (to) thrive. When someone’s displaced, it’s a huge loss.”

Contact Sonya Herrera at [email protected] or follow @SMHsoftware on Twitter.