Red, Black and Blues

[August 1st, 2007]

While Portland welcomed Swedish home-furnishing giant IKEA to our liberal shores, a much smaller homegrown business suffered a big blow to its already slim chance for survival.

The Red & Black cafe—a worker-owned collective whose locally grown menu of mostly vegan food has been a backdrop to activist- and arts-community functions—now appears likelier than ever to leave its corner of Southeast Division Street and 22nd Avenue by Sept. 1.

That's because North Rim Properties, the site's new owner, is enforcing an unusual clause in the pre-existing lease, which would allow it to triple the cafe's rent in September. And that, in turn, means the cafe will shut down instead of paying the higher rent, laying off its staff of 10 people and having to raise money faster than expected for a move to a still-to-be-determined location.

The cafe had been preparing to move from its home of seven years since February, when North Rim bought the entire street block for $1.8 million. At the time, North Rim informed the eight tenants it would honor the previous rental arrangements until November, when it would renovate and convert the properties "according to environmentally safe standards," says Jeffrey Weitz, principal partner of North Rim, a local affiliate of Windermere until last January. (Weitz told WW that there will not be specific plans for the property until after the full renovation.)

The cafe planned accordingly while seeking funds for a move in November—plans that included the possibility of buying a new space.

Jill Campoli, a Red & Black staff member, says it was already "a daunting challenge" to raise the money to let them close the shop as well as either renting or buying a new space.

But things got worse for the cafe June 29, when North Rim wrote Red & Black that one of the other tenants, Radius Studios, would be vacating in mid-September, six weeks ahead of the November deadline. At issue is a rental agreement that even North Rim officials say has an odd clause between the original property owner and the block's eight commercial tenants.

The 7-year-old lease requires each of the businesses to pay a share of the entire $6,000 monthly rent. Red & Black's monthly share is $1,776. But, according to one clause in the lease, if one tenant moves out, the other tenants collectively must pay the balance of the rent.

"I've never seen a commercial lease like this before—it's highly unusual," says Weitz. "But it was in place before we purchased the property, and if the tenants don't comply they will be in default of their lease agreement."

The June 29 letter from North Rim informed the remaining seven tenants their rent would subsequently be raised in September. Then, chances of survival for the Red & Black took an even worse turn July 17, when all the other tenants says they too had given notice to vacate their properties earlier than planned, also in September.

This means that the Red & Black would be the only tenant remaining if it stayed open, thus on the hook to pay the entire "collective" rent of $6,000—more than three times its current monthly rent—until November.

The cafe's only choices are to find a new location before the September rent increase or to vacate and shut down operations indefinitely while fundraising for a new location. Staying through November at the increased rent is not possible.

"Our record, both as a business and as a benefit to local citizens, is something we are proud of," Campoli says. "It is wrong for a corporate developer to do this to us.... They are insensitive."

Weitz defended North Rim's actions. "The problems about the additional rent," he says, "is between them [Red & Black] and their constituent leaseholders. The [entire] rent must be paid, and it doesn't matter how the cookie is cut."

As for the prospect that North Rim and the cafe could negotiate something for after September, so that North Rim wouldn't be out the entire $6,000 and the cafe could pay something affordable, both sides say they haven't directly discussed that option and accuse the other of avoiding the issue.

North Rim insists it is prepared to help the Red & Black—and the community—by offering the renovated building to Red & Black first, at market rate, after cleaning up what Weitz says are health hazards, such as asbestos. Nevertheless, the image of a corporation killing a local grassroots icon resonates for many patrons ticked off by the impasse.

"It reminds me of coffee shops my parents told me about," says Aaron Adams, a 27-year-old freelance chef who donated his services to a recent fundraising dinner at the cafe. "Where else can you get vegan beer and watch movies? People are pissed off. I doubt that some super-duper new gelato place, or whatever they put here, will ever get the local patrons that came to the Red & Black."