Santa Rosa downtown businesses grapple with challenges to stay afloat

Andrea and Jeff Ballus know how to turn an idea into a successful business. After they launched their first Sift gourmet cupcake shop in Cotati in 2008, the couple moved quickly to open the popular dessert bar in Napa, Santa Rosa, San Francisco and, most recently, in Petaluma.

After tasting that success, when the couple decided to launch a wine and oyster bar called the Jade Room Wine Bar & Oysterette on Fourth Street in Santa Rosa, a lot of people got behind it with financing and encouragement.

But a few months after they signed a commercial lease in 2017, a devastating wildfire burned sections of Santa Rosa and surrounding areas, destroying thousands of homes and turning the local economy upside down.

A planned six-week wine bar construction project turned into a 12-month slog, with the couple paying rent before finally opening in January 2019. The Jade Room, which cost them $500,000, was out of business by summer.

“We started out on fumes,” Andrea Ballus said. “That’s why we ran out of capital.”

Ballus said she remembers hearing a lot of local customers say something that portended the wine bar’s eventual closure: “I haven’t been to downtown Santa Rosa in years.”

In the past two years, a number of downtown restaurants and other businesses have closed despite the city’s $10.5 million Old Courthouse Square reunification, which was supposed to lead to a more vibrant downtown. Besides the Jade Room, the food and drink casualties have included Stout Brothers, Mercato, Tex Wasabi’s, La Vera Pizza and 2 Tread Brewing Co.

Gerard Nebesky was on the brink of shutting his Gerard’s Paella y Tapas restaurant on Fourth and D streets, but said last week he’s planning to do everything he can to overcome obstacles he and other downtown business owners cited: homeless people loitering, frustrating parking policies and a lack of foot traffic to lure new customers.

Nebesky said city officials and local developers are moving in the right direction to draw more people downtown, such as building mid-rise apartments. But he and other entrepreneurs say it will be years before those efforts pay off and something needs to be done now, before more small businesses close.

“There’s good stuff on the horizon. We just may not have the staying power,” Nebesky said. “There’s great shops downtown. We just need to get more.”

Downtown Santa Rosa operators wonder why smaller cities and towns like Healdsburg, Sonoma and Petaluma can enjoy far more vibrant downtowns than the county seat.

“For us to be upstaged by every other city and town in Sonoma County is wrong,” Nebesky said. “We should be on par with everybody else.”

The answer to that conundrum isn’t simple. Almost everyone interviewed cited similar challenges, but some decried the urban landscape which may be even harder to reconcile.

“We have too many banks downtown,” Nebesky said.

These include Exchange Bank, which had extended a business loan to the Balluses for the Jade Room, U.S. Bank and Bank of America around the square. Other banks close to the square are Wells Fargo and Luther Burbank Savings.

Lois Fisher, a local urban designer with Fisher Town Design, said Santa Rosa’s downtown was a victim of urban redevelopment in the 1960s and 1970s, particularly after the 1969 earthquake that destroyed a number of downtown buildings.

Smaller communities like Petaluma and Healdsburg were largely spared large-scale “modernist” redevelopments that brought the large bank buildings to Santa Rosa’s square.

Raissa de la Rosa, Santa Rosa’s director of economic development, said many downtown businesses have been able to succeed despite errors of previous urban planners and developers. And she applauded their perseverance.

“They should be hopeful,” she said. “We’re finding our way out of the legacy that was built 50 years ago. After the earthquake in ’69, the desire by the (City Council) was to go after banks and nonactive uses.”

Cadance Allinson, executive director of the Santa Rosa Downtown District, said to a large extent downtown suffers from a “perception” problem. She said the business owners throughout the district all are investing in helping to clean up the area and make it safer for visitors.

This year the district hired Streetplus to provide safety, security and sanitation services. These services include graffiti abatement and walking people to their cars at night, Allinson said.

The work since April cost the district $250,000 and next year the budget, funded by an assessment paid by businesses, is likely to be even higher.

“The Streetplus team has made a big difference,” she said. ”There’s a perception that downtown is dirty, which confuses me. There’s a team of five people who are out there cleaning six days a week.”

De la Rosa said the city is doing everything it can to work with downtown businesses to help them thrive, while officials move forward with long-term goals for the city’s core. The plan calls for taller buildings with residents living above ground floor businesses and more nightlife centered around Old Courthouse Square.

Some downtown business owners are banking on that for a resurgence.

Matthew Vella, a local entrepreneur who with a couple of partners bought Third Street Aleworks in April, is counting on development of apartment buildings that will hopefully bring more foot traffic downtown.

But he said Third Street Aleworks has an established clientele that can help carry him through the years until downtown is hopefully flush with hundreds of new hungry and thirsty residents. New businesses trying to build a new customer base do not have that luxury, however.

Sonu Chandi, founder and president of Chandi Hospitality Group, recently closed some of his eateries in the city, including Mercato and Stout Brothers. He said downtown Santa Rosa’s lack of foot traffic cannot be resolved by any one city official or business owner.

Because Santa Rosa is a much bigger city than Healdsburg, Sonoma and Petaluma, he said, it has many more “pockets” of commercial activity that thrive at the expense of downtown. He said there’s also a negative perception among local residents that downtown is overrun by homeless people and unfriendly parking policies.

Last week, in response to complaints from downtown businesses and property owners, Santa Rosa parking officials scaled back by two hours downtown parking meters, from 8 a.m. to 6 p.m. Monday through Saturday.

“What we need is for people to come downtown and they will end up at all these businesses,” Chandi said.

Vikram Badhan, owner of Wilibees Wine & Spirits on Third and D streets, agreed. He said, ultimately, the entire city will have to take ownership of whatever is ailing its downtown.

“This is their downtown,” he said of city residents. “It doesn’t belong to the city or the retailers. We are the custodians of downtown. If it works for us we’ll stay, if it doesn’t we’ll run out our leases and leave.”

You can reach Staff Writer Martin Espinoza at 707-521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @pressreno.