Due to a souring economy, many Westwood merchants are not only
suffering low sales, but are also threatened with dramatic rent
increases. In these situations, long-time “mom-and-pop”
operations can be forced out of business.
One such business is the Butterfly Bakery on Westwood Boulevard,
just south of Wilshire Boulevard. On Sept. 30, Liz Brooks, owner of
the bakery, was informed that her rent would be increased from
$1,837 to $3,000 per month, an increase of over 63 percent.
The Butterfly Bakery opened nearly 30 years ago, and for much of
that time it was a small operation, run by Liz Brooks, now 71, and
her late husband.
In its early years, the bakery was also partially owned by
Barbra Streisand’s sister. For years the bakery has had a
strong connection with Hollywood film stars and the local community
““ Brooks has catered to the likes of Dolly Parton in her
Beverly Hills home.
But more than anything else, the Butterfly Bakery is a low-key
place for family and friends, according to customers.
“I do let her know when I won’t be in,” said
Bruce Snyder, a local resident who has been coming into the bakery
every morning for 17 years. “And the customers get to know
other customers,” he added.
“It’s always been a family-like bakery,”
Brooks said.
Customers said the homey feeling of the bakery has a lot to do
with its owner.
“Liz has gotten to know the whole community,” said
Andrew Gross. “It’s a shame that someone can purchase
the building, (raise the rent), and with the stroke of a pen put
Liz out of business forever.”
The building that houses the bakery was purchased by the Phoenix
Investment Group in August. Brooks was informed on Sept. 30 that
effective Nov. 1 she would have to pay the increased rent on the
first of each month.
Almost immediately Andrew Gross, a certified mediator with the
Los Angeles Bar Association who volunteered his time to help Brooks
improve her business, notified Henry Danpour, a managing member of
the Phoenix Group, that they had a pre-existing lease which
contained a payment schedule of incremental increases.
According to the lease’s five-year payment schedule,
legally the Butterfly Bakery only needed to pay their landlord
$2,368.27. But Brooks had a “handshake” arrangement
with the previous owner that she wouldn’t be assessed any
increases ““ she was allowed to pay the original rent of
$1,837 a month for years.
Gross said when Danpour was made aware of the lease agreement,
Danpour said it was void.
Danpour said Brooks signed a legal document called an estoppel a
few months earlier, at the behest of the previous owner, who was
still trying to sell the building at the time. The estoppel would
legally allow the new owners to raise rents as high as they
wanted.
At this point, Gross contacted KCAL channel 9 news, which
featured the bakery and its plight during a noon news hour in
October. Then the Phoenix group, as featured on the news segment,
said they would consider reducing the bakery’s rent in
accordance with the the lease’s payment schedule ““
still $531.47 a month more than what Brooks was originally
paying.
“There was no increase from the new owners,” Danpour
said, after the rent was lowered from $3,000 to 2,368.27.
But the “Notice of Change of terms of Tenancy”
Danpour sent to Brooks on Sept. 30 ““ before Danpour knew of
the previous lease payment schedule ““ states the monthly rent
will be “the sum of $3,000 instead of $1,837.” This
indicates Danpour understood the Butterfly Bakery had been paying
$1,837 a month to the previous landlord, not the 2,368.27 for which
the lease’s incremental payment schedule called.
“Jumping ahead five years of rental increases is a hefty
burden for us; one we are not sure we can meet,” Gross
said.
The Butterfly Bakery is not the only business to have had their
rent raised recently. The slumping economy has actually caused real
estate market to soar. As investors pull money out of the unstable
stock market, they look for safer investments, namely real estate,
said Steve Sann, a Westwood business and real estate consultant.
This drives up real estate prices dramatically, he added.
“The problem for tenants is that when a building sells for
a high price, unless the owner is willing to hold onto the building
as a long term investment and recoup their purchasing price over a
long period of time, the new land lord is forced to jack up rents
in order to justify the high price they paid and to pay off their
mortgage,” Sann said.
Danpour said he won’t negotiate the price of Brooks’
rent.
“We have to answer to our investors and make the property
work,” he said.