WeHo’s First Non-Profit Business Incubator, Opened in December, Will Close in August

Tenants of For the Social Good (FTSG), a non-profit incubator for socially conscious businesses that officially opened its doors at WeHo’s French Market in December, will be evicted from the space by the end of August.

Tai Sunnanon, founder of For the Social Good, has told its tenants that the building’s owner, Faring Capital, plans to speed up its plans to demolish the building, originally scheduled for a year and a half from now.  Faring, however, said it has made no change in its schedule for redeveloping the site. Faring plans to build a four-story building with 50,000 square feet of office space, 8,600 square feet of restaurant space, 4,400 square feet devoted to shops and a 3,200 square foot space for a bar or nightclub on the lot now occupied by French Market at 7985 Santa Monica Blvd. and its parking lot and the nightclub space to the east.

Sunnanon, a consultant, said he organized For the Social Good to “provide residents of the Greater West Hollywood area with affordable work-space, resources and collaboration to launch and grow their business with support from the government, public and private sector.” He chose the French Market as an initial location, knowing that he had roughly 18 months to find a permanent one.

Tenants included the Lavender Effect, an organization formed to chronicle LGBT history; the Dance Resource Center; the Southeast European Film Festival; the Los Angeles Volleyball Association, and Mercy for Animals. Other for-profit tenants include GTM, a visa and passport agency; EKLaw, a legal firm; Glam Production Consulting, and West Hollywood Media Company, publisher of WEHOville and West Hollywood Magazine.

Rents vary according to tenant and size of space but are dramatically lower than the market rate, estimated at $3.50 per square foot. Most tenants have short-term leases that they can renew on a month-to-month basis.

Tenants generally expressed happiness with the space and the camaraderie of their fellow tenants. But that happiness turned to anger several weeks ago when Sunnanon told them that he was turning management of the space over to Faring Capital.

For the Social Good, Sunnanon said, wasn’t equipped to manage a building and would focus on providing other services such as workshops, education programs and training events, for which it has been billing the tenants $150 a month. To date none of those have taken place, however FTSG does provide Internet access, access to conference rooms and a copier.

Sunnanon introduced the tenants to representatives of Faring, who said it intended to raise the low rents to a market level to cover its costs, which Sunnanon said were more than $14,000 a month for taxes, maintenance, utilities and security. Sunnanon originally had hoped to get large grants from the City of West Hollywood and other donors to cover part of the operating costs. Faring also hoped to rent out shops on the first floor of French Market.

Suddenly faced with paying market rates, the tenants, none of whom had been in place for more than four months, rebelled. In response, Jason Illoulian, CEO of Faring, has agreed to leave the current tenants in place at their current rents until August. “We are going to continue the subsidized rents that FTSG had already been charging and cover the operating losses ourselves,” Alex Smith, an employee of Faring, said in an email message

“The reality is that most of us can’t afford to work here anymore,” said the executive director of one of the non-profits, who agreed to be quoted only if not identified by name. “… It’s been a huge, huge disappointment, and has put us, an organization, at great risk. So, bless Jason’s heart, he’s giving us six months. And I do think that his decision to extend our lease six months was a fair move. The whole situation is quite sad.”

“We’re still in negotiation with Tai Sunnanon about some of the benefits of being in his organization that aren’t really clear,” the executive director said. “If the whole point of For the Social Good is to make affordable rent for non-profits and small businesses to co-exist and cross-pollinate and all that, which is a vision that all of us bought into … if that is not there, if Tai Sunnanon takes away that part of the offering, which is the main part, then what is left is the big question.”

Sunnanon said he had been surprised at the extent of the building’s maintenance and repair needs. “For instance, the heating system didn’t work,” he said. “We had a lot of incidents with homeless patrons defecating in the back that I was cleaning up on a weekly basis. We had passersby leaving trash. We had glass.

“We had a lot of building issues, with pipes and toilets being clogged. What we didn’t anticipate, for instance, was twice, when it was raining, we had cracks in the ceiling and that impacted our workplace environment. A lot of structural issues. What no one anticipated were the building costs, which were outrageous.”

Sunnanon said he is stepping up his search for a permanent location for FTSG. “My goal all along has been to find an office space within the city within ten months to a year. We’re looking at different places right now, and I attend a lot of commission meetings and public hearings, I realize the challenge it is for non-profits to find affordable space within the city.

“There are several spaces that I’m interested in. We’re in different stages of conversations and meetings with those locations. And what’s happening with the French Market is causing us to have to expedite those conversations. If we can secure a space within this calendar year, that would be phenomenal.”