How Landlords Soak the Bay’s Small Business

Two small business owners told Bay Area Current that they’ve faced difficulties over the last few years dealing with unpredictable charges from the owners of Dogtown Center, a 20-unit building in Oakland, on top of their base rent. Their story highlights a problem a tenant lawyer says is widespread. These charges, called “common area maintenance,” or CAM charges, fluctuate from year to year and have led to one business being evicted and another business owner being threatened with eviction at Dogtown Center.

According to Tchell DePaepe, sole owner and operator of the microgreens and edible flower business Wild Dog Farms, Dogtown Center’s owners unexpectedly billed her $5,000 during spring of last year. She was unable to pay the bill, and was ultimately evicted by the building’s landlords. 

“I was shocked,” DePaepe said about receiving the bill. “This totally came out of the blue.”

DePaepe had been paying about $2,700 per month to rent a small space at Dogtown Center, where she grew her greens indoors using LED lights. The sudden request from her landlord to pay $7,700 — her monthly base rent plus $5,000 in CAM charges — forced DePaepe out, but was likely legal. 

While DePaepe was able to secure another space for her business, unpredictable CAM charges are common, and likely cause displacement that leads to the vacancies in commercial buildings we see throughout Oakland and California.

How the law works

In order to understand how all this works, Bay Area Current spoke to Jassmin Poyaoan, a lawyer who represents commercial tenants for the Lawyer’s Committee for Civil Rights of the San Francisco Bay Area. She said landlords who rent to businesses tend to secure a lot of legal flexibility in passing expenses for building upkeep onto their commercial tenants.

“Commercial tenants don’t have an abundance of rights in comparison to residential tenants,” Poyaoan said. “So commercial leases become the battleground between tenants and landlords to determine who has what responsibilities. Most small businesses don’t have access to attorneys or the resources and the wherewithal to understand what they’re agreeing to, and will oftentimes sign onto a commercial lease that is detrimental to their interests.”

Poyaoan said commercial landlords in California tend to use "boilerplate language" they learn from the California Association of Realtors, a trade association that advocates for nearly 200,000 realtors statewide, when drawing up their leases. This language makes tenants responsible not only for the base rent, but also for CAM charges, which include paying for the building’s taxes, insurance, repairs, and maintenance. 

The charges are often spent to fix or improve shared areas, such as the roof, hallways, bathrooms, fences or the parking lot. Landlords don’t have to accurately predict what these charges will be, and because of that, Poyaoan said, commercial tenants like small businesses and nonprofits “can’t predict their operating costs” from year to year.

Unpredictable costs

DePaepe said that she wasn’t fully aware of how commercial rental agreements work when she signed her lease, as Dogtown Center was the first commercial space she’d rented. The three-year lease seemed relatively straightforward to her, she said, so she didn’t consult with a lawyer. Although CAM charges were listed in the lease, she didn’t realize these charges would be unpredictable.

One reason commercial tenants might not understand or be prepared for fluctuating CAM charges is that residential tenants’ leases work differently. Ethan Silverstein, who works as a residential tenant lawyer for California Center for Movement Legal Services, said residential renters in California, unlike commercial renters, are entitled to a baseline level of habitability, and landlords are required to pay for all services that maintain that. 

“The tenant is already paying for a habitable safe rental unit and associated common areas, and they can’t be double billed,” Silverstein said. “So things like having to pay for repairs, that’s illegal in the residential context.”

As for improvements, Silverstein said, there are legal avenues for landlords to pass those costs onto residential tenants in some cases, but it would have to involve raising the base rent; those charges can’t be assessed separately, as they can with commercial tenants.

Kevin Perkins is the senior vice president of Libitzky Property Companies, one of the entities that own Dogtown Center. Perkins said that each year he and the other owners, which include Orton Development and real estate developer Kenneth Schmier, make yearly estimates as to how much tenants will have to pay in CAM charges. Then they inform the tenants of the estimate and charge them a monthly fee based on one-twelfth of what it amounts to. At the end of the year, Perkins said, the owners go back and calculate what they actually paid for maintenance. If their estimate was too high, they bill the tenants. If their estimate was too low, they reimburse the tenants.

“We try our best to estimate what our CAM charges will be,” Perkins said. “But costs have been going up across the board and it’s been hard for us to estimate.”

‘Incompetent’ improvements and a tense town hall

Brandon Canchola, who owns Treasure Island Woodworks, a four-person cabinet making business, has rented space at Dogtown Center for over 15 years. He likes the space, and its location just a few blocks from Emeryville’s Home Depot is convenient. But he’s been frustrated with his landlords since 2019, when he signed a five-year lease that included CAM charges. He didn’t realize at the time that those charges could be used to pay for expensive projects that maintain or improve the value of the building, like sealing the roof and repaving the parking lot.

“This sucks,” Canchola told Bay Area Current. “It feels like they maintain or improve an asset on my dime, only to turn around and treat me like they’re doing me a favor by taking my money.”

“It feels like they maintain or improve an asset on my dime, only to turn around and treat me like they’re doing me a favor by taking my money.”

Perkins said that maintaining a building is expensive, and tenants like Canchola should expect to have to pay for a building that is well maintained, like Dogtown Center is.

“Their expectation is to have high services with low cost,” Perkins said. “That’s not a reasonable expectation.”

Dogtown Center’s owners have a lot of assets. Libitzky Property’s website states that the company owns and operates over 30 commercial properties in 10 states, over eight million square feet in total, including a million-square-foot building that houses an Amazon fulfillment center in Mississippi. Orton Development owns more than 25 million square feet of space in over 70 buildings in 10 states, according to its website. Libitzky Property, Orton Development, and Schmier appear to be closely linked, all doing business out of the same building in Emeryville. The address is listed on the ownership records for over 40 properties in the Bay Area, including both commercial and residential buildings, according to records made public by the San Francisco Chronicle in 2022.

Libitzky Property’s owners regularly donate to local political campaigns. Recently, Libitzky Property’s chairman Moses Libitzky made a donation of $650 to Barbara Lee’s successful 2025 mayoral run, and he also donated $650 to her challenger, Loren Taylor. Libitzky Property’s president, Nathan Petrowsky, and his wife Anne Petrowsky, donated $20,000 to a committee supporting Taylor’s run. The Libitzky Property company donated $15,000 to Taylor’s successful 2024 run for Democratic Central Committee representative. Kenneth Schmier and his wife Lisa Schmeir also have supported Taylor, as each donated $900 to his unsuccessful 2022 mayoral run.

Canchola shared records with Bay Area Current that show the owners have underestimated their CAM charge projections for his space every year since 2019. In 2022, they underestimated the charges by about $10,000, and in 2023, they underestimated by about $7,000. Having uncertainty as to how much he’ll owe for CAM charges makes it hard for him to plan, Canchola said, as it “creates a frustrating transition from one fiscal year to the next.”

Canchola’s CAM charges have been steadily rising since 2019. In 2019, he paid about $17,500 for them, by 2023, the charges more than doubled, reaching almost $39,000. Last year, his CAM charges fell to about $28,500, but that was because he renegotiated his lease and moved into a smaller space in the same building. That year, he paid about $53,500 in base rent, so CAM charges made up about 35% of the money he paid his landlords.

Canchola said he’s also been frustrated that he has no say in how CAM charges are allocated. He sees some of the money the owners spent on the property as pointless, such as installing an ineffectual security system. 

“You would think we would have some kind of vote in this since we’re paying, but we don’t,” Canchola said. “So incompetent things they do end up on my CAM charges.”

Perkins said that he and the other owners have town halls where tenants “can discuss every expense” that they use the CAM charges for. But Canchola said there has only been one town hall in all his time at Dogtown, and it only occurred after he and other tenants in the building complained about the CAM charges. The meeting was not “proactive on [ownership’s] end” but “reactive,” Canchola said. He didn’t feel it influenced the way ownership decided to spend CAM charges, and instead ownership “used it as an opportunity to lecture us.”

Pay or quit 

Canchola thinks that ownership has also been using CAM charges to charge him for electricity in a manner that violates his lease. The lease states that Canchola’s business must pay for electricity that is calculated through a sub-meter, which is a tool that measures how much electricity a unit in a building is using. According to Canchola, after he and other tenants questioned the accuracy of the sub-meters in 2022, ownership switched to charging him based on square footage he was renting in proportion to the total electricity used in the building.

Emails Canchola shared with Bay Area Current show him encouraging ownership to get the sub-meters inspected to determine if they are accurate, but don’t show ownership committing to doing so. Landlords must submit information from sub-meters “to the County of Weights and Measures for accuracy testing,” according to Pacific Gas and Electric Company. 

In an email, Bay Area Current asked Perkins if ownership had arranged for its sub-meters to be inspected for accuracy, and why it had switched the manner in which some tenants are charged tenants for electricity. In response, Perkins wrote “I have nothing further to add.”

Suspecting that Dogtown’s owners were violating his lease and facing what he saw as a dead end while trying to get ownership to accurately charge him, Canchola began withholding some CAM charge payments to ownership this year. In response, ownership sent him a three-day “pay or quit” notice in May. The notice demanded that he pay all back CAM charges or face eviction.

Canchola said that “it couldn’t be any clearer to me that they broke the terms of the lease,” but since the corporate landlords he’s dealing with have more time and money for a legal battle, they “have the leverage.” He paid the amount he had withheld, because he said his business couldn’t face eviction.

An “ugly game”

Poyaoan said that Canchola’s situation is typical, and “it’s ugly game with commercial tenants,” because even if they have a good case for challenging a landlord, commercial landlords tend to be very wealthy and have access to high quality lawyers, while small business owners can’t afford them.

Poyaoan’s nonprofit organization, Lawyer’s Committee for Civil Rights of the San Francisco Bay Area, is “flooded with requests for service,” she said, and limits its actions to defending commercial tenants who are in crisis and advocating for better legislation for commercial tenants. Suing a commercial landlord for unjust charges is outside of what the organization can do at the moment due to a lack of funding.

However, the organization has had some recent legislative success. Senate Bill 1103, which the Lawyer’s Committee advocated for with several other organizations, secured modest renter protections for some commercial tenants and went into effect at the start of this year. Businesses with five or less employees, restaurants with 10 or less employees, and non-profits with 20 or less employees, all qualify.

For these tenants, landlords have to give 60-days notice before removing them from a site due to their lease expiring if they’ve rented at the site for more than a year. If they’ve rented for less than a year, landlords have to give tenants 30-days notice. Tenants are also allowed to request that their lease be translated into Spanish, Chinese, Tagalog, Vietnamese or Korean, which is a protection Poyaoan said helps monolingual commercial renters. Additionally, S.B. 1103 requires that landlords show receipts for what they spend CAM charges on, and how they allocate those charges, if requested. Lastly, the law requires that maintenance, tax and insurance fees be accrued within the previous 18 months or be reasonably expected to be incurred within the next 12 months for landlords to collect them. 

Despite some commercial tenants now having protections, Poyaoan said that going the legal route is often not the best avenue for small businesses that have conflicts with their landlords, as the protections are limited. 

“Since commercial tenants don’t have a lot of legal rights,” Poyaoan said. “We often ask tenants to organize by using media, getting support from the community to write letters, or getting city council members to advocate for them. That’s worked in the past.”

A lot of times though, Poyaoan said, tenants just have to find a different space if they’re able to.

“We’ve helped clients find new spaces,” she said. “A lot of times the best advocacy is just to leave.”

Empty businesses

That’s what DePaepe did with her microgreens business. At first, she tried to fight her eviction in court, but eventually gave up, and instead moved into a new space she could afford that didn’t charge CAM fees. Although DePaepe no longer rents at Dogtown, she’s kept in touch with tenants there, and said many of them have left due to conflicts over CAM charges.

“There are so many vacant spaces in that building,” DePaepe said. “And I know my former space is vacant.”

Canchola said that at least five of the units in the building are empty, which makes for a 25% vacancy rate.

Perkins said Libitzky Property’s buildings across the nation have an under 10% vacancy rate, but wouldn’t say how empty Dogtown Center is. Perkins did say, however, that “subsequent to DePaepe and Canchola’s frustrations” ownership is shifting away from writing leases that include CAM charges and is switching to leases with fixed charges.

Poyaoan said she thinks if commercial landlords had less flexibility to charge tenants in an unpredictable manner, and small businesses had more tenant protections, we’d likely see less empty shops and commercial spaces in California.

“One argument landlords have is that if there’s more tenant protections for businesses, landlords will start renting out their spaces less,” Poyaoan said. “But I want to be more optimistic, I think there would be less empty space, and you’d see more balance of power where tenants would be able to stay in their spaces and landlords would not take commercial tenants for granted. If small businesses got to worry less about getting evicted and they’d be more set up to thrive.”