Aug. 19 (Bloomberg) -- CBGB, the birthplace of punk rock on New York's Lower East Side, outlived Sid Vicious and all but one of the Ramones. It may not survive the city's real estate boom.

The club faces eviction Aug. 31 when its 12-year lease expires unless it can settle a dispute with the landlord, a homeless agency that runs a shelter upstairs. Owner Hilly Kristal, 74, has drawn support from Tommy Ramone, Blondie's Debbie Harry, the Talking Heads' David Byrne and E Street Band guitarist Steven van Zandt, who is trying to mediate.

When Kristal opened the club in 1973, the neighborhood was synonymous with poverty, crime and alcohol abuse. Now, new condo developments are going up and a Whole Foods market is under construction. The Bowery Residents' Committee has listed the premises for $75 a square foot, or $55,000 a month for the whole place, almost triple the current rent of $19,500.

``Every neighborhood has its day, and this is the day of the Lower East Side,'' says Faith Hope Consolo, chairwoman of the retail leasing and sales division at New York-based Prudential Douglas Elliman Real Estate. ``If I were `repping' that building, I'd ask $100 a square foot. It's an explosive neighborhood.''

With one-bedroom condos going for $1.4 million or more in the area, Bowery Residents' Committee director Muzzy Rosenblatt says his job is to raise every cent he can to preserve low-cost housing options.

``We want to make sure the revival of the Bowery doesn't force out the people who stayed here through the hard times,'' says Rosenblatt, 39, whose shelter assists more than 8,000 people a year. ``Because that's what happens with gentrification. People get forced out.''

Ratty Interior

That's a sentiment Kristal and his supporters say should also apply to CBGB, which has served as a venue for young bands playing original music for 32 years. The bar, which typically features three bands a night for a $10 cover charge, is famous for its ratty interior, with layer upon layer of posters and graffiti, and the acoustics.

``The sound system is the best in the city,'' says Arturo Vega, 57, the Ramones' artistic director. ``CBGB made punk rock possible, and punk revived the Bowery.''

Vega moved to the Bowery in 1972 and still lives there, around the corner from CBGB on what is now called Joey Ramone Way, after the Ramones' singer who died of cancer in 2001.

``The main thing I appreciated instantly here was the freedom,'' Vega says. ``I thought it would always be an outlaw territory, too dangerous for the people uptown.''

`A Landmark'

Civil Court Judge Joan M. Kenney sided with the club earlier this month in a ruling on Rosenblatt's claim that CBGB owed about $100,000 in back rent, interest and fees. She says the landlord had failed to prove it had billed CBGB for the rent increase.

``This was traditionally a section of town plagued, for many generations, by destitution, degradation and substance abuse,'' Kenney wrote in her decision. ``CBGB is credited with being the anchor of what has become the renaissance of the Bowery. CBGB has proven itself worthy of being recognized as a landmark -- a rare achievement for any commercial tenant in the ever diverse and competitive real estate market of New York City.''

The club's plight has brought a series of offers to help from the stars who got their start there, the fans who came to see their favorite bands, and even the bands who never made it big but nonetheless had their moment of fame on CBGB's stage.

``People come here all the time and say, `This place is the only reason I came to New York,''' says Phebe Hunnicutt, 24, a waitress who has worked at the club for a year after moving to New York from Northern California. ``My mother was so excited when I got the job here. She's a huge Patti Smith fan. I grew up wanting to be Debbie Harry.''

`Hardcore Years'

By 1981, the year that Hunnicutt was born, CBGB was into its second phase, referred to by fans as the ``hardcore years,'' when bands like Black Flag played there. In the first phase, in the '70s, it had launched the careers of Patti Smith, Blondie, Television, the Ramones and the Talking Heads; it hosted the Clash, the Police and Elvis Costello.

Van Zandt, who offered to serve as mediator, sat down with both sides and put together a proposal that includes a 15 percent rent increase, regular fundraisers at the club for the Bowery Residents' Committee and a third-party guarantor to ensure the rent is paid and building code and other rules are met.

The Bowery Residents' Committee takes in about $32 million a year, and employs about 500, including 60 outreach workers who keep track of homeless people around the city and try to persuade them to get medical care, food and housing. The agency, which has a 45-year lease to the building for $16,500 a month, is still owed $100,000 in back rent, says Rosenblatt.

`Moral Obligation'

``The judge ruled they are not legally obligated to pay, but there's a moral obligation,'' says Rosenblatt. ``CBGB's takes in millions of dollars each year and to this day has not fully paid their rent. Knowing where the money goes, who it helps, I think it's shameful that they would want to withhold those funds. I don't think it is appropriate or necessary for a not-for-profit to subsidize a very successful nightclub.''

Kristal says the club grossed about $2 million last year on sales of its t-shirts, with the CBGB & OMFUG design, which stands for Country, Blue Grass and Blues & Other Music for Uplifting Gormandizers. Its profit on the shirts was $149,000. The bands get 80 percent to 90 percent of the door, he says, which leaves bar sales to cover the rent, salaries of about 60 employees, and general upkeep.

Closing the club would mean the loss of one of the last places young musicians can play original music, says Van Zandt, who plays in Bruce Springsteen's band, performs on the HBO series ``The Sopranos'' and has a syndicated radio show.

``I'm all for progress and evolution, but can't we save a few cool things?'' he asks. ``Once we turn New York City into a suburban mall, it's going to lose its character, its identity and a lot of its tourism.''

To contact the reporter on this story: Rob Urban in New York at robprag@bloomberg.net.

Last Updated: August 19, 2005 00:04 EDT