Jackhammers, crowbars and drills rage below the first floor of City Lights Bookstore and Publishers while customers browse the shelves and buy books -- seemingly undaunted. The bookstore's 14 staff members do not appear as relaxed as the customers -- though spirits are high in this world-famous literary landmark. Directly above the three floors of retail that comprise the bookstore is the domain of the publishing arm. The five editors of City Lights Publishers are even effusive when describing the noisy earthquake retrofitting below, which began on May 10 and will continue through August.

This is the physical manifestation of major changes at City Lights that began earlier this year, when, in February, City Lights Bookstore and Publishers bought the property it has occupied for 46 years at 261 Columbus Avenue, in the heart of San Francisco's North Beach. At the same time, it received IRS approval to launch the City Lights Foundation for the advancement of literacy.

For many in the West, City Lights is the essence of what San Francisco publishing and bookselling is all about -- and the antithesis of the New York publishing scene. The symbiotic relationship between the bookstore and the publishing house has made both thrive. The 1907 building, located on the corner of Columbus and Jack Kerouac's Alley, is most well-known for the role it played during the Beat poetry movement in the 1950s. The store is co-owned by Nancy L. Peters and San Francisco's first official poet laureate, Lawrence Ferlinghetti.

Ferlinghetti founded City Lights Bookstore in 1953 with Peter D. Martin. (Martin left a few years later and started the New Yorker Bookstore in New York City's Upper West Side, which stayed in operation for more than two decades.) Soon after opening the store, Ferlinghetti launched the Pocket Poets series, which immediately became the backbone of City Lights Publishing. His now classic book of poems Pictures of the Gone World inaugurated the series in 1955 and was soon followed by Allen Ginsberg's Howl and Other Poems.

When Ginsberg's Howl was published in 1956, Ferlinghetti was arrested, tried and eventually acquitted of federal obscenity charges in a trial that changed the standards for freedom of speech throughout the publishing world.

The purchase of the property brings a promise that the spirit of independence represented by City Lights for nearly half a century will continue well into the future. The creation of the foundation also means City Lights will be able to offer more cutting-edge literary programs that forge new opportunities for the counterculture writers often shunned by New York mainstream publishers.

Executive editor Nancy L. Peters joined the publishing staff and became co-owner of the store in 1980. The press issues 12 titles a year and has more than 200 backlist titles in print. Under Peters's guidance, the publishing arm has continued to promote innovative poetry, fiction and memoirs, as well as titles in politics and culture. In addition, Peters has built upon City Lights' history of publishing unknown poets from around the world.

Bringing new writers into print is a mainstay for the editorial board. Senior editor Bob Sharrard, who joined City Lights in 1976, emphasized the importance of continuing to expand the press's horizons. "Our future is not in our publication of poets from the mid-50s," he explained. "We take risks with new writers. That's what this is all about."

With the assistance of a business loan, Peters and Ferlinghetti purchased the building in order to secure its future and "compete with the chains," according to Peters. The purchase followed a similar business arrangement made by the Vesuvio Cafe across the alley. In spirit, the bar, store and publishing company are intricately connected: they feed off one another's business. In 1997, Vesuvio Cafe secured a U.S. small-business loan and bought the saloon's site, and City Lights followed their lead.

"But the bank owns 99%," the feisty 80-year Ferlinghetti sardonically told PW. "Still, we were always wondering if the previous owners would just someday kick us out. Fortunately, their son inherited the store, and he was one of our fans. If he had gone on the open market with it, we'd never have been able to afford it."

For nearly half a century, the lease was renegotiated every three years. As part of the purchase, the city has required the store to do the earthquake retrofitting that periodically shuts down computers, electricity -- and phone interviews.

"We're getting through it," said Paul Yamazaki, City Light's buyer. "Gross sales at the store are now over $2 million a year," he continued. "That's up from $460,000 in 1983." As evidence that the relationship between City Lights Bookstore and its publishing arm are thriving, Yamazaki told PW that more than 10% of the store's overall book sales are titles published by City Lights. (Ginsberg's Howl is approaching sales of 900,000 copies.) Every bookstore employee helps with providing the rich selection of contemporary writing in which City Lights -- both bookstore and publisher -- specializes.

The bookstore now stocks 35,000 titles and works off a popular backlist database of more than 60,000 titles. Visitors from around the world crowd into its 2100 square feet of retail space in order to see the site where Kerouac and other Beat generation writers read and sometimes wrote.

Funds for the new City Lights Foundation will come through private, tax-deductible donations. Fundraising will begin in the fall once the retrofitting is completed. "People are already calling in," said Ferlinghetti. Plans include expanding the press's publications, broadening its reading series, establishing residency grants for poets, giving student scholarships and creating a translation center.

"We intend to create a Cultural Courage Award as well -- one we can give every year or so for writers of exceptional courage, writers willing to make a stand in this world," Ferlinghetti added.

The store will also further develop its Web site (www.citylights.com), which features online conversations with authors, literary interviews and an updated bulletin board posting for Bay Area cultural events.

"They're more than booksellers and publishers," said Heather Peeler, executive director of Small Press Distribution, of the City Lights operation. "They're partners." City Lights Bookstore carries more than half of the 570 presses SPD distributes. "We rely on the knowledge that buyer Paul Yamazaki and his staff share with us, particularly in poetry," Peeler went on, echoing the sentiment of poetry lovers and book buyers around the country. With its own poetry reading room on the third floor, the store carries more than 5000 poetry titles.

Last year, the San Francisco Chronicle book editor, David Kipen, hired Ferlinghetti to write a monthly "Poetry As News" column for the paper. The articles (also prominently featured on City Lights' Web site) have created a devout readership. Kipen told PW, "City Lights is simply indispensable to Bay Area publishing and bookselling. They have done remarkable work over the past half century."