WALKING A PLASTIC banana slug on a leash, Wavy Gravy dodders onto the stage to lead the crowd in a group affirmation. "Yes! Yes! Yes!" he shouts.

But the net effect is not terribly uplifting. There are only seven of us in the audience, yelling into the cavernous warehouse of SomArts Cultural Center. It's not exactly a merry din of communal revelry.

Wearing a bright red nose, a bowler hat, and a rainbow-colored T-shirt, Wavy Gravy appears undeterred by our scant numbers. At his feet are a half dozen old TVs displaying some cryptic video eye-candy. From this arty pulpit, the aging clown launches into a meandering monologue heavy on the name-dropping: Abbie Hoffman, Kurt Vonnegut, Willie Nelson. Behind him, the next band gets ready for its set.

Will Wavy Gravy accidentally introduce them as Jefferson Airplane?

The evening is supposed to be a benefit to keep the NextArts Foundation alive. NextArts is an informal group – nonprofit status pending – that has thrown free concerts in Justin Herman Plaza since 1999, starring local bands like Swarm, the Sick, and Ten Ton Chicken. But not anymore. The concert series has been shut down in a protracted dispute with Boston Properties, the company that owns Embarcadero Center. At issue: what bands can play and for how long.

"It was just an excuse to have a hoot," says organizer Anthony Imperial, a burly guy in his late 30s who runs a small business staging performances. He started the free shows to promote local acts because a decade ago, when he was in a band, "there was no one doing it for me." The Sunday-afternoon fun would go on for as long as six hours and draw 500 to 1,000 people, everyone from skaters to tourists.

NextArts hired homeless people to work as stagehands. Members of the San Francisco Board of Supervisors even got behind the shows, waiving the permit fees. The cost to put on an afternoon of music came to just a few thousand bucks, since the main expense was hiring a truck to haul gear.

Eight of these concerts went off without incident. But trouble started in March of last year, when Embarcadero security objected that the concerts had been lasting too long, well past the allotted two hours on the permits. Subsequently, the San Francisco cops hired by Boston Properties to provide security on the plaza began to enforce the schedule down to the minute, roiling the musicians. The security situation is an odd one: since the '70s, when the Embarcadero Center was built, the city has held the owner of the building responsible for security in the plaza, even though it's a public space.

Things finally got really ugly when Imperial showed up to stage a weekday, lunchtime commercial gig with a high school choir from Montana. To teach him a lesson, the cops cut off the choral performance exactly at 1 p.m., in the middle of a song. "It was like the paratroopers came in. Everybody was horrified," Imperial says.

Stop right there, choirboy. Hold the hallelujah chorus! This is San Francisco.

The whole mess came to a head at a hearing before the San Francisco Recreation and Park Department, where the whole concert series came under scrutiny: Couldn't it be a tad mellower? This band called Bitches Brew must go.

And here's what really got the NextArts folks ticked off: when Boston Properties throws a big party in the plaza, such as the annual opening day of the ice-skating rink, its booming music is allowed to last as long as 10 hours.

"There's a floating scale of decency measured by one's wallet!" Imperial charges.

NextArts now hopes to move the concert series to Sharon Meadow in Golden Gate Park, but that requires renting a stage and a generator. And all the potential sponsors have grown skittish because of the controversy. At the moment, NextArts is broke.

That's why the group is throwing tonight's "appeal party" with Wavy Gravy. The event is modeled on the legendary benefits Bill Graham held at the Fillmore for the San Francisco Mime Troupe in the '60s, when one of its plays was deemed "too risqué" to be performed in the public parks by the Rec and Park Commission.

But for all the music fans who showed up to hear NextArts concerts at Justin Herman, few have taken up the "free the music" rallying cry. By the end of the night, the benefit at SomArts has drawn fewer than 20 paying patrons. Tonight's benefit loses money for the cause.

"It's a crying shame," Imperial says, sighing. "These bands deserve to be seen and heard. Maybe people don't care." But he says he's trying not to lose faith. "I got two guys here telling me that they're not going to let me be discouraged," he says. "But I need more hugs, though."