When San Francisco instituted rules several years ago to protect light industry, officials hoped to keep space affordable for companies that might otherwise flee to neighboring cities with lower rents, such as Oakland or South San Francisco.
Businesses that did not meet the criteria for light industry — referred to by The City as production, distribution and repair, or PDR — were offered a three-year amnesty during which they could pay a fee and keep their locations.
Now that the amnesty has ended, opponents of the policy say hundreds of businesses could be operating illegally in the eastern section of The City, and many could face eviction since their landlords did not complete the compliance process as needed.
The problem started back during the dot-com boom of the late 1990s, when tech companies were willing to pay more in rent per square foot than companies that produced or manufactured goods. In a move to protect these PDR companies, the Eastern Neighborhoods Plan was drafted. It contained land-use rules that sought to strike a balance between housing, office space and technology companies.
The plan set aside about 7,000 parcels in the South of Market, Mission and Potrero Hill neighborhoods where only PDR companies were supposed to be located. If other businesses wanted to use those locations, an impact fee of about $10.50 per square foot was supposed to be paid, and landowners had three years to come into compliance.
Thirty businesses did pay the proper fees in that three-year period, during which the economic climate in San Francisco again changed. The economic downturn hit just as the fee went into place. Tech also has started to blossom again in San Francisco, with notable companies growing at exponential rates and smaller ones sprouting up around The City.
Businesses and landowners should not be let off the hook for ignoring the new zoning rules, but city officials need to take a fresh look at the problem through the lens of the current economic situation. One property owner told The San Francisco Examiner that there was no way the rent on his space would cover the fee, given that his tenants face their own financial challenges. Some landlords would no doubt find it easier to terminate leases for noncompliant companies than pay the fee. But The City should not set in motion the mass ouster of established businesses.
The first step needs to be an extension of the amnesty so businesses and landlords can assess the situation and make plans. Second, The City should reach out to the businesses to see if there is an alternative to them paying the fee. For instance, there is a push to have tech companies open in the mid-Market Street stretch, and many of the noncompliant businesses may fit the mold of what officials are looking for to revitalize that neighborhood.
San Francisco is just recovering from the economic downturn, and all sectors need all the help they can receive. It is not unwise for The City to want to save its production, distribution and repair companies, but other industries that require office space also need locations that fit their needs and price points. There is a middle ground, and San Francisco officials need to grant everyone involved the needed time to figure it out.