Possibly 1,000 businesses along the eastern edge of The City are operating illegally after their landlords failed to complete an amnesty program in areas where The City has adopted restrictions to protect light industry such as print shops, film production, auto repair and furniture wholesalers.
Back during the turn-of-the-century dot-com boom, high-rolling tech firms began pricing light industry out of The City, and blue-collar jobs began to vanish. Community advocates joined forces to battle such commercial gentrification.
In an effort to protect companies in the so-called PDR industries — production, distribution and repair — city officials began their decadelong effort crafting what is known as the Eastern Neighborhood Plan. That document used land-use controls in an effort to strike a balance among conflicting demands from the housing, industry, office and technology industries.
The plan designated about 7,000 parcels in the Mission, South of Market and Potrero Hill neighborhoods where buildings could only house such PDR uses. As part of those restrictions, the December 2008 plan created a three-year amnesty program, which expired Jan. 19, in which buildings that were made illegal by the new controls — mostly ones that had converted into office space — could become legal by paying an impact fee of about $10.50 per square foot.
But only 30 businesses applied.
Representatives of impacted businesses are now calling for an extension and also a reduction in the fees. And there is fear that if the program is not extended or the fees lowered, potentially hundreds of 5- to 10-year-old businesses will have to leave.
“Any small business without proper permits is subject to code enforcement and termination of use,” according to a Planning Department report.
Land-use attorney Brett Gladstone is leading a campaign to extend the program and lower or eliminate the conversion fees. The fees were set before the economic recession.
“Some progressive activists have long wanted office users to leave the industrial districts, to move downtown, to move to Oakland, South City, wherever it is, but leave this space for heavy industry, even though there is no need right now,” Gladstone told the Small Business Commission on Dec. 12. “The progressive activists have long been looking forward to Jan. 19 because that’s the time they can start making complaints to the Planning Department.”
Victor Vitlin, a co-owner of Lion Enterprises, a 150,000-square-foot building at 2525 16th St. in the Mission, said he has to pay $1.25 million to fix their legal status. His building is home to six businesses, including a catering company.
“Since the building is not full and the rents average about 75 cents per square foot, I cannot get that money from my tenants, who are struggling themselves,” he said.
Vitlin also objected to the fees and asked for the process to be re-examined. “To us, what is good for small business is good for The City,” he said.
The amnesty program could be extended for six months under legislation introduced by Supervisor Malia Cohen, which is going before the Board of Supervisors Land Use and Economic Development Committee today.
Cohen said while she is OK with an extension of the amnesty program, she is not willing to reopen other aspects of the politically charged Eastern Neighborhood Plan.
Areas impacted: Mission, central waterfront, east South of Market and Showplace Square/Potrero Hill neighborhoods
What’s PDR? Production, distribution and repair — including printers, design, repair, food preparation, flower arrangers, house builders and furniture wholesaling. Supporters say PDR businesses provide stable and well-paying jobs for the 50 percent of San Francisco residents who do not have college degrees
Planning process began in 2001
Plan went into effect January 2009
Source: Planning Department
San Francisco’s booming tech industry is gobbling up office space. On March 1, the Mayor’s Office announced that more than 1 million square feet has been leased in the first two months of the year.
For people such as land-use attorney Brett Gladstone, the time is now to relax PDR zoning controls — which are designed to preserve the production, distribution and repair industries — in areas near high-tech pockets. He suggested The City lift controls in Showplace Square for a “safety valve to make sure we don’t find ourselves in the next year or two running out of places for high-tech businesses to go. We need to have one place to loosen up in the short term.”
Gladstone is not alone in asking the question. The Small Business Commission indicated a willingness to re-examine the controls during its Dec. 12 hearing when it recommend a one-year amnesty extension and also a six-month study on the effectiveness of the controls. Among the proposed topics of that inquiry would be an analysis of vacancy rates and an assessment of the demand from PDR businesses.
“What is the demand for PDR?” asked Luke O’Brien, vice president of the Small Business Commission. “It’s important to be not trying to create something that’s just not wanted for the sake of it.”
City Planning Director John Rahaim said there is a concern about office space availability for the growing tech industry, but “at this point” there is no need to relax PDR controls since other “options” exist.
The City has identified areas for tech growth around Pier 70 and the Central Corridor, the area around Fourth Street between Townsend and Market streets.
Speaking broadly, Gabriel Metcalf, executive director of the San Francisco Planning and Urban Research Association, said The City should generally rethink its narrow zoning controls for building use. Metcalf said the trend in modern planning “is to control building appearance in more sophisticated ways while de-controlling building use.”
“Uses change over time,” he said, “and the essence of good urban building is it will outlast the uses originally imagined.”
— Joshua Sabatini
More than 1 million square feet of office space have been leased by technology firms in just the first two months of 2012:
Salesforce.com: 400,000 sq. ft. at 50 Fremont St.
Macys.com: 242,753 sq. ft. at 680 Folsom St.
Riverbed Technology: 167,788 sq. ft. at 680 Folsom St.
Kabam: 64,000 sq. ft. at 795 Folsom St.
StumbleUpon: 63,000 sq. ft. at 310 Brannan St.
LinkedIn: 57,000 sq. ft. at One Montgomery St.
6Waves: 26,405 sq. ft. at 550 Kearny St.
Funzio: 20,000 sq. ft. at 55 Second St.
Source: Mayor’s Office