Tales From the People’s Republic of San Francisco: This is Why One Falafel Shop Still Hasn’t Opened

Via Economic Policy Journal

Recently I posted, the comment:

I am thinking [the reason so many empty storefronts exist in NYC and SF] may have something to do with the cost to lease in intense interventionist cities, which both NYC and SF are.

In SF, at least, it can take six months or more to get all the permits and approvals to do buildouts inside a location. This is a period for which the landlord generally must absorb the rent. So the landlord may hold out for a long-term lease, with a triple A tenant who will pay top dollar to avoid having to go through another permit/approval rent absorption process that might develop with a lower quality tenant.

A Dana Beuschel essay seems to support my thinking on this:

The Great Falafel Debacle
By Dana Beuschel

San Francisco has a major problem with retail vacancy, a result of a regulatory thicket of oddly specific zoning requirements, terrible Prop 13-induced incentives for commercial landlords, and difficulty finding staff who can afford the extreme rent. Vacancies harm neighborhoods through a deader street life and fewer public spaces for neighbors to come together, and can have a knock-on effect on other businesses as poorly maintained street fronts drive away potential customers.

You might think that in light of this, the city would be rolling out the red carpet when a business wants to open in a vacant storefront. Unfortunately the carpet is made out of red tape. The planning code is so incoherent that Supervisor Vallie Brown had to introduce an ordinance just so that businesses can know which sets of rules apply to them. Previously it was a completely arbitrary and capricious decision by Planning Department staff, subject to change at any time. The process of opening a restaurant is so convoluted that the SF Controller’s office created the following helpful chart to illuminate the way.

Enter Flying Falafel. Flying Falafel wanted to open a second location in a vacant retail storefront on Castro Street. This requires a permit for conversion to limited restaurant. In this particular space, limited restaurants are principally permitted, which means that restaurants merely need a straightforward change of use permit, as opposed to the expensive, months-long public humiliation ritual known as a conditional use permit. Normally this conversion is a (relatively) easy over-the-counter permit that gets processed in about a month. But not this time, thanks to the unique, bizarre system of frivolous appeals known as Discretionary Review.

In sane cities, permits are based on rules. If you follow the rules, you get your permits. This is how it works in literally every other major city in the US. But in San Francisco, nothing is guaranteed. Discretionary Review allows anybody to appeal any permit for any reason (or no reason) and force a public hearing in front of the famously arbitrary Planning Commission. It’s the minotaur in San Francisco’s permit labyrinth. Shockingly, it is a cornucopia of selfishness and pettiness.

Read the rest here.

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