NC Districts: A Look Back, And Ahead

In San Francisco, neighborhood commercial zoning (“NC Districts”) have been around since 1987. These zoning controls attempted to clarify various desirable and undesirable uses within the naturally occurring neighborhood commercial strips throughout the City. These zoning districts run along some of the busiest streets in the City (Geary Boulevard and Van Ness Avenue, for example), as well as some of the more “neighborhoody” streets like Union Street, 25th Street, and Chestnut Street. There are also a vast number of very small NC Districts that cover a single intersection or one block. After 20 years of these zoning controls being in place, the Planning Department has recently released a paper, “NC@20”, that takes a look back and what has worked, and a look forward to changes that need to be made to clarify and modernize the rules.

The paper is a well done and insightful review of both the history and evolution of NC zoning controls, and includes a variety of interesting facts and figures. For example, over the 20-year period from 1987 to 2007, the report indicates that applications in NC Districts seeking to convert residential uses to non-residential uses had just a 52% Planning Commission approval rate – the lowest of all conditional use application types. Applications for commercial outdoor activity areas and extended hours of operation were also not well received by the Planning Commission, being approved at rates of 58% and 63%, respectively.

It is also interesting to note that almost half of the conditional use applications filed City-wide from the period 1987 to 2007 (a total of 3,010 applications) were filed in NC Districts. This is an interesting statistic in light of the fact that only 6% of the City is zoned NC.

The report examines a variety of trends in different NC Districts. There are interesting nuggets throughout the report, from the obvious (the NC-3 District had the most conditional use applications of any other commercial district with 349 filings), to some more surprising results (the 24th Street – Mission NCD had the highest percentage of CU approvals of any NCD, with 37 total CUs applied for, all but three of which were approved).

The report also comes to some sobering conclusions that would be of no surprise to shop owners and property owners in NC Districts. The report recommends that changes should be made “to the overall permitting process so that it is more intelligible, predictable and rational.” The staff goes on to state that current NC District controls “while making the entitlement process extremely comprehensive, have also led to redundancy and excessive process without clear need. Specifically, the entitlement process is complex, time-consuming, expensive and ultimately uncertain. The cumbersome nature of the process inherently favors large businesses which have financial backing such that they can endure a lengthy and uncertain permitting process.” As a rough barometer of the level of permit complexity, in 1987, at the onset of the NC controls, 97% of all permits in NC Districts were processed over-the-counter. In 2007 that figure had declined to just 30%. “Very few independently operated small businesses can afford to pay rent for substantial periods of time while waiting for lengthy neighborhood notices, public hearings, and approvals keyed to multiple agencies before opening their doors for business. As a result of this process and associated uncertainties, the City has actually discouraged small business from locating in our NC districts. In doing so, we have come to the aid of chain stores by precluding local competition.” (NC @ 20, at page 52.)

The Department also soberly opines on the obvious abuse of the Section 312 process (which requires notices for use changes in NC Districts) being used by competitors to keep out competition. The staff acknowledges that these types of DRs and the associated delay and threat of multiple appeals is often enough to force applicants to modify their plans or abandon their project entirely. Such is the nature of competition in San Francisco.

We encourage the Planning Department to continue their work on updating and modernizing the NC Controls. Some things still work, but a lot doesn’t. Healthy neighborhood commercial districts are the heart of the City. We need zoning controls that encourage small businesses to come to these areas without fear of being put out of business by the process before they even get a chance to open their doors.

To see the complete report, go to:

Reuben & Junius, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leases, purchase and sale agreements, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.