In the latest effort to ease longstanding zoning restrictions and encourage new business activity in San Francisco, Mayor Breed (along with Supervisors Engardio, Dorsey, and Melgar) have introduced legislation to expand the types of uses permitted in Neighborhood Commercial Districts (“NCDs”), streamline the change of use process in Eastern Neighborhood Mixed Use Districts, and incorporate numerous other Planning Code changes aimed at filling retail vacancies throughout the city.
Unlike a number of other recently proposed changes, this legislation would not limit the amendments to Downtown. Instead, it focuses on neighborhood commercial corridors and on expanding permissible uses and streamlining the change of use process for certain use types across the city. With retail vacancies in San Francisco as high as 14.8%,[1] any change that allows more categories of business to occupy empty commercial storefronts in more zoning districts would be a welcome policy change.
The 92-page ordinance has yet to be heard by the Planning Commission or the Land Use and Transportation Committee, so a lot could change between now and final passage, but here is a summary of some of the more meaningful changes proposed:
- Professional Services Uses: Arguably the most substantive and exciting change is a proposal to eliminate the distinction between Retail Professional Services and Non-Retail Professional Services. Currently, Non-Retail Professional Services include businesses that provide services to other businesses, like accounting, legal, insurance, advertising, and consulting offices. Retail Professional Services cover uses primarily open to the general public—in other words, offices where a member of the public can walk in to talk to a lawyer, travel agent, or accountant. As drafted, the legislation would principally permit all types of Professional Services Use (both retail and non-retail types), within all NCDs and Chinatown mixed use districts. This opens up the possibility of office-type uses operating in ground and upper-level spaces in neighborhood commercial corridors throughout the city.
- Section 311 Notice: The proposed ordinance would eliminate Section 311 notice for change of use projects in Eastern Neighborhoods Mixed Use Districts—doing away with the possibility of a discretionary review hearing for those projects. 311 notice would still apply to formula retail and substantial construction projects in those districts.
- Legalization of Existing Outdoor Activity Areas: The proposed ordinance would allow business owners citywide to legalize an Outdoor Activity Area via a building permit, provided the Zoning Administrator or Planning Staff determines that the outdoor space has been operating (mostly continuously) for the last 10 years. No Conditional Use (“CU”) Authorization would be required for these legalizations, but a building permit would need to be filed within one year from when the proposed ordinance becomes effective.
- Flexible Retail Uses: Previously limited to properties in Districts 1, 4, 5, 10 or 11 and zoned NCD, NCT or NCS, the legislation proposes to allow Flexible Retail Uses citywide. Flexible Retail Uses are defined as the combination of at least two of the following uses: Arts Activities, Limited Restaurant, General Retail Sales and Services, Professional Services, and Trade Shop.
- Formula Retail in Residential Districts: The legislation would allow Formula Retail uses in RH and RM districts with approval of a CU.
- Special Use District Controls: A number of proposed amendments ease controls on eating, drinking, and entertainment uses within Special Use Districts (“SUDs”). Here are a few highlights:
- Allow new Restaurant, Limited Restaurant, and Bar uses on the first story in the Jackson Square SUD, with approval of a CU.
- Allow a Music Entertainment Facility in the Mission Alcohol SUD to serve alcohol with an ABC Type 90 license.
- Non-Formula Retail Restaurants and Limited Restaurants would be principally permitted within the Taraval Street Restaurant Subdistrict (i.e., no CU for these uses).
- Permit Financial Service and Limited Financial Service uses with approval of a CU in the Chestnut Street Financial Service Subdistrict.
- Allow new Liquor Establishments with approval of a CU in the Haight Street Alcohol Restricted Use Subdistrict.
- Expedited CU Review: The legislation would allow Nighttime Entertainment and Non-Retail Sales and Services uses (including Professional Services) (that meet other eligibility criteria) to be eligible for the Community Business Priority Processing Program, which aims to schedule eligible projects for a consent calendar Planning Commission hearing within 90 days of the application being deemed complete. Many non-Formula Retail commercial uses are already eligible for this program.
- Miscellaneous Changes: Other one-off exciting changes include the following:
- Financial Services would be allowed on the ground floor with approval of a CU in many NCDs.
- Professional Services and Design Professional uses would be allowed at the ground floor in the North Beach NCD.
- The Sacramento Street NCD would permit Bars on the first story with a CU, and Gyms and Health Services would be principally permitted on the ground floor.
- The Union Street NCD and Pacific Avenue NCD would allow Bars on the first story with a CU.
- The West Portal NCD would permit Financial Services on the ground floor with a CU, and Health Services and Design Professional uses would be principally permitted on the first and second floor.
- Allow new Restaurants, Limited Restaurants, and Bars within the Mission Street NCT, up to an increased maximum of 197 locations (up from 167). Full-service Restaurants and Bars allowed within the cap would still require a CU.
- New Bars and Restaurants would be permitted in the 24th Street-Mission NCT with approval of a CU, subject to the limitation of the Calle 24 SUD.
In the current market, any kind of storefront activation is good for the health of commercial corridors, and it seems that the prevailing political opinion finally agrees. This piece of legislation is just at square one of the process, and you can track its progress here.
[1] See Cushman & Wakefield San Francisco North Bay Metro Retail Q1 2023 Report; available at https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/san-francisco-north-bay-marketbeats (accessed June 21, 2023.)
Authored by Reuben, Junius & Rose, LLP Attorney Chloe Angelis.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, 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 leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.
