Proposed Zoning Changes Would Enable Growth in the PDR Sector

​Existing zoning restrictions prohibit residential and office uses, and limit retail and institutional uses, in both PDR-1-D and PDR-1-G zoning districts.  These prohibitions have in fact discouraged production, distribution, and repair (“PDR”) development.

Mayor Ed Lee, together with three members of the Board of Supervisors, recently proposed legislation to encourage the development of PDR uses, and small enterprise work spaces.  The proposed legislation would amend the Planning Code to allow office, retail, and certain institutional uses to be combined with PDR uses in new mixed-use development projects.  The proposed legislation encourages development of small enterprise work spaces, defined as a building that includes discreet work space units, commonly referred to as business incubators which are independently accessed from the building’s common areas.

Subject to obtaining a conditional use authorization from the Planning Commission, applicants with parcels of 20,000 sq. ft. or larger located in PDR-1-D or PDR-1-G zoning districts north of 20th Street shall be permitted to construct new developments containing a minimum of one-third (total gross floor area) of PDR uses.  The remaining two-thirds of total gross floor area may be allocated to office use, retail uses, or institutional uses such as assembly, social services, child care, schools, colleges, religious facilities, residential care, and job training centers.  Each small enterprise use in a project would count as 0.5 square feet of PDR space and 0.5 square feet of non-PDR space.  

The existing land use category known as “integrated PDR” would be eliminated from the Planning Code.  The Restricted Integrated PDR Special Use District would be eliminated from the Code.  The proposal would allow up to 33% of new PDR space to be characterized as accessory retail use.  To be eligible, the development site must be vacant or nearly vacant (i.e., built to a floor area ratio of 0.3:1 or less).  Small enterprise work spaces would be limited to a maximum of 1,500 square feet each, although these work spaces would be allowed to be a part of a mixed-use building.

The proposed legislation is likely to facilitate construction of new PDR buildings and mixed-use buildings with PDR uses, and make it easier for new PDR uses to obtain permits.  The proposed Code changes reflect needed corrections to the existing PDR zoning controls, which were created in 2008 as part of the Bay View and Eastern Neighborhoods Plans.  The proposed changes reflect experience gained over the past 6 years with respect to zoning restrictions in PDR districts, and the reality that it remains difficult to finance construction of new PDR space even in PDR zoning districts.  Allowing office and other uses to be part of new PDR projects is expected to help alleviate this problem.

The increase in the permitted size of small enterprise work spaces from the current maximum of 100 square-feet to the new maximum of 1,500 square-feet per workspace should encourage development of small PDR businesses including those with accessory retail space.  

After more than a decade of controversy relative to replacement of former warehouse uses and many types of industrial uses by 21st century uses and modern industries such as technology, biotech, research and development, and internet services, the legislative proposal is a fresh approach to seeking a balance between maintaining PDR mandates while recognizing that technology office uses are the new bedrock of San Francisco job creation, economic development and growth.

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.