City Extends Entertainment Zone to Outer Neighborhoods

| Tara Sullivan
neighborhood

On December 10th Mayor Breed and Supervisor Mandelman introduced BOS File No. 241197, an ordinance that would create the Cole Valley Entertainment Zone. Buoyed by the success of the Entertainment Zones that occurred downtown, this is an acknowledgment that there are other parts of San Francisco that have yet to recover from the pandemic-related downturn.

As a refresher, entertainment zones enable restaurants and bars in designated areas to sell alcoholic beverages to go for outdoor consumption during events and activations. The establishment of entertainment zones stems from the Mayor’s Roadmap to San Francisco’s Future, which has supported a series of entertainment initiatives designed to bolster Downtown’s economic recovery. Sanctioned under SB 76, authored by Senator Scott Wiener, entertainment zones are designed to support the sustainability of local bars and restaurants and boost neighborhood economic activity by permitting restaurants and bars to sell alcoholic beverages to go for outdoor consumption during special, permitted events.

So far, there have been three events (in two Entertainment Zone areas) that have taken advantage of this legislation: Oktoberfest on Front (Street) on September 20th and Nightmare on Front Street on October 31st, along with the recent Winter Wonderland Tree Lighting Ceremony on November 30th at Thrive City (Chase Center). All of these have been deemed a success, bringing in thousands of people and increasing sales by anywhere from 700-1,500%.

The proposed legislation makes a tweak to the definition of an “Entertainment Zone Event” by removing the requirement of an ABC license or permit to allow the sale and consumption of alcohol to be served outdoors. Moving forward, only local authorization is needed to hold an “Entertainment Zone Event,” with only licensed establishments that hold an ABC permit allowed to sell alcohol. This will greatly reduce the amount of paperwork needed to put on an Entertainment Zone Event.

Cole Valley is a small neighborhood district that spans three blocks from Frederick Street to Parnassus Avenue. Intimate in nature, it does feature several bars and restaurants, and the neighborhood has undertaken several street-specific events, like the Cole Valley Night Fair on December 5th. It is not a neighborhood that draws many nighttime patrons, largely due to its location and family-oriented population. However, it is located along a Muni line and sits between the Haight and Inner Sunset neighborhoods, so it is a good case study for this type of economic initiative. It is anticipated that the proposed entertainment zone will be effective as early as March 2025, allowing for nighttime and weekend events along Cole Street in the spring.

The entertainment zone program has so far proved to be a success in larger, more commercially-oriented areas. Cole Valley is an interesting choice for the first of this expanded concept, but if successful, can demonstrate how other neighborhoods in the city such as the Inner Sunset, which has held several night markets in 2024, can utilize the concept to help attract patrons during times that are otherwise pretty quiet. Cole Valley’s businesses all support the proposed Entertainment Zone and, if successful, will be great to see how this concept is utilized in other neighborhoods throughout San Francsico.

 

Authored by Reuben, Junius & Rose, LLP Partner, Tara Sullivan.

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.

End of Summer Legislative Round Up

| Tara Sullivan
ordinance

As the summer winds down and with most of the San Francisco’s boards and commissions on break, there is not much activity happening in the local land-use world.  Below are a handful of ordinances that were introduced on July 30th, the last hearing before the Board of Supervisors’ legislative recess and currently winding their way through the review process.

Crackdown on Unauthorized Dwelling Units

Legislation proposed by Supervisor Melgar (BOS File No. 24-0803) would implement a new, multi-pronged approach to San Francisco’s (the “City’s”) handling of unauthorized dwelling units (“UDUs”).  Under the legislation, the Planning Department’s development application process would be amended to require project sponsors to disclose the presence of UDUs on the subject property, in addition to the number of dwelling units, mailboxes, and utility meters at the property.  Applicants may also be expected to provide information about whether any dwelling units or bedrooms had been rented for the previous ten years.  In addition, this ordinance would also require the Planning Department to conduct property inspections to determine whether UDUs exist before the department may recommend a residential demolition, conversion, or merger under Section 317.

To ensure compliance, Supervisor Melgar’s ordinance would also add specific penalties for misrepresentations on development applications and building permit applications.  If, after receiving a planning application, the Planning Department reasonably believed that an applicant did not disclose a UDU, this legislation would authorize Planning to further investigate and potentially cancel the development application.  Should the Zoning Administrator cancel a development application, applicants may need to start over by re-filing their application with a potential six-month penalty waiting period imposed for willful violations.

Under the proposed legislation, the City may also penalize parties other than the project sponsor for violating the ordinance.  In addition to allowing (and sometimes requiring) the Zoning Administrator to cancel planning applications featuring misrepresentations, the ordinance would also give the Planning Department authority to refer design professionals and authorized agents who signed off on those planning applications to the applicable licensing agency or regulatory body.

Increasing Income Limits for Certain BMR Units

The City’s Below Market Rate (“BMR”) homeownership and rental programs currently requires a percentage of newly developed housing units be made available to households earning a certain percentage of the Area Median Income (“AMI”), with limited exceptions or opportunities to adjust affordability levels.

Under legislation proposed by Supervisor Melgar (BOS File No. 24-0802), an owner who purchases a BMR owned unit at above the current affordable price may seek a permanent adjustment of the unit’s AMI threshold by petitioning the Mayor’s Office of Housing and Community Development (MOHCD).  If the city accepted the owner’s petition, MOHCD would be authorized to increase the BMR unit’s AMI levels up to a maximum of 150%.  Projects whose affordability levels were originally set by either the Planning Commission or the Planning Department, however, would also need that body to approve the adjustment.

This ordinance would also grant MOHCD the authority to grant a one-time exception for certain properties, setting the qualifying income level to 20% above the required AMI.  In addition, MOHCD would also be empowered to grant an exception to affordability limits for BMR rental units converted to owned units up to a maximum of 150% AMI.

Expanding Downtown Entertainment Zones

This ordinance (BOS File No. 24-0804) comes in response to Senate Bill 76 (the “Entertainment Zones Act”), which authorized San Francisco to create “Entertainment Zones” in public places where brick and mortar establishments could sell alcohol for off-premises consumption.  Since Governor Newsom signed the statute into law last year, however, the City’s only proposed entertainment zone had consisted solely of a segment of Front Street between California and Sacramento Streets.

Under this ordinance proposed by Supervisor Peskin, the City’s entertainment zone would be expanded to also include: (1) the segment of Annie Street between Market and Stevenson, (2) Claude Lane between Bush and Sutter, (3) segments of Jessie Street between Mission and Fifth and between Mission and Fourth, (4) Leidesdorff Street between Sacramento and Clay and Commercial and Montgomery, and other locations in and around the Financial District.

The legislation also creates a permitting scheme for businesses hoping to participate in the City’s Entertainment Zones.  If adopted, Supervisor Peskin’s legislation would task the Department of Public Works with issuing permits to sell alcoholic beverages for off-site consumption in entertainment zones on a discretionary basis under a new process, subject to certain conditions.

In addition to allowing outdoor alcohol consumption, the ordinance would also exempt businesses in entertainment zones from obtaining limited live performance permits, entertainment permits, and fixed place outdoor amplified sound permits for sound generated between 7 a.m. and 10 p.m.

New Interim CU Requirements for Change of Use in Certain Mid-Market Districts

This resolution (BOS File No. 24-0817), if passed, will create interim controls that will require a Conditional Use Authorization for any change of use from either an Entertainment, Arts and Recreation, or Retail Sales and Service use for certain mid-Market zoning districts for eighteen (18) months.  Citing high vacancy rates and public safety concerns, businesses wishing to change uses from one of the above uses would, in addition to making the required findings under the Planning Code, also be required to make certain findings showing that the use would detract from the area’s function as a commercial corridor nor its nearby entertainment, arts, or tourism uses.  The interim controls, proposed by Supervisor Dorsey, would give the City time to reevaluate current zoning controls for mid-Market as the area recovers from the impacts of the COVID-19 pandemic to determine whether changes are needed to encourage and retain entertainment and retail businesses.

 

Authored by Reuben, Junius & Rose, LLP Partner, Tara Sullivan.

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.