Mayor Breed’s small business reforms approved by Board of Supervisors

The approved legislation will move forward 100 changes to the Planning Code to improve the small business permitting process and help fill commercial vacancies faster

SAN FRANCISCO – Mayor London N. Breed’s latest round of small business reforms was approved by the Board of Supervisors on Tuesday, December 5. The legislation, which was co-sponsored by Supervisors Joel Engardio, Matt Dorsey, Myrna Melgar, Catherine Stefani, Rafael Mandelman, and Connie Chan will facilitate easier permitting for small businesses, encourage economic recovery and growth, and fill commercial vacancies in San Francisco.

This legislation builds on the significant small business reforms Mayor Breed has advanced over the last three years including the passage of Proposition H in 2020, the passage of the Small Business Recovery Act in 2021, and opening a new one-stop shop Permit Center.

Under the legislation, over 100 changes to the Planning Code will serve to ease restrictions across five main categories:

  • Allow more business uses on the ground floor
  • Lift restrictions on bars and restaurants
  • Incorporate new liquor license for music venues
  • Remove certain public notice requirements
  • Enable priority processing for nighttime entertainment, bars, and restaurants.

Since the city began implementing Proposition H in January 2021, over 3,500 businesses have benefited from the program, which allows more commercial projects to be processed within a shorter timeframe, in what’s known as “over-the-counter,” when permits applications are processed immediately upon submission.

“We are making it easier to fill vacant storefronts and support small businesses that are essential to our economy and the health of our neighborhoods,” said Mayor Breed. “This latest round of reforms builds on the work we’ve doing over the last few years to make it easier to open and operate a small business in this city. By getting rid of barriers and incentivizing people to invest their time and energy here, we can build a stronger San Francisco.”

In addition to this approved legislation, Mayor Breed’s recent budget extended First Year Free, which waives the cost of initial registration fees, initial license fees, first-year permit, and other applicable fees for qualifying businesses. Since the First Year Free program started in 2021, approximately 5,724 businesses have enrolled, with 3,640 of these completely new, and the remainder are existing businesses adding a new location. The city has waived more than $2.38 million in fees since the program started.

This legislation and extension of the First Year Free program is integral to Mayor Breed’s Roadmap to Downtown San Francisco’s Future. One of the plan’s nine strategies is to make it easier to start and grow a business. Simplifying city processes while reducing cost will encourage more businesses to start and remain in San Francisco.

“We started Wave as an art gallery and events popup in Lower Haight, and after an amazingly positive reception, realized there was a need for it to become a permanent space,” said Jamila Keba, owner and co-founder and Wave Collective on Haight Street. “The Flexible Retail use has allowed us to continue building a creative multifaceted community space that is gallery, cafe, workshop and event space.”

Legislative details

  • Allow more business uses on the ground floor and as principally permitted

Under the legislation, “Flexible Retail” would be principally permitted and expanded to all neighborhoods on the ground floor across the city’s commercial corridors. An example of Flexible Retail includes a business that sells both plants and coffee, and then later shifts to selling plants and making small production bags on site. The proposed ordinance will also clarify that multiple uses are allowed in the same business space. Additionally, the legislation will expand the types of businesses that can open in ground floor spaces to create more opportunities to fill commercial vacancies.

  • Lift restrictions on restaurants and bars

Currently, several commercial corridors have restrictions in place for restaurants and bars, such as not permitting them, imposing a cap on the number of restaurants that can be established, or requiring a Conditional Use Authorization (CUA). Conditional Use Authorization is a lengthy process for businesses to be granted approval for their plans, including providing public notice and attending hearings – CUA can add months to the process of opening a business.

Under the legislation, those restrictions will be lifted for new restaurants in Chinatown, along Haight Street, and Taraval Street. Likewise, restrictions on new bars will be lifted along Haight Street, Sacramento Street, and Union Street.

  • Incorporate new liquor license for music venues

The ordinance will incorporate into local Planning Code a new liquor license, Type 90, which was adopted by the state in 2022. This new liquor license type gives venues more options as it allows a music venue to serve beer, wine, and liquor without excluding minors from the business.

  • Remove the public notice requirement in Eastern Neighborhoods Mixed Use Districts for business changes

In November 2020, voters adopted the “Save our Small Business Initiative” (Proposition H), which reduced the steps a business owner needed to take when they change their business use. Before this, if a clothing store, for example, were to become a café, the change would require that the general public be provided notice about the change for at least 30 days and the business could not receive their Planning Department approvals over-the-counter, even though both types of businesses are permitted in the neighborhood. Under the legislation, these benefits will be expanded to the commercial corridors in the eastern portion of the city.

  • Enable nighttime entertainment, bars, and restaurants to benefit from priority processing at Planning Department/Commission

Currently, nighttime entertainment venues, bars, and restaurants with full liquor licenses are excluded from participation in the Planning Department’s Community Benefit Priority Processing Program (CB3P). Under the legislation, nighttime entertainment venues, bars, and restaurants with full liquor licenses will benefit from expedited Conditional Use Authorization review, which can save a new business from months of waiting for a hearing at the Planning Commission.

“Most bars, entertainment venues, and restaurants seeking liquor licenses are small businesses, yet they have been excluded from programs that enable fast-tracking of permits like other small businesses,” said Steven Lee, managing partner of a legacy restaurant and nightclub in Chinatown, and is a board member of the California Music and Culture Association. “The legislation offers exciting incentives for entrepreneurs who are on the fence about opening new entertainment venues or bars in San Francisco given concerns about paying high rent while waiting for local approvals required to operate.”

Previous efforts to support small business

This legislation builds on the significant small business reforms Mayor Breed has advanced over the last three years including the passage of Prop H in 2020 and the passage of the Small Business Recovery Act in 2021. Since the city began implementing Proposition H in January 2021, over 3,500 businesses have benefited from the program, which allows more commercial projects to be processed within a shorter timeframe, in what’s known as “over-the-counter,” when permits applications are processed immediately upon submission.

The city also opened the Permit Center in 2021, which offers 23 distinct service areas through the Planning Department, Department of Building Inspection, Department of Public Health, Department of Public Works, among others. By centralizing services in one place, customers can move between permitting departments efficiently, resulting in a better experience and improved government function. Since the start of this year, the Permit Center has served an average of 191 customers per day and provides on average 531 services daily.

More information about San Francisco’s First Year Free program may be found at https://sftreasurer.org/business/first-year-free. (SF Mayor’s Office Release)

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