Formula Retail Report Pleases All, Satisfies None

T-Mobile, a chain store that slipped through the cracks of previous formula retail regulation.

T-Mobile, a chain store that slipped through the cracks of previous formula retail regulation.

In its 235-page opus on the city’s retail formula provisions, the Planning Department recommended changing the threshold for formula retail to 20 locations, up from 11 and including in that count all of a company’s global locations.

The recommendations, which the Commission won’t vote on until July, comes in the wake of several recent public battles around formula retail across the city, including the decision this fall to keep Jack Spade from renting a location on 16th Street.

In a sense, the research report offers something for both reformers and pro-development advocates—but in both the public comments and the comments of commissioners, no one at Thursday’s hearing seemed completely satisfied .

“It’s a very complicated issue; almost everyone can find something in this proposal that they’re not comfortable with,” said Amy Cohen, from the Office of Economic and Workforce Development, which had a hand in the writing of report.

Currently, the Planning Department counts any retailer with 11 or more U.S. locations as formula retail– a designation that means the retailer must get a conditional use permit before it can open a new location. That permitting process requires a public hearing.

If adopted, the new legislation would require planners to count all global locations, but bump up the number considered formula retail from 11 to 20.

The rationale for the raised threshold given by the report’s main authors, Kanishka Burns with AnMarie Rodgers, is that the Planning Department wants to make sure that formula retail restrictions don’t hinder local, mid-sized businesses from growing.

“We can see a clear difference between brands like Philz Coffee compared to companies like Subway,” Burns said during her presentation.

Real-estate brokers and business owners who spoke during the public comment period were unhappy about restricting international business. Those with many locations abroad, but none in the United States, they said, should be more welcome here.

“We feel that including international locations in the definition of formula retail is shortsighted,” said Dee Dee Workman, a representative from the San Francisco Chamber of Commerce. “San Francisco is an international retail destination; closing doors on stores with international location seems misguided… People travel from all over the world to shop here.”

In his comments, commissioner Michael Antonioni suggested the restrictions already discourage popular regional companies from coming to San Francisco.

“If a company is popular regionally elsewhere and they’re looking to open up their first location in California we want them to come here, not elsewhere,” Antonioni said. “We want uniqueness, what we don’t want is companies not coming here.”

But that indeed is what some advocates want—to keep out those companies that are considered formula retail.

While neighborhood activists who have fought the arrival of chain stores seemed pleased that the Planning Department would include international locations—Jack Spade would have been counted as formula retail early on, had this been law last year—they worried about another piece of the Planning Department’s recommendations.

The report said that planners could not recommend factoring corporate ownership into its decisions on formula retail. Jack Spade, for example, is a subsidary of formula retailer Kate Spade. That connection, planners said, should not be counted against it.

Burns explained that considering corporate ownership would be too challenging and could have unintended consequences. Take, she said, the local restaurateur and owner of Super Duper, Adriano Paganini. His small burger chain has seven locations, but he also owns Beretta, Delarosa, Starbelly, Pesce, Lolida, and Uno Dos Tacos. It would be a stretch to call the latter subsidiaries of Super Duper.

Commissioner Rich Hillis disagreed, saying that recent examples of businesses such as Athleta, a subsidiary of Gap on Fillmore, are clearly by common sense standards a chain store.

“People will look for loopholes around this,” Hillis said. “We’ve seen this happen, like Athleta. Those are real examples where we’ve seen formula retail fall through the cracks.”

He failed to see how locally-owned small businesses with multiple locations would have much trouble winning approval in a conditional-use hearing.

“We’re happy to see you include international locations….but under current code there’s nothing to stop 7-11 from opening a store called 8-12 and get around planning code,” said Conor Johnston, the legislative aide to London Breed.

Johnston added that if the Planning Commission does not address this issue of subsidiaries, the Board of Supervisors likely will.

The report’s plan would also expand the types of businesses considered formula retail by adding fringe financial services (such as payday lenders), limited financial services (ATMs), and business and professional services (tax-preparers and gyms).

In addition to changing how formula retail is defined, the Planning Department’s proposal would also strengthen review criteria of building plans for new formula retail stores to make sure they’re consistent with the neighborhood character. The plan also suggests that the addition of any “super stores,” such as Target or Best Buy, undergo an economic impact report. The plan would also create a process by which non-controversial, less impactful projects could be approved more quickly.

“There’s so much to touch on,” said commissioner Rodney Fong before the Planning Commission moved to vote to adopt or reject the report’s recommendations on July 10. “Where we are now is not the end all.”

The report in full, which includes heaps of economic research and qualitative results from the Planning Department’s outreach efforts can be found below.

Formula Retail and Large Controls Planning Department Report by MissionLocal

10 Comments

  1. John

    235 pages and not a word about what consumers actually want?

    I’d rather ban the kind of people who think writing 235 pages about something like this is a good idea.

    • Mike K

      I wonder how much this report cost us? Small potatoes in the scheme of things but still we all pay for this complete waste of time.

      • John

        I think the problem is that it is very expensive AND they never bothered to ask consumers what choices they want.

  2. 24-24

    as long as burger king, and Mcdonalds get to stay open in the mission we are safe from gentrification

  3. MissionLoca

    It’d be nice if they banned formula retail, banks, and similar businesses from moving into ground-floor corner spaces…corners should be reserved for local businesses that add vibrancy and color to the neighborhood! I’m tired of seeing more and more Chase Bank locations take over these types of spaces…it’s depressing!

    I also wish there were some sort of provisions for forcing landlords to rent out vacant spaces that’ve been sitting empty for years on end. It’s depressing when those spaces sit unoccupied forever and just accumulate graffiti tags and squatters. At least ask those landlords to allow local artists to display their works in the windows until they are rented out again….

    • John

      There is no legal or practical way to compel a landlord to rent out a space, whether commercial or residential. It was an attempt to do that that led to the Ellis Act.

      What a municipality could and perhaps should do is offer incentives like a break on property and business taxes for landlords who rent out sites that have been vacant for a certain time.

      But in the end, you cannot rent out a property if there is nobody willing to pay you for it.

      • BackToTheBurbs

        Really, you are arguing that in these times there is no one willing to rent/buy a property? That goes against your rhetoric …

        It’s takes just a little imagination to realize that places may not be rented for other reasons. Perhaps the owner is not present, or families Are squabbling over rights, or the owner is really only a legal entity which could give a rats ass, or the property is purely an investment to be liquidated at the owners whim. Welcome to the free market …

        • John

          It’s not unusual even in housing booms for commercial properties to stay vacant. It all comes down to whether there is a commercial tenant willing to pay a rent that makes sense for the owner.

          And particularly because commercial lease are much longer than residential leases, renting a place for a less than optimal rent is locking in a poor return long-term.

          With residential spaces the explanation for keeping a home un-rented is much simpler. The owner worries that under rent control he will never get his place back.

          Anyway, my point wasn’t to speculate about why places are vacant but simply to point out that a government cannot force an owner to let if he doesn’t want to for WHATEVER reason. Basic property rights.

  4. The planning dept. like all government employees, is filled with inept fools who don’t have to succeed in the real world. Hence they represent the bottom of the barrel.

  5. marcos

    Planners are not inept, just malevolent, and ground floor retail never got fully let out during the height of the last bubble.

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