Prop. H could help save small businesses like Tokyo Futon & Tea
Tokyo Futon & Tea, one of the many businesses closing on Valencia Street. Photo provided by Lydia Chavez.

If San Francisco’s small business ecosystem was a wobbly tower of Jenga blocks in early March, the coronavirus was the clumsy kid at the table who knocked the tower down with a single tap.

As Sharky Laguana, the President of San Francisco’s Small Business Commission, puts it: “A straw would have already broken the camel’s back, and the pandemic was a five-ton anvil.”

Can Prop. H, a measure put on the November ballot by Mayor London Breed to streamline permit approval and fill vacant storefronts, help build the Jenga tower back up again? 

The short answer: It’s a step in the right direction for a city known for being an exceptionally difficult place for small businesses to operate. Even before the pandemic, San Francisco was deemed the most difficult city in the nation for starting and operating a small- or medium-sized business, according to the 2019 Arizona State University “Doing Business in North America” report. 

“We are in a moment where the cost of inaction is greater than the cost of action,” said Laguna. “We don’t have the luxury of sitting around and gazing at our navels wondering how we progress.” 

Already, the city has implemented emergency measures, such as deferring business taxes and licensing fees for small businesses and implementing an eviction moratorium, but Laguana and others say much more is needed. 

Prop. H would make it easier for new businesses to open and for existing businesses to make changes. 

The way Cynthia Huie, a small business owner and Small Business Commissioner, explains it: “The heart of Prop. H is giving small business owners a tool in flexibility.”

Currently, the permitting process poses a significant hurdle for small businesses. Business owners pay steep fees and often wait as long as a year for their permits to be approved while paying rent.

“It is outrageous that it should take 16 months and $200,000 to open an ice cream store,” Laguana said, evoking the image Scott James painted in a 2012 New York Times article about the planning code perils of opening the Ice Cream Bar in San Francisco’s Cole Valley neighborhood.

Prop. H requires businesses’ permits to be reviewed within 30 days, allows different city departments to review a business’s application simultaneously, and expedites inspections for businesses whose permits require them.

Another important component of Prop. H is filling vacant storefronts. Many businesses which could not weather the pandemic have closed, and Jay Cheng, Public Policy Director at the San Francisco Chamber of Commerce, expects that we will see more empty storefronts once the pandemic ends. Laguana agrees.

“There is no shortage of vacancies, boarded-up businesses, and vacant storefronts right now. This will take years to recover from,” Laguana said.

A vacant storefront on Valencia Street. Photo provided by Lydia Chavez.

Prop. H would permit more pop-ups in vacant retail spaces, allow restaurants to rent spaces to co-working firms, and authorize nonprofits to open offices on the ground floor of buildings — spaces generally held for retail. 

Prop H. would also scrap mandatory neighborhood notifications for new businesses if the proposed business is already allowed under zoning laws.

Laguana sees Prop. H as “a golden opportunity to transform the city and make it magical — better than it was before.”

While Prop. H has broad support, not everyone is as enthusiastic about the measure as Laguana is.

Some criticize Prop. H for doing little to help existing small businesses. However, short of making money appear out of thin air, the path to helping these businesses is unclear.

“What small businesses need is financial relief, but the city isn’t flush with wealth right now,” said Kristy Wang, Community Planning Policy Director at SPUR.

More contentious is Prop. H’s method of reform.

David Pilpel — a San Franciscan referred to as either a  “watchdog” or a “gadfly” depending on whom you’re talking to — opposes Proposition H. Pilpel objects to the fact that Mayor Breed put Prop. H on the ballot. Pilpel writes in his opposition argument that changing the Planning Code should be done with public and stakeholder input from the Planning Commission and the Board of Supervisors.

Laguana’s verdict: Never mind the politics. The result is more important than the process.

“I support the mayor now because Proposition H supports small businesses. We should build bridges to make the city better instead of concentrating on who introduced the proposition,” he said. 

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  1. ANOTHER POINT OF VIEW, FROM THE LEAGUE OF PISSED OFF VOTERS:
    https://www.theleaguesf.org/voter_guides

    Prop H: Poorly Designed Small Biz Permitting Overhaul: Reluctant No

    The pandemic is decimating our small businesses, and while Prop H would do some things to help new businesses open, we have so many questions about this unvetted, 100-page ballot measure, we just can’t support it. This was one of the two props we debated longest (Prop RR being the other) with some of our members supporting or saying we shouldn’t make an endorsement.

    It’s notoriously hard to open a small business in San Francisco. Why is that? Well, the Planning Code and other codes that business owners have to navigate are like a tangled cord drawer. Our Planning and Building Inspection departments don’t get along, and the permitting process involves an alphabet soup of other departments. Supposedly the City will soon be opening a “One Stop Permit Shop” at Mission and Van Ness that will finally get all those departments together in one office and on a unified software platform. Let’s hope that works out. We’re also glad that Prop F will give small businesses a break by lowering their taxes.

    Prop H aims to help new small businesses by taking a machete to the Planning Code. It…

    Requires City departments to process new business applications within 30 days.

    Removes limits on restaurants and bars in neighborhood commercial districts.

    Allows restaurants (and many other types of businesses from movie theaters to animal hospitals) to get their permits “by right,” meaning neighbors would not have the ability to raise concerns at the Planning Commission.

    Also allows restaurants to add outdoor patios “by right,”

    Allows restaurants and cafes to also offer WeWork-style shared co-working office space for rent.

    Eliminates the requirement that new businesses notify neighbors of their application.

    Allows restaurants to offer table service in parklets. This is currently prohibited, because parklets are supposed to be public space, and waitstaff offering table service makes them feel more private than public.

    Waives additional fees when department errors result in additional reviews.

    Allows Pop up retail to open for up to 60 days in vacant spaces. Previously they could only do this in occupied commercial spaces.

    Locks in all of these changes for three years, after which it could be modified legislatively.

    Some of that is great. Some of it is pretty sus. We have soooo many questions!

    Why does this measure only impact new businesses, not all of our existing businesses that are getting hammered by the pandemic? Why do we need to remove limits on the number of restaurants on a corridor when so many restaurants are closing? When every office is closed, why do we need to allow restaurants, coffee shops and bars to rent WeWork-style co-working spaces? Profiteers have been trying for years to convert retail spaces into more-profitable office space in neighborhoods like the Mission and Chinatown, which would drive up rents and hurt neighborhood-serving small businesses.

    Why does the Mayor need this measure to get business permits processed in 30 days? All the departments that handle those permits (Planning, Building Inspection, Fire, DPH, etc.) report to her. Couldn’t this expediting be accomplished by an executive order? If those departments need more staff to make this happen, why didn’t the Mayor add them in the budget she just signed?

    Why hasn’t the Planning Department analyzed this measure? Any time an ordinance is introduced that amends the Planning code, the Planning Commission has 60 days to weigh in on it. The department staff, who are experts in this stuff and issue these permits, always write a detailed analysis that explains all of the jargon and background, and makes recommendations. The only official “analysis” is this super high-level slide deck. 🙁 Prop H’s website also lacks any real substance. The only deep dive we’ve found from a proponent is this uncritical twitter thread.

    Why should we remove “non-profit” from the definition of “Social Service or Philanthropic Facility?” What are the implications for treating for-profit philanthropies or social services the same as non-profits? Is it a good idea to remove the cap on the number of financial services providers on a street? Will landlords there be less likely to rent to a neighborhood-serving store in hopes that something like JP Morgan will pay higher rent?

    Whew, like we said, this thing raises a lot of questions!

    The biggest question of all is, why do we have to vote on this? Nothing about this legislation requires going to the voters. In fact, rumor has it that the Board of Supervisors was ready to pass the good parts of Prop H in exchange for it being pulled from the ballot, but the Mayor’s Office rejected the offer. Five Supervisors from across the political spectrum are supporting Prop H (Haney, Mar, Ronen, Safai, and Stefani). There must have been a compromise available to get it one more vote at the Board. If they had made that work, we wouldn’t have had to wrassle with all this fine print, and the ordinance could already be in effect.

    TLDR, we’re pissed off that voters have to decide on this complex measure without any analysis from the experts at the Planning Department. Ultimately, while we like that Prop H streamlines the permit process for small businesses, it removes too much community input for us to be comfy with it. We call on the Mayor and Board of Supervisors to work this out. At a time when the pandemic is decimating small businesses, our city deserves thoughtful and community-vetted solutions that can streamline the permit process without steamrolling over resident concerns. Vote No.

    1. There is little valuable about the community input that’s removed, and voters have to decide on complex measures with little analysis all the time! We have an entire set of business tax reforms on the ballot.

    2. “voters have to decide on this complex measure without any analysis from the experts at the Planning Department. ”

      Best reason of all to vote yes…..why should a problem department get to ring in on a fix? Would you really expect a timely answer from the department? Would you really expect a department to streamline what they do when it’s been a problem for years?

  2. Hi Marc,
    Thanks for posting the entirety of your org’s argument against small business. I’ll just point out that you say you have so many questions, but you never reached out to me or anyone involved with the campaign to get answers to those questions (and I specifically offered to answer them to whoever runs your twitter account before your guide was published!).

    Prop H is supported by 9 out of 11 supervisors (the other 2 have taken a “neutral” position), the Democratic Party, every significant small business organization in the City, the Alice B. Toklas Club, countless neighborhood organizations, and all of our state representatives. Prop H does not have a big campaign budget, no big business benefactors, and is largely counting on volunteers like myself to speak up for the campaign. In another time small business would be donating to help, but most small business owners, myself included, are facing bankruptcy, or already bankrupt and closed.

    Your post has factually wrong and/or deeply misleading statements. To cover a few of them:
    “Removes limits on restaurants and bars in neighborhood commercial districts.”
    This sounds really scary! But bars are mentioned only once in Prop H: if the measure passes bars will be able to offer temporary pop-up retail. That’s it. Prop H lets bar owners use the now worthless space (which they still have to pay rent on) to sell clothing, or books, or League of Pissed Off Voters voting guides.

    “Allows restaurants (and many other types of businesses from movie theaters to animal hospitals) to get their permits “by right,” meaning neighbors would not have the ability to raise concerns at the Planning Commission.”
    We have lost over 50% of our restaurants, and in some parts of the City it’s over 80%. We have over 130,000 people out of work, tens of thousands of whom are service workers that used to work in the restaurants that are now closed. In the past four years there have been over 100 Discretionary Review complaints filed with the Planning Commission over incoming businesses. A planning commissioner told me they could only recall TWO of these businesses being denied a permit on the merits of the complaint. So 98% of the complaints were baseless, and a waste of everyone’s time. We can’t afford that right now. We need to get back on our feet. 130,000 people need jobs *now*, not a year from now. They have to pay rent, they need healthcare.

    “Allows restaurants and cafes to also offer WeWork-style shared co-working office space for rent.”
    I’m astounded that this is an issue. First of all WeWork has nothing to do with this, and you are throwing their name in here to scare people into thinking WeWork is going to open in their neighborhood. Simply put this allows the restaurant or cafe to rent only the *back* of their store, *only* during business hours, only when the store is open to the public, to neighbors that need a place to be on the laptop without kids screaming in the background. This would give restaurants another way to pay the rent, which many of them cannot do. We complain about tech taking over everything, but then we stand in the way of small business being able to compete with these tech companies. It’s insane that this is objectionable. Shouldn’t we be celebrating this?

    “Eliminates the requirement that new businesses notify neighbors of their application.”
    Again you make this sound really scary, but any new business requiring a conditional use (this includes bars, cannabis, massage, etc) will STILL have to send notices to all their neighbors. Nothing is changing for controversial businesses! The change is very modest: uses that the community has already determined are “principally permitted” will not have to send 311 notices. They already do this in D4 and D11, and there has not been any massive outcry from the public. It is going well.
    Permit applications will still be public records, and the public will still be able to review the applications. It’s just removing a needless cost and expense that rarely if ever leads to a businesses permit being denied, but often leads to months of delays and many thousands of dollars in additional expenses – which again, we can’t afford right now. That keeps minorities, immigrants, women, and other vulnerable population from being able to start their own business. We need San Francisco to be an easy place to start and own a business for everyone, not just the wealthy. Right now it’s one of the hardest places to start a business in the country.

  3. Hi all,

    I am supporting prop h because SF has long allowed the whims of few to determine the outcome for many. The city needs to grow and it also needs to change. Those who oppose prop h do so because they like the feeling of control and the ability to extort small business owners. I have experienced this first hand. Everything from shake downs asking me to buy people new windows to requesting free meals in exchange for corporation. Keep in mind that these people wanted to extort us in exchange for allow us to operate within the law and according to code. This has been an unfair and corrosive system for a very long time. Also we experienced delays for years due to simply inadequate guidance from the planning department. Small businesses have created one of the largest tax bases for the city of SF and are the corner stone of our city’s mantra “stay weird”. If prop h doesn’t pass the only beneficiaries will be big box retail. As those are some of the only business models that can negotiate the types of leases and spend the type of money that is required to do business here. I ask everyone to protect the integrity of SF’s small business community and vote YES ON H.

  4. “Allows restaurants to offer table service in parklets. This is currently prohibited, because parklets are supposed to be public space, and waitstaff offering table service makes them feel more private than public.”

    There were roughly 48 parklets in front of restaurants in the entire City when Covid hit. These 48 restaurants paid an average of $25-$30k to construct the parklet, and continue to pay thousands of years for their maintenance. As a result of Covid the restaurants cannot use their indoor space. Shared Spaces allowed over 1300 restaurants to set up eating areas in the sidewalk, parking spaces, or street in front of their business.
    But the 48 restaurants couldn’t do this, because there was already a parklet there.
    1300+ restaurants are allowed to serve food to the Shared Space in front of their restaurant. This has been a vital lifeline for our local small businesses, and over 80% of them report that their business would not have survived without it.
    But the 48 restuarants can’t serve food in their parklets.

    The Parklet program is *voluntary*. The business does not have to keep the parklet. They spent the money to beautify the neighborhood, and (hopefully) attract more customers. They are not obligated to continue to pay thousands of dollars on maintenance on a parklet that is instead *preventing* them from staying in business. Prop H does not privatize the parklet. It specifically says the parklet will continue to be open to the public. Allowing these 48 restaurants to provide table service to the people in the parklet will give them an incentive to keep the parklet, it will help the restaurant stay in business, and it will help save the jobs of the people that work there.

  5. Prop H helps our struggling small business community and is a lifeline for us right now. It stops ridiculous red tape that has been damaging us for years while tech companies and gig companies eat us alive.

    With all due respect for the League, the city has had years to address these common sense issues and nothing has happened. We have been asking them for years. The result is a small business community that was in free fall BEFORE Covid and is in full extinction mode now.

    Now is not the time to get mired in wishing for imaginary process that will never materialize or worse, groups that simply don’t want to see the mayor get a win.

    Please vote yes on H. Vote like your favorite small businesses’ lives depend on it.

  6. all permits for business should given “by right”. If they follow the law, they get the permit. That simple.

    If you don’t like the law, change the law.

    Community input is just a way to let bullies bully after high school.

  7. Allowing retail storefronts to be converted to shared workspace (private office space) is a hard no for me.

  8. How “permanent” is prop H? If it passes, and in a year or two the board of supervisors decides they want to amend it, will they be able to? Or would amendments require another ballot prop?

  9. 1) Prop H is terrible!

    2) It takes way any neighborhood controls.

    3) It privatizes all “parklets”. Needed parking spaces are given over to businesses — who should not be building permanent structures but ARE — while existing “parklets” are also privatized.

    Laguana appears to be a willing tool in all of this! Were he not, Breed would never have appointed him to the SBC!

    PS” “It specifically says the parklet will continue to be open to the public.”

    No, some have “only for customers” signs!

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