5 ms·

The article does not do a good job of explaining the issue, as far as I can tell what happened is: 1. SF allows neighborhood objections to new businesses, in t

by s17n 5y ago

The article does not do a good job of explaining the issue, as far as I can tell what happened is: 1. SF allows neighborhood objections to new businesses, in this case his potential competitors used the objection process to cost him 6 months. 2. After making it through the objection process, it took another 6 months for the city to issue all the permits that he needed. Rent on the space is $7300 a month so this cost him $87600 in addition to whatever he spent on lawyers and his own energy.

fridif 5y ago
Sounds like a place that really doesn't want small businesses.
- Apes 5y ago
  Big businesses are banned too, so really it's just about making sure those who were here first are sheltered from any newcomers. It's like Trumpism for liberals. edit because hacker news won't let me reply: Big Businesses are literally banned from most places in San Francisco. If a business is over a certain size, they cannot open a franchise in around 90% of San Francisco. Last I heard, the cutoff was 6 franchise locations -- any bigger any you can't get approval. There are a couple of areas in the city where exceptions are made, but that's a very small part of the city.
  - throwaway8581 5y ago
    Big businesses can afford to swallow upfront costs like that. Individual people using their savings to start a small business can't.
  - solarkraft 5y ago
    Big businesses are more likely to be able to clear that cost of entry.
  - boringg 5y ago
    My favorite example is that Blue Bottle a san francisco based coffee company that started as a super tiny shop ended up becoming one of the big companies and had a difficult time opening up coffee shops in the neighborhood due to the 6 franchise location. To be fair - it did take a lot of VC money to build out the company and it has a pretty impressive footprint. Still kind of funny to get kicked out of your own home turf. FWIW - as a former SF resident I love the diversity of stores without all the large chains coming in.
  - dang 5y ago
    Please make your substantive points without flamebait. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    - Apes 5y ago
      Let me be crystal clear then -- there are large groups of people in San Francisco who use intolerance and fear of newcomers as a defense against competition. They use regulatory capture to prevent people from moving here, and from opening businesses here. It's massively toxic behavior. I find drawing a parallel to Trumpism to be apt, since these are core defining traits of Trumpism. Yet despite all the valid hatred that Trumpism gets, the people abusing the same things in liberal cities get no criticism at all.
      - dang 5y ago
        I'm sure you have a good underlying point but this comment is not a step away from flamewar.
- jacobolus 5y ago
  There are 4 or 5 other small-business ice cream places within 3 blocks of that location. As far as I’m concerned the more the merrier, and it sucks that this particular project became a nightmare for the owner, but objectively this is already one of the most small-ice-cream-shop-friendly neighborhoods on the planet.
  - dwaltrip 5y ago
    To do a proper analysis, you need to look at more than just the number of existing businesses. How many total groups attempted to open a business? How long does it take to open a business? What are the costs? Have these factors changed across time? And so on. But sure, using that as a rough heuristic, I agree it doesn’t seem likely to be the worst place to open an ice cream shop.
    - jacobolus 5y ago
      Here is a city zoning map: https://sfplanning.org/sites/default/files/resources/2019-02/zoning_use_districts.pdf https://sfplanning.org/sites/default/files/resources/2019-02... I think the biggest problem is that like 3/4 of the city is zoned as low-density residential (pale yellow areas), only allowing detached single-family homes or – in some places – duplexes with low building height limits, and not allowing mixed uses like small ice cream shops, bodegas, bookstores, or cafés. As a result small businesses get crowded into a few streets zoned as “commercial corridors” (purple areas), and both residential and commercial rents are much higher than they would be if more parts of the city allowed construction of low-rise apartment buildings with bottom-floor storefronts (e.g. to RC3 from RH1/RH2 zoning). The real winners are large-scale property owners, who end up skimming a substantial margin from all economic activity in the city. If the rent weren’t so punishing, an extra couple months of permit bureaucracy wouldn’t be nearly the nightmare it is now, and existing small business owners wouldn’t be so desperate to protect slim profits. (A once-in-a-century pandemic still might kill many nascent businesses, but it’s hard to plan for that one.)
lotsofpulp 5y ago
For one of my real estate projects, I have a competing hotelier that has tied me up in court for 6+ years now due to an arcane wording in the town's ordinances distinguishing zoning for "motels" rather than "hotels". The ordinance's wording was amended years ago shortly after the lawsuit was filed (for approving me for a hotel even though it was only zoned for a motel). Every single person involved knows it's bullshit, every variance and zoning committee meeting has been in my favor, but my competitor is notorious for using the legal system to to keep others tied up long enough in the hopes they bleed enough money to give it up. Or at least enjoys a competitive advantage in the meantime. So far, that project is 7 figures in the hole.
- schoolornot 5y ago
  What kind of avenues exist for a competitor to stall committee hearings like that?
  - lotsofpulp 5y ago
    For one, the competitor waited until after the town approved all the variances and permits. That process alone took a year. There also aren't strict schedules with these zoning and permitting decisions, it's a "we'll get to it when we get to it", and if the hearings run late into the evening, and they don't get to your issue, then maybe you have to wait a month or two until they reconvene. So once the approval was given by the town, the hotelier, who had been watching all along, files a lawsuit against the town and my company, claiming it was granted improperly (which is technically true). Once that happens, you're now in the thicket of the legal system, and as the saying goes, "the process is the punishment". You win one battle, competitor appeals (waiting for the last day to file the appeal each time), you win that one, competitor appeals again. Your lawyer makes a mistake, go back to square 1. And months go by between decisions. Meanwhile, you're paying property taxes and legal fees like nobody's business.
- youeseh 5y ago
  > Every single person involved knows it's bullshit In many countries, this is a sure sign that palms need to be greased.
deleted 5y ago
[deleted]
duxup 5y ago
Can you go through some of this process without actually leasing or somehow deal with that? It would be interesting to hear how other folks actually, do this thing.
- lotsofpulp 5y ago
  Everything is up for negotiation. But high demand places might not agree to provisions that subject them to extra risk.
munk-a 5y ago
I'm a bit astonished - is the 7300/mo accurate? Retail space isn't cheap but it will usually run less per square foot than residential space and that feels like he was either way over-charged or else was trying to create a restaurant with a pretty big footprint.
- pvarangot 5y ago
  A 140 square feet room in that area with shared kitchen and bathroom goes for 2000. 7300/mo for that corner is probably accurate.
JumpCrisscross 5y ago
> this cost him $87600 in addition to whatever he spent on lawyers and his own energy Wasn't there a commercial rent moratorium during this time? Why did he keep paying the rent? I'd have been very up front with the landlord. The lease is signed with an LLC that will be worthless if the city doesn't approve the licenses. The cash is there. But it won't go to the landlord or to the LLC until the earlier of the (a) city approving or (b) moratorium expiring. I understand this is unsavory, but it's what these sorts of licensing processes force. There is a reason the New York restaurant business is notoriously scummy, and it's not because restauranteurs are bad people. (Far from it.)
- dragonwriter 5y ago
  > Wasn't there a commercial rent moratorium during this time? No. The eviction moratorium is not a rent moratorium.
- sbuttgereit 5y ago
  I think rent still accrued while eviction and without getting into whether that is right or wrong (landlords didn't get an expense moratorium), I think whatever specific solution may of applied to this instance due to the pandemic is beside the point. The issue was there prior to the pandemic. Prior to the pandemic, I saw a boba tea shop in our SF neighborhood take well over a year to open (only then to have the pandemic crop up); there's a small specialty grocer is going into the second year of construction and waiting on city issues, there are other shopfronts where they started work and just stopped not to speak of empty storefronts that just never even rent for years at a time and all of this prior to the pandemic. This in a neighborhood which still gets some decent foot traffic. From my perspective, and I do have a fair amount of experience in retail, I wouldn't touch San Francisco as a small independent proprietor; it's risky without these hurdles and with them you'd better be packing substantial investment, be already well connected within the city bureaucracy, and have some sort of prior reason to think you'd be successful in the market (business already known from elsewhere, famous chef, etc. )

by s17n 5y ago

fridif 5y ago

Sounds like a place that really doesn't want small businesses.

Apes 5y ago
Big businesses are banned too, so really it's just about making sure those who were here first are sheltered from any newcomers. It's like Trumpism for liberals. edit because hacker news won't let me reply: Big Businesses are literally banned from most places in San Francisco. If a business is over a certain size, they cannot open a franchise in around 90% of San Francisco. Last I heard, the cutoff was 6 franchise locations -- any bigger any you can't get approval. There are a couple of areas in the city where exceptions are made, but that's a very small part of the city.
- throwaway8581 5y ago
  Big businesses can afford to swallow upfront costs like that. Individual people using their savings to start a small business can't.
- solarkraft 5y ago
  Big businesses are more likely to be able to clear that cost of entry.
- boringg 5y ago
  My favorite example is that Blue Bottle a san francisco based coffee company that started as a super tiny shop ended up becoming one of the big companies and had a difficult time opening up coffee shops in the neighborhood due to the 6 franchise location. To be fair - it did take a lot of VC money to build out the company and it has a pretty impressive footprint. Still kind of funny to get kicked out of your own home turf. FWIW - as a former SF resident I love the diversity of stores without all the large chains coming in.
- dang 5y ago
  Please make your substantive points without flamebait. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - Apes 5y ago
    Let me be crystal clear then -- there are large groups of people in San Francisco who use intolerance and fear of newcomers as a defense against competition. They use regulatory capture to prevent people from moving here, and from opening businesses here. It's massively toxic behavior. I find drawing a parallel to Trumpism to be apt, since these are core defining traits of Trumpism. Yet despite all the valid hatred that Trumpism gets, the people abusing the same things in liberal cities get no criticism at all.
    - dang 5y ago
      I'm sure you have a good underlying point but this comment is not a step away from flamewar.
jacobolus 5y ago
There are 4 or 5 other small-business ice cream places within 3 blocks of that location. As far as I’m concerned the more the merrier, and it sucks that this particular project became a nightmare for the owner, but objectively this is already one of the most small-ice-cream-shop-friendly neighborhoods on the planet.
- dwaltrip 5y ago
  To do a proper analysis, you need to look at more than just the number of existing businesses. How many total groups attempted to open a business? How long does it take to open a business? What are the costs? Have these factors changed across time? And so on. But sure, using that as a rough heuristic, I agree it doesn’t seem likely to be the worst place to open an ice cream shop.
  - jacobolus 5y ago
    Here is a city zoning map: https://sfplanning.org/sites/default/files/resources/2019-02/zoning_use_districts.pdf https://sfplanning.org/sites/default/files/resources/2019-02... I think the biggest problem is that like 3/4 of the city is zoned as low-density residential (pale yellow areas), only allowing detached single-family homes or – in some places – duplexes with low building height limits, and not allowing mixed uses like small ice cream shops, bodegas, bookstores, or cafés. As a result small businesses get crowded into a few streets zoned as “commercial corridors” (purple areas), and both residential and commercial rents are much higher than they would be if more parts of the city allowed construction of low-rise apartment buildings with bottom-floor storefronts (e.g. to RC3 from RH1/RH2 zoning). The real winners are large-scale property owners, who end up skimming a substantial margin from all economic activity in the city. If the rent weren’t so punishing, an extra couple months of permit bureaucracy wouldn’t be nearly the nightmare it is now, and existing small business owners wouldn’t be so desperate to protect slim profits. (A once-in-a-century pandemic still might kill many nascent businesses, but it’s hard to plan for that one.)

lotsofpulp 5y ago

For one of my real estate projects, I have a competing hotelier that has tied me up in court for 6+ years now due to an arcane wording in the town's ordinances distinguishing zoning for "motels" rather than "hotels". The ordinance's wording was amended years ago shortly after the lawsuit was filed (for approving me for a hotel even though it was only zoned for a motel). Every single person involved knows it's bullshit, every variance and zoning committee meeting has been in my favor, but my competitor is notorious for using the legal system to to keep others tied up long enough in the hopes they bleed enough money to give it up. Or at least enjoys a competitive advantage in the meantime. So far, that project is 7 figures in the hole.

schoolornot 5y ago
What kind of avenues exist for a competitor to stall committee hearings like that?
- lotsofpulp 5y ago
  For one, the competitor waited until after the town approved all the variances and permits. That process alone took a year. There also aren't strict schedules with these zoning and permitting decisions, it's a "we'll get to it when we get to it", and if the hearings run late into the evening, and they don't get to your issue, then maybe you have to wait a month or two until they reconvene. So once the approval was given by the town, the hotelier, who had been watching all along, files a lawsuit against the town and my company, claiming it was granted improperly (which is technically true). Once that happens, you're now in the thicket of the legal system, and as the saying goes, "the process is the punishment". You win one battle, competitor appeals (waiting for the last day to file the appeal each time), you win that one, competitor appeals again. Your lawyer makes a mistake, go back to square 1. And months go by between decisions. Meanwhile, you're paying property taxes and legal fees like nobody's business.
youeseh 5y ago
> Every single person involved knows it's bullshit In many countries, this is a sure sign that palms need to be greased.

deleted 5y ago

[deleted]

duxup 5y ago

Can you go through some of this process without actually leasing or somehow deal with that? It would be interesting to hear how other folks actually, do this thing.

lotsofpulp 5y ago
Everything is up for negotiation. But high demand places might not agree to provisions that subject them to extra risk.

munk-a 5y ago

I'm a bit astonished - is the 7300/mo accurate? Retail space isn't cheap but it will usually run less per square foot than residential space and that feels like he was either way over-charged or else was trying to create a restaurant with a pretty big footprint.

pvarangot 5y ago
A 140 square feet room in that area with shared kitchen and bathroom goes for 2000. 7300/mo for that corner is probably accurate.

JumpCrisscross 5y ago

> this cost him $87600 in addition to whatever he spent on lawyers and his own energy Wasn't there a commercial rent moratorium during this time? Why did he keep paying the rent? I'd have been very up front with the landlord. The lease is signed with an LLC that will be worthless if the city doesn't approve the licenses. The cash is there. But it won't go to the landlord or to the LLC until the earlier of the (a) city approving or (b) moratorium expiring. I understand this is unsavory, but it's what these sorts of licensing processes force. There is a reason the New York restaurant business is notoriously scummy, and it's not because restauranteurs are bad people. (Far from it.)

dragonwriter 5y ago
> Wasn't there a commercial rent moratorium during this time? No. The eviction moratorium is not a rent moratorium.
sbuttgereit 5y ago
I think rent still accrued while eviction and without getting into whether that is right or wrong (landlords didn't get an expense moratorium), I think whatever specific solution may of applied to this instance due to the pandemic is beside the point. The issue was there prior to the pandemic. Prior to the pandemic, I saw a boba tea shop in our SF neighborhood take well over a year to open (only then to have the pandemic crop up); there's a small specialty grocer is going into the second year of construction and waiting on city issues, there are other shopfronts where they started work and just stopped not to speak of empty storefronts that just never even rent for years at a time and all of this prior to the pandemic. This in a neighborhood which still gets some decent foot traffic. From my perspective, and I do have a fair amount of experience in retail, I wouldn't touch San Francisco as a small independent proprietor; it's risky without these hurdles and with them you'd better be packing substantial investment, be already well connected within the city bureaucracy, and have some sort of prior reason to think you'd be successful in the market (business already known from elsewhere, famous chef, etc. )