Starting or expanding a business in North Beach and elsewhere in the northeast corner of San Francisco promises to become easier as the city’s Board of Supervisors passed a bill on Tuesday from member Danny Sauter that will consolidate and liberalize commercial zoning uses in his district. But it didn’t happen before a legislative gambit by bill opponents fizzled after prolonging proceedings.
The legislative package, dubbed “District 3 Thrives” by Sauter, aims to liberalize commercial zoning in parts of District 3, including North Beach, Nob Hill, Jackson Square, and Russian Hill. Notably, the legislation abolishes the North Beach Special Use District and moves some of its controls into the North Beach Neighborhood Commercial District. The overall effect would be to allow for new business formats, including shared and merged storefronts.
“I think it comes down to, are we going to make it easier for a small business to open or not? I think it does reflect that retail is changing, shopping patterns are changing, and we need to give a little more flexibility,” Sauter told The Voice in an interview before the vote. He also expressed confidence that he would get the required six votes to pass.
Introduced back in June, the legislation was reviewed by both the city’s Small Business Commission and Planning Commission, and extended hearings were held before the board’s Land Use Committee, during which considerable public comment was taken.
“The city, as a whole, and especially D3, has a hodgepodge of almost Frankenstein-esque code around managing small businesses; who can open where, and how late they can open. It creates a tough situation for new business owners,” Ben Bleiman, president of the city’s Entertainment Commission and director of the Discover Polk Community Benefit District, testified to the Land Use Committee. “We have a number of vacancies within our district, and as the supervisor said before, people are scared away from D3; they’re scared away from doing business there. They’re scared away by the code and the reputations of some of these neighborhoods.”
The bill also had the support of North Beach neighbors, the Jackson Square Merchants Association, the Golden Gate Restaurant Association, the San Francisco Chamber of Commerce, the Nob Hill Association, the Discover Polk Community Benefit District, the Chinese Chamber of Commerce, and Russian Hill Neighbors.
But one organization that opposed the bill and asked for repeated amendments throughout the process was the North Beach Business Association. They recently brought on Aaron Peskin, Sauter’s long-serving predecessor as supervisor, architect of much of District 3’s current zoning regime, and putative leader of the city’s self-identified progressive no-growth movement, as treasurer. The organization boasts around 70 of the neighborhood’s most high-profile businesses as members. According to a commerce and industry inventory report compiled by the Planning Department in 2018, North Beach is home to close to 3,000 businesses of one type or another, including around 500 retail concerns.
Romalyn Schmaltz, speaking on behalf of opponents at Monday’s committee meeting, accused bill supporters of bad faith.
“Over 50 of our small businesses reject this plan, Schmaltz told the committee. “Small business owners feel blindsided and have tried to hold meaningful meetings with supervisor Sauter, resulting in mostly insulting, and they believe it is intentional miscommunication.”
Despite the posturing, Sauter continued to offer compromise by adding amendments to the bill, the most recent of which removed a clause that would have allowed health services to use ground-floor storefronts in North Beach.
“This is very unusual, and I think it serves to be less about policy at this point, and more about other things.”
— District 2 Supervisor Stephen Sherrill
By the end of the committee process on Monday, District 11 Supervisor Chyanne Chen, a member of the progressive bloc and the only committee member to voice skepticism of the bill, supported sending it to the full board of supervisors the following day as a committee report, albeit without recommendation.
The following day at the whole board, some legislative jiu-jitsu occurred, which some members considered extraordinary.
District 1 Supervisor Connie Chan, leader of the progressive bloc and a protege of Peskin, continued to push for amendments, eventually offering a motion to duplicate the legislative file and send the bill back to committee to allow for subsequent adoption of a large number of amendments.
“I wanted to say that we do have a responsibility to listen to some of San Francisco’s most iconic and renowned businesses, which are actually opposing the supervisor’s changes proposed today,” Chan told the board, before offering the motion.
The motion left some members dumbfounded. One source inside City Hall told The Voice that this kind of motion was out of the ordinary, describing it as a “highly unusual and remarkable attempt to block legislation that will help small businesses specifically in Supervisor Sauter’s district.” But another noted that motions like these had been done before and are within board rules.
Land Use Chair Myrna Melgar chimed in at this point, reminding colleagues, as she did in committee, to respect supervisorial prerogative, a longtime folkway of the board in which customary deference is given to a member’s legislation when it affects only their district.
“By definition, we argue about things in San Francisco,” Melgar told her colleagues. We are not all in agreement on where to proceed, but we have a democratic process and district representation. So, in the Land Use Committee, we at the Board of Supervisors have a long tradition of deferring to the district supervisor on land use decisions specifically, because we trust that the district supervisor knows their district the best.”
“I think that this is a slippery slope going down this path, where other district supervisors want to write legislation for a different district,” she added. “It puts us on a path that I frankly don’t want to be on.”
Board President Rafael Mandelman then moved to consult with both the city attorney’s and the clerk of the board’s offices on how to handle the situation, in the meantime, moving to other items on the agenda. When they returned to the item, both Supervisors Stephen Sherrill and Bilal Mahmood noted that it had already been heard at two committee meetings and two commissions.
“This is very unusual,” noted Sherrill. “And I think it serves to be less about policy at this point, and more about other things. So I would encourage us to continue to engage in substantive policy discussions, but at this point, this seems less about policy and more about other things.”
Meanwhile, city attorney’s staff told Mandelman that considering the new amendments on the split file would require a continuance of both files for another week, so Chan replaced her earlier motion with one to just duplicate the file and send it back to the Land Use Committee. If that motion failed, the board would vote on whether to pass the legislation.
In the end, the vote on Chan’s motion was split 5–5, in the absence of a representative for District 4, and so it failed. The original legislation passed 8–2, with only Chan and District 10 representative Shamann Walton opposing. Surprisingly, Progressive District 11 representative Chen, who was skeptical of the bill during the committee process, and District 9 representative Jackie Fielder voted for it in the end.
Legislation at the board requires two readings, so the bill will be voted on again next Tuesday. It’s certainly possible that the second reading vote could have a different outcome, but that is also rare. Back in 2020, the board reversed course on second reading on an ordinance that would have banned smoking in apartment buildings.
It may be worth asking whether Aaron Peskin, the most powerful opponent in the background on this issue, has any chits left. We’ve reached out to him for comment.