SEC FORMULA RETAIL USES.

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1 Page 17 of 245 9/22/2011 (C) The establishment of a use that sells alcoholic beverages, other than beer and wine, concurrent with motor vehicle fuel is prohibited, and shall be governed by Section 229. Except in the SoMa NCT, where these uses are permitted accessory uses. (Added by Ord , App. 3/13/87; amended by Ord , App. 11/12/87; Ord , App. 11/7/97; Ord , App. 12/24/98; Ord , File No , App. 5/19/2000; Ord , File No , App. 11/17/2000; Ord , File No , App. 11/9/2004; Ord , File No , App. 12/12/2006; Ord , File No , App. 11/26/2007; Ord , File No ; Ord , File No , App. 12/19/2008; Ord , File No , App. 4/20/2011, Eff. 5/20/2011; Ord , File No , App. 7/5/2011, Eff. 8/4/2011) AMENDMENT HISTORY Division (a) use categories.69c and.69d, division (b)(1)(b)(iv) added; Ord , Eff. 5/20/2011. Division (a) use categories.69,.69b, and.85 added; division (b)(1)(c)(iii) amended; division (b)(1)(c)(vii) added; Ord , Eff. 8/4/ Section number reference should be So in Ord CODIFICATION NOTE SEC FORMULA RETAIL USES. (a) Findings. (1) San Francisco is a city of diverse and distinct neighborhoods identified in large part by the character of their commercial areas. (2) San Francisco needs to protect its vibrant small business sector and create a supportive environment for new small business innovations. One of the eight Priority Policies of the City's General Plan resolves that "existing neighborhood-serving retail uses be preserved and enhanced and future opportunities for resident employment in and ownership of such businesses enhances." (3) Retail uses are the land uses most critical to the success of the City's commercial districts. (4) Formula retail businesses are increasing in number in San Francisco, as they are in cities and towns across the country. (5) Money earned by independent businesses is more likely to circulate within the local neighborhood and City economy than the money earned by formula retail businesses which often have corporate offices and vendors located outside of San Francisco. (6) Formula retail businesses can have a competitive advantage over independent operators because they are typically better capitalized and can absorb larger startup costs, pay more for lease space, and commit to longer lease contracts. This can put pressure on existing businesses and potentially price out new startup independent businesses. (7) San Francisco is one of a very few major urban centers in the State in which housing, shops, work places, schools, parks and civic facilities intimately co-exist to create strong identifiable neighborhoods. The neighborhood streets invite walking and bicycling and the City's mix of architecture contributes to a strong sense of neighborhood community within the larger City community. (8) Notwithstanding the marketability of a retailer's goods or services or the visual attractiveness of the storefront, the standardized architecture, color schemes, decor and signage of many formula retail businesses can detract from the distinctive character of certain Neighborhood Commercial Districts.

2 Page 18 of 245 9/22/2011 (9) The increase of formula retail businesses in the City's neighborhood commercial areas, if not monitored and regulated, will hamper the City's goal of a diverse retail base with distinct neighborhood retailing personalities comprised of a mix of businesses. Specifically, the unregulated and unmonitored establishment of additional formula retail uses may unduly limit or eliminate business establishment opportunities for smaller or medium-sized businesses, many of which tend to be non-traditional or unique, and unduly skew the mix of businesses towards national retailers in lieu of local or regional retailers, thereby decreasing the diversity of merchandise available to residents and visitors and the diversity of purveyors of merchandise. (10) If, in the future, neighborhoods determine that the needs of their Neighborhood Commercial Districts are better served by eliminating the notice requirements for proposed formula retail uses, by converting formula retail uses into conditional uses in their district, or by prohibiting formula retail uses in their district, they can propose legislation to do so. (b) Formula Retail Use. Formula retail use is hereby defined as a type of retail sales activity or retail sales establishment which, along with eleven or more other retail sales establishments located in the United States, maintains two or more of the following features: a standardized array of merchandise, a standardized facade, a standardized decor and color scheme, a uniform apparel, standardized signage, a trademark or a servicemark. (1) Standardized array of merchandise shall be defined as 50% or more of in-stock merchandise from a single distributor bearing uniform markings. (2) Trademark shall be defined as a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs that identifies and distinguishes the source of the goods from one party from those of others. (3) Servicemark shall be defined as word, phrase, symbol or design, or a combination of words, phrases, symbols or designs that identifies and distinguishes the source of a service from one party from those of others. (4) Decor shall be defined as the style of interior finishings, which may include but is not limited to, style of furniture, wallcoverings or permanent fixtures. (5) Color Scheme shall be defined as selection of colors used throughout, such as on the furnishings, permanent fixtures, and wallcoverings, or as used on the facade. (6) Facade shall be defined as the face or front of a building, including awnings, looking onto a street or an open space. (7) Uniform Apparel shall be defined as standardized items of clothing including but not limited to standardized aprons, pants, shirts, smocks or dresses, hat, and pins (other than name tags) as well as standardized colors of clothing. (8) Signage shall be defined as business sign pursuant to Section of the Planning Code. (c) "Retail sales activity or retail sales establishment" shall include the following uses, as defined in Article 7 of this Code: "bar," "drive-up facility," "eating and drinking use," "liquor store," "restaurant, large fastfood," "restaurant, small self-service," "restaurant, full-service," "sales and service, other retail," "sales and service, retail," "movie theatre," "video store," "amusement and game arcade," "take-out food," and "specialty food, selfservice." (d) Formula Retail Uses Permitted. Any use permitted in a Neighborhood Commercial District, which is all a "formula retail use" as defined in this Section, is hereby permitted. (e) Formula Retail Use Prohibited. Notwithstanding subsection (d), any use permitted in the Hayes-Gough Neighborhood Commercial District, or the North Beach Neighborhood Commercial District, which is also a "formula retail use" as defined in this Section, is hereby prohibited. Any full-service restaurant, large fast food restaurant, small self-service restaurant or self-service specialty food store permitted in the Upper Fillmore

3 AFFIDAVIT FOR Formula Retail Establishments Date: February 26, 2010 Planning Department 1650 Mission Street Suite 400 San Francisco, CA T: F: To: From: Re: Applicants proposing a new Retail Use Establishment San Francisco Planning Department Affidavit for Formula Retail Establishments Under Planning Code Section 303(i), certain retail uses must have additional review to determine if they qualify as a Formula Retail Establishment. If a use does qualify as a Formula Retail Establishment, then additional controls will apply depending on the zoning district where the proposed business will be located. Businesses subject to the formula retail establishment controls include the following Retail Sales Activity or Retail Sales Establishment as defined in Article 7 and Article 8 of the Code: Amusement Game Arcade Bar ( 790.4, 890.4) ( , ) Drive-up Facility Eating and Drinking Use ( , ) ( , ) Liquor Store Movie Theater ( ) ( , ) Restaurant, Large Fast Food Restaurant, Small Self-Service ( , ) ( ) Restaurant, Small Fast Food Restaurant, Full Service ( ) ( , ) Sales and Service, Other Retail Sales and Service, Non retail ( , ) ( , ) Sales and Service, Retail Take-out Food ( , ) ( , ) Video Store Specialty Food, Self-Service ( ) ( ) If the proposed business is listed above and there is a Permit Application for any Alterations, New Construction, Commercial Tenant Improvements, Change of Use or Signage which relates to the establishment of that use, then before the project application is considered complete this checklist must be completed and signed as required below.

4 Affidavit for Formula Retail Establishments All retail use establishments must fill out the following form and sign the Affidavit before the Planning Department can complete review of a permit. PROJECT ADDRESS: BLOCK/LOT: ZONING DISTRICT: EXISTING/PREVIOUS USE & SQUARE FOOTAGE: Proposed Use NAME OF PROPOSED USE CATEGORY PER ARTICLE 7 OR 8, AS APPLICABLE: PROPOSED BUSINESS NAME: DESCRIPTION OF PRODUCTS OR SERVICES: Retail Operation 1 A Number of Retail Locations in Operation How many retail locations of this business are currently in operation nationwide? 1 B 1 C Other Pending Locations in San Francisco Other Pending Locations Nationwide Outside of San Francisco How many other sites in San Francisco have pending applications or approved permits to establish additional locations for this business that have not commenced operation? How many other US sites outside of San Francisco have pending applications or approved permits to establish additional locations for this business that have not commenced operation? If the number entered on Line 1 A above is 11 or more then the proposed use may be a Formula Retail Use and the questions in the following table must be answered. If the sum is 10 or fewer the Applicant does not need to provide any additional information on this form and may proceed to sign the Applicant s Affidavit on the subsequent page. SAN FRANCISCO PLANNING DEPARTMENT

5 Affidavit for Formula Retail Establishments STANDARDIZED FEATURES YES NO 2 Standardized array of merchandise Will this proposed use sell merchandise from a single distributor, bearing uniform markings and comprising 50% or more of the merchandise offered for sale, as measured by shelf or display space, in common with other locations of this business? 3 Standardized facade Will the proposed facade (face or front of the building looking onto a street or an open space), including awnings, have a facade design in common with other locations of this business? 4 Standardized decor and color scheme Will the interior of the business space, which may include but is not limited to, finishes, style of furniture, wall coverings, permanent fixtures or furnishings, have a style in common with other locations of this business? 5 Uniform apparel Will the proposed business require standardized items of clothing for employees, including but not limited to aprons, pants, shirts, smocks or dresses, hats and pins )other than name tags) as well as standardized colors of clothing style in common with other locations of this business? 6 Standardized signage Will the proposed business display one or more business signs (as defined in of the Planning Code) in common with other locations of this business? 7 Trademark or Service mark Will the proposed business utilize a Trademark (a word, phrase, symbol or design, or a combination of those that identifies and distinguishes the source of the goods of one party from those of others) or a Service mark (a word, phrase, symbol or design, or a combination of those that identifies and distinguishes the source of the services of one party from those of others) in common with other locations of this business? 8 Total Features Enter the total number of YES responses from lines 1 (previous page) through 7 Requirements and Provisions of the Code If the number of national locations (excluding the location proposed in this application) in Line 1 A is 11 or more and if the number of total standardized features of this business in Line 8 is 2 or more, then the proposed use is a Formula Retail Use. All Building Permit Applications for Formula Retail Uses for any use categories permitted shall be subject to the notification and design review procedures of 312 of the Planning Code as changes of use. If the Planning Department determines that an application or permit is for a Formula Retail Use the permit applicant of holder bears the burden of proving to the Planning Department that the proposed or existing use is not a Formula Retail Use. Any permit approved for a use that is determined by the Planning Department to be for a Formula Retail Use that did not identify the use as such is subject to revocation at any time. SAN FRANCISCO PLANNING DEPARTMENT

6 Affidavit for Formula Retail Establishments Applicant s Affidavit By signing below, I acknowledge: That I am the owner or authorized agent of the owner of this property; that I am familiar with the proposed business and its operation; that I have read and completed this form in its entirety and the information presented is true and correct to the best of my knowledge; and that I understand that receipt of these materials by the Planning Department does not mean that the application has been accepted as complete. Signature: Date: Print name, and indicate whether owner, or authorized agent: Owner / Authorized Agent (circle one) Phone: Mailing Address: Planning Department Determination THIS SECTION TO BE COMPLETED EXCLUSIVELY BY PLANNING DEPARTMENT STAFF The proposed use has been determined to be a Formula Retail Use: Yes No In the subject District the proposed use is: Principally Permitted Requires Conditional Use Not Permitted Subject Address: Application No.: Block/Lot: Date Filed: Application Type: Signature: Printed Name: Date: Phone: SAN FRANCISCO PLANNING DEPARTMENT

7 Memo to the Planning Commission HEARING DATE: JULY 28, 2011 Date: July 21, 2011 Staff Contact: Aaron Starr, Legislative Staff (415) Reviewed by AnMarie Rodgers, Manager of Legislative Affairs Subject: Informational Presentation on the Status of Formula Retail Controls BACKGROUND Overview. In 2004, the Board of Supervisors adopted San Francisco s first Formula Retail Use controls. This Ordinance established a definition; prohibited Formula Retail in one district; required Conditional Use Authorization in another; and established notification requirements in all neighborhood commercial (NC) districts. Since 2004, the Planning Code has been amended to expand Formula Retail Use controls, notably voters approved a ballot initiative in 2007 that formed the base for most of the City s current controls. Proposition G. In 2007, San Francisco voters approved Proposition G which required any ʺformula retail useʺ desiring to locate in any NC district to obtain Conditional Use Authorization. Prior to 2007, Formula Retail uses in NC Districts required 312 Neighborhood Notification; formula retail was either principally permitted, required Conditional Use Authorization or was not permitted, such as in the Hayes Gough and North Beach NCDs. Detailed History. In 2004, the Board of Supervisors adopted San Francisco s first Formula Retail Use controls (Ord ) under Planning Code Section (Formula Retail Uses). These controls established a definition of Formula Retail Use, prohibited these uses within the Hayes Gough Neighborhood Commercial (NC) Zoning District, required Conditional Use Authorization for these uses within Cole Valley, and required neighborhood notification pursuant to Planning Code Section 312 for these uses in all other NC Zoning Districts. In 2005, Section was amended to prohibit Formula Retail Uses within the North Beach NCD (Ord ) and require Conditional Use Authorizations for these uses on Divisadero Street between Haight and Turk Streets (Ord ). In 2006, Section was amended to require Conditional Use Authorizations for Formula Retail Uses within the Japantown Special Use District (SUD) (Ord ) and Section was added to require Conditional Use Authorizations for these uses within the Western SoMa Planning Area SUD (Ord ). In 2007, San Francisco voters approved Proposition G, which added Section and required Conditional Use Authorization for all Formula Retail Uses as defined in Section In 2008, Section was amended to prohibit Formula Retail Uses within the Chinatown Visitor Retail Zoning District and require Conditional Use Authorization for these uses within the Chinatown Community Business and Residential Neighborhood Zoning Districts (Ord ) and the Mixed Use General (MUG) and Urban Mixed Use (UMU) Zoning Districts (Ord ). In 2011, the Planning Code was amended to extend Formula Retail Use Controls, including Conditional Use Authorization requirements, to the RC 3, RC 4, RH, RM, RTO, and RED Zoning Districts (Ord ).

8 Memo to Planning Commission Hearing Date: July 28, 2011 Informational Item Formula Retail CURRENT CONTROLS Definition. Planning Code Section 703.3(b) defines a Formula Retail Use as: a type of retail sales activity or retail sales establishment which, along with eleven or more other retail sales establishments located in the United States, maintains two or more of the following features: a standardized array of merchandise, a standardized facade, a standardized decor and color scheme, a uniform apparel, standardized signage, a trademark or a servicemark. Use Types Subject to Formula Retail Controls. The Formula Retail Use controls of Section 703.3(c) apply to a finite group of uses, including: ʺBar,ʺ ʺDrive Up Facility,ʺ ʺEating and Drinking Use,ʺ ʺLiquor Store,ʺ ʺRestaurant, Large Fast Food,ʺ ʺRestaurant, Small Self Service,ʺ ʺRestaurant, Full Service,ʺ ʺSales and Service, Other Retail,ʺ ʺSales and Service, Retail,ʺ ʺMovie Theatre,ʺ ʺVideo Store,ʺ ʺAmusement and Game Arcade,ʺ ʺTake Out Food,ʺ and ʺSpecialty Food, Self Service.ʺ Formula Retail Use controls do not apply to uses that are not specifically listed above, including: Personal Service, Financial Service, or Medical Service. Authorization Process. Depending on the location of the Formula Retail Use, it may be either prohibited, permitted or permitted by Conditional Use Authorization. 1. Formula Retail is prohibited in the Hayes Gough Neighborhood Commercial District and the North Beach Neighborhood Commercial District, and formula retail full service restaurants, large fast food restaurants, small self service restaurants or self service specialty food stores are prohibited in the Upper Fillmore Neighborhood Commercial District. Pending legislation [BF Inner, Outer Clement and Geary NC Controls] would prohibit formula retail eating and drinking establishments and formula retail pet supply stores, if adopted by the Board of Supervisors. 2. Formula Retail Uses are permitted and do not require special notification nor a public hearing in the Potrero Center Special Use District. 3. Conditional Use Authorization is required in all other districts where formula retail controls apply. Districts which require Conditional Use authorization include Neighborhood Commercial (except where prohibited as described above); the Urban Mixed Use (except where permitted in the Potrero Center SUD as described above); Mixed Use General; Residential Transit Oriented; Chinatown Visitor Retail; and the Residential Commercial districts; and the Japantown and Western SoMa Special Use Districts. In these districts Conditional Use authorization is required even if the proposed Formula Retail use is would occupy a space that is currently occupied by a Formula Retail use. 2

9 Memo to Planning Commission Hearing Date: July 28, 2011 Informational Item Formula Retail When hearing a CU for Formula Retail the Commission is required to consider the following criteria in addition to the standard CU criteria: The existing concentrations of formula retail uses within the Neighborhood Commercial District. ISSUES The availability of other similar retail uses within the Neighborhood Commercial District. The compatibility of the proposed formula retail use with the existing architectural and aesthetic character of the Neighborhood Commercial District. The existing retail vacancy rates within the Neighborhood Commercial District. The existing mix of Citywide serving retail uses and neighborhood serving retail uses within the Neighborhood Commercial District. Formula Retail continues to be a contentious issue in many of San Francisco s NC Districts, particularly with pet food and supply stores, such as Pet Food Express and Unleashed by PETCO, and national restaurant chains like Subway and Starbucks Coffee. Recently, there have also been concerns about the proliferation of branch banks ( Financial Service ), which are not subject to the Formula Retail Use controls. While Financial Services are listed as a distinct use category in each NC Zoning District, with use controls tailored to each District (i.e. prohibited, permitted and permitted by Conditional Use Authorization), concerns have been raised that these uses have similar impacts to Formula Retail Uses and should be subject to these controls, including Conditional Use Authorization. It should be noted that while the Commission is required to consider the criteria listed above, the interpretation of how to apply these criteria has varied. At times arguments have been made that a district with a few existing Formula Retail Uses should be considered as a neighborhood where new Formula Retail Uses would be acceptable whereas others will review the same information and conclude that the neighborhood is over saturated and therefore no more Formula Retail should be allowed. Similarly, if a district has no Formula Retail uses, it could be interpreted that the addition of one such use would have a de minimis impact on the district OR it could be interpreted that the district is one that should have no Formula Retail uses. While the varied interpretations create a lack of certainty, the lack of a rigid definition also allows the Commission to weigh each case on its merits and utilize discretion. APPEALS TO THE BOARD OF SUPERVISORS Since 2007, the Board of Supervisors has heard at least three appeals of Formula Retail Conditional Use authorizations. Specifically, the cases were resolved as follows: 1575 South Van Ness Avenue dba ICI Paints : The Board of Supervisors modified but upheld CU California St dba Pet Food Express : The Board of Supervisors failed to either uphold or overturn the CU. Therefore, the Commission s authorization stood Geary Blvd dba Starbucks : The Board of Supervisors disapproved the CU. 3

10 Memo to Planning Commission Hearing Date: July 28, 2011 Informational Item Formula Retail SUMMARY OF CASES (NOT INCLUDING ACTIVE CASES) Of the cases that have been filed and resolved since November of 2007 there have been approximately 31 Formula Retail Conditional Use cases. Of those 6 have been withdrawn, 3 have been disapproved, 22 have been approved. Not including currently active cases, 29% of all Formula Retail Conditional Use applications have been either withdrawn or disapproved by the Commission and 71% of all Conditional Use applications have been approved by the Planning Commission since November SUMMARY OF ALL CASES (INCLUDING SIX ACTIVE CASES) Of all the cases that have been filed since November of 2007 and including those that are currently pending, there have been approximately 37 Formula Retail Conditional Use applications filed with the Department. All Applications for Conditional Use Authorization of Formula Retail Filed On or After 11/7/ active permit 16% of all cases since 2007 Approved Disapproved Withdrawn Active 6 withdrawn permits 16% of cases since '07 3 disapproved permits 8% of cases since '07 9 withdrawn OR disapproved permits 24% of all cases since approved permits 60% of cases since '07 4