San Francisco Subjects Formula Chains to Added Scrutiny

Date: 1 Apr 2004 | posted in: Retail | 0 Facebooktwitterredditmail

Under a city law adopted in March, chains seeking to locate in San Francisco could be required to undergo a public hearing and meet certain conditions before being granted a permit to open.

Sponsored by Supervisor Matt Gonzalez, the ordinance passed on an 8-3 vote by the Board of Supervisors. It must pass a second reading, but support appears solid and the margin is wide enough to overcome a veto by the mayor.

The ordinance adds “formula” businesses to the list of uses that require neighborhood notification under San Francisco law. Residents will be notified whenever a formula business applies to open in their neighborhood. They will then have the option of requesting a public hearing and subjecting the applicant to a list of criteria. In addition, it bans formula retailers entirely from the four-block Hayes Valley neighborhood business district and requires them to automatically undergo a hearing and review in the Cole Valley area.

The ordinance encourages neighborhoods to consider their own needs and to petition the city if they would also like a complete ban or automatic review for formula businesses, or would prefer to have the notification requirements lifted altogether.

“We really have something to protect—not just our individual neighborhoods, but the whole character of San Francisco,” said Ed Bedard, vice president of the Hayes Valley Neighborhood Association and one of the leading advocates for the new law.

Hayes Valley has struggled with a problem common to many up-and-coming San Francisco neighborhoods. Once rundown, the commercial district was brought to life by an eclectic group of local merchants who were willing to take a chance on the neighborhood. Now, chains that once shunned the area are looking to move in and milk the area’s popularity.

The ordinance defines a formula retailer as one of at least a dozen outlets in the U.S. that share common features such as a standardized array of merchandise, trademark, architecture, or decor. The law applies throughout the city except for the downtown area around Union Square, which is already overrun by dozens of national brands, and Fisherman’s Wharf, a tourist shopping area.

“San Francisco needs to protect its vibrant small business sector and create a supportive environment for new small business innovations,” the ordinance notes. It goes on to state that formula businesses are increasing in number—San Francisco already has more than 60 Starbucks coffee shops and 50 Walgreen outlets—and that their continued proliferation threatens to eliminate business opportunities for residents and to harm the diversity of the city’s retail base.

The ordinance directs the Planning Commission to develop guidelines for evaluating formula retail applications that come up for public review. The guidelines must consider: the existing concentration of formula retail businesses within the area, whether similar goods or services are already available, how the proposed business will affect neighborhood character, retail vacancy rates, and the balance of neighborhood-serving versus citywide or regional-serving businesses.

— San Francisco’s Formula Business Ordinance

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.

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