Planning Study of Formula Retail (Chain Stores)
Subsidiary Working Group
San Francisco initiated formula retail regulations in 2004. After 10 years of experience with implementation of these controls and one year of study and dialog of the issue, San Francisco recently updated the controls. These new controls now include increased rigor in conditional use review, specific regulation of signage and façade for formula retail, and an economic impact study for larger stores. One controversial topic was left outstanding: the regulation of subsidiaries. Both Supervisor Mar and Planning Department staff found the proposed regulation of subsidiaries to be problematic. Therefore, a working group was established to further explore the topic and make recommendations to the City’s Small Business and Planning Commission about the viability of further regulation. This group met from January 28-March 25, 2015.
Update December 2014 - Ordinance Passes and is Now in Effect
The final Formula Retail and Large-Scale Retail Controls Ordinance was finally passed by the Board of Supervisors on November 18, 2014 and signed by Mayor Ed Lee on November 26, 2014. The ordinance will go into effect on December 26, 2014 and applies to all complete applications received by the Planning Department after October 24, 2014. For a summary of actions taken since the Planning Commission hearing in July, please continue reading.
The Planning Commission Formula Retail Ordinance (Board File No. 140844) and Supervisor Mar’s Formula Retail Ordinance (Board File No. 130788) were considered at the Land Use and Economic Development Committee of the Board of Supervisor’s on October 27, 2014. At the Committee hearing, Supervisor Mar sponsored the Planning Department Ordinance with the following amendments:
- Require 3 new economic impact studies with CU consideration for large-scale retail
- Retain the threshold number of 11
- Codify the Upper Market NCT method for calculating Formula Retail concentrations for all Formula Retail CUs
- Delete the analysis of permanent employment in the impact area for the Economic Impact Study requirement
- Require an Economic Impact Study for Formula Retail uses over 20,000 sf as part of the Formula Retail CU, exempting grocery stores
- These 2 changes resulted in the Economic Impact Study being required for all large scale retail uses over 50,000 in all but the C-3 Zoning Districts and with Formula Retail uses over 20,000 sf
- Require 30 day mailed notice for Formula Retail CUs
Supervisor Weiner made additional amendments in Committee:
- Codify staff disapproval of Formula Retail when the concentration is over 20% in the Upper Market NCT (current Commission Policy)
- Remove Business and Professional Services from the proposed definition of Formula Retail
- Retain existing controls on non-Formula Retail Financial and Limited Financial Services in the Castro Street NCD, Upper Market NCT and 24th Street – Noe NCD
- Added a grandfathering clause to for any application made to the City prior to 10/24/14
The Ordinance passed Committee on first reading. The file was duplicated with 2 additional amendments to come back to the Planning Commission:
- Codify and make permanent Supervisor Weiner’s interim controls in the Castro NCD which require a CU when a use is determined to be Formula Retail and then alters a standardized feature so they are no longer Formula Retail
- Exempting personal and financial services from Formula Retail controls if they are located above the ground floor
The Formula Retail and Large-Scale Retail Controls (Board File No. 140844 Amended in Committee) was considered by the full Board of Supervisors on November 4, 2014 and passed unanimously. Supervisor Weiner made one amendment to clarify the grandfathering clause to be specific to complete applications made to the Planning Department prior to 10/24/14. Supervisor Mar discussed his intent to lead a working group to further consider the issue of regulating subsidiaries and expediting the CU process for Formula Retailers with less than 20 locations.
On November 18, 2014, the Board of Supervisors finally passed the Formula Retail and Large Scale Retail Controls Ordinance [Board File No. 140844] with a unanimous vote of 10-0 (with Supervisor Campos absent). The Board of Supervisors approved ordinance (Board File No. 140844 Amended in Board) will go into effect on December 26, 2014. For more information, check the Clerk of the Board’s legislative database.
Certain commercial uses are considered to be formula retail establishments in San Francisco. Existing formula retail controls are based on 2004 legislation that established, in specific zoning districts, a definition of formula retail, a notification requirement, a requirement for Conditional Use authorization for formula retail on certain blocks in the Haight/Cole Valley, and a prohibition on formula retail in the Hayes-Gough Neighborhood Commercial District. In 2007, San Francisco voters passed Proposition G, which expanded the controls by requiring Conditional Use authorization for all formula retail establishments within all Neighborhood Commercial Districts.
Formula Retail - What Is It and Why Does San Francisco Care?
In an effort to "protect San Francisco's vibrant small business sector and create a supportive environment for new small business innovations," Section 703.3 of the San Francisco Planning Code mandates specific controls on "formula retail" uses.
Formula retail uses are commonly referred to as "chain stores." Under Section 703.3 of the San Francisco Planning Code, they are 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 World, 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 service mark.” In other words, retail stores with multiple locations and a recognizable "look" or appearance.
The definition of formula retail applies only to specific retail uses: bars, restaurants, limited restaurants, liquor stores, retail stores, movie theaters, video stores, and amusement and game arcades and now applies to personal services such as salons and gyms as well as fringe financial and limited financial services and to tobacco and massage establishments.
You might have heard about one of the recent or pending proposals to change San Francisco's formula retail regulations, or of a recent store proposal that’s drawing attention. Conversation is growing around formula retail: polls, focus groups, and studies are now commonplace; news reports and local blogs are exploding with opinions.
In June 2013, in response to a number of new and pending proposals to revise the City’s policy toward formula retail, Commission President Rodney Fong directed Planning Department staff to review and analyze the current planning controls in San Francisco. On July 25, 2013, the Planning Commission passed Resolution No. 18931, recommending to the Board of Supervisors that the issue of formula retail be further studied to increase understanding of the issue overall and to examine potential economic and visual impacts of proposed controls before any new legislation was enacted. The Planning Department selected Strategic Economics Consulting Group from the City’s pre-qualified economic consultant list maintained by the Controller’s Office to carry out the study.
Funded in its entirety by the Planning Department, the study was completed in June 2014. Based on the data gathered, the Department will analyze existing policy and controls to determine whether changes to the definition, process, or applicable geographic areas would improve neighborhood character and economic vitality.
This study is intended to provide data and analysis in a timely manner to assist decision-makers in analyzing current and future legislation. This effort is not intended as a vehicle for citywide outreach due to limited resources and time allotted for review. However, information was presented at public hearings before the Planning Commission throughout the winter and spring of 2014.
The dates for the Planning Commission to review the Department's economic study and potential policy changes are as follows (note: as reports and findings are presented, they will appear as links below):
- November 18, 2014
Board of Supervisor’s Final Hearing on consolidated ordinance sponsored by Supervisor Mar
[ Board File No. 140844 BOS Packet 11/18/14 ]
- November 4, 2014
Board of Supervisor’s First Hearing on consolidated ordinance sponsored by Supervisor Mar
[ Board File No. 140844 BOS Packet 11/4/14 ]
- October 27, 2014 Board of Supervisors’ Land Use and Economic Development Committee Hearing on Planning Commission
[ Board File No. 140844 Committee Packet ] & Supervisor Mar’s Ordinance [ Board File No. 130788 Committee Packet ]
- July 17, 2014
Informational Presentation by Chief Economist Ted Egan, Ph.D. on Supervisor Mar’s Ordinance, “Expanding Formula Retail Controls: Economic Impact Report”
Commission consideration of Supervisor Mar’s Formula Retail Ordinance [ Board File No. 130788 ] and
Consideration of Planning Commission Proposed Ordinance. The revised ordinance can be found here.
Ordinance for Adoption Presentation to the Planning Commission
- May 22, 2014
Policy Recommendations, Discussion and Draft Ordinance amending the Planning Code as initiated by Commission
Policy Recommendations Presentation to the Planning Commission
- April 24, 2014
Draft final report presentation to the Planning Commission
- February 27, 2014 (at the completion of Phase 1)
Phase 1 report: revised Citywide Analysis, draft Issue Briefs
Phase 1 report: Draft Issue Briefs Presentation to the Planning Commission
- Findings from January 23, 2014 hearing:
Preliminary Department Report & Feedback on Phase 1
San Francisco’s Formula Retail Economic Analysis - Planning Commission Update
- Findings from July 25, 2013 hearing:
Memorandum to the Planning Commission recommending further study
Resolution initiating the Formula Retail Economic Analysis
San Francisco Formula Retail Studies
The Planning Department is aware of the following recent efforts to study formula retail in San Francisco.
- San Francisco Planning Department Study
The San Francisco Planning Commission requested this report. It was prepared by Strategic Economic consultants and published on June 16, 2014. This report reviews the role that existing formula retail establishments play in San Francisco’s neighborhoods, the impacts of the City’s existing formula retail controls, and the potential effects of certain proposed changes to the controls.
- San Francisco Commercial Real Estate Brokers’ Formula Retail Mapping Project
A group of San Francisco commercial retail brokers conducted a thorough, storefront-by-storefront survey in 28 retail corridors. The results of their 2013/2014 extensive, on-the-ground survey are available, and include a count of retail spaces by block face, survey of vacant store fronts, and characterization of existing formula retail.
- San Francisco Retail Diversity Study
This 2007 study was completed by Civic Economics at the request of the San Francisco Locally Owned Merchants Alliance. The study looks at San Francisco, Daly City, Colma and South San Francisco and provides a Market Share Analysis, Economic Impact Analysis, and Consumer Guidance.
- Expanding Formula Retail Controls: Economic Impact Report
Released in February 2014, the Office of the Controller prepared a report in response to a proposed ordinance (item #130788), introduced by Supervisor Eric Mar in 2013, which would expand the definition of formula retail and require the Planning Commission to consider an independent economic impact report detailing how a proposed chain store would affect existing businesses.
Formula retail uses are regulated by the San Francisco Planning Code. To maintain the character and purpose of distinct areas in San Francisco, the City's geography has been divided into distinct zoning use districts (view these zoning use districts on the San Francisco Zoning Map and Section 201 of the Planning Code). For each parcel in any given zoning district, the Code identifies activities or uses as either: Permitted, Conditional, or Not Permitted.
This is a map of our current Formula Retail controls, illustrating whether a proposed Formula Retail establishment is Permitted, requires a Conditional Use authorization, or is Not Permitted. In certain districts, a use may be permitted if it’s an independent operation, and may require Conditional Use authorization – or may not be permitted -- if it’s a formula retail business. For more information about the review and approval process for a Formula Retail establishment, please visit this page.
Recent or Pending Proposals and Changes
There are ten pending or recent modifications related to formula retail controls in the City. The following is a summary of recent formula retail control proposals:
- Planning Commission Initiated Ordinance. This report provides the policy basis for the Commission's Ordinance
- Supervisor Mar's Ordinance expanding Formula Retail Controls. This ordinance [ Board File No. 130788 ] is pending before both the Planning Commission and the Board of Supervisors.
- Planning Commission’s Policy for Upper Market. This policy was enacted by CommissionResolution Number 18843 on April 11, 2013.
- Supervisor Breed’s Ordinances for the Fillmore and Divisadero Neighborhood Commercial Districts. These draft Ordinances [ Board File Nos. 120814 and 120796 ] are pending before the Board of Supervisors.
- Supervisor Breed’s Ordinance for the Hayes-Gough Neighborhood Commercial Transit District. Draft Ordinance [ Board File No. 130486 ] is pending before the Board of Supervisors.
- Supervisor Farrell's Ordinance for the Upper Fillmore Neighborhood Commercial District.Draft Ordinance [ Board File No. 130735 ] is pending before the Board of Supervisors
- Supervisor Kim’s Interim Controls for Market Street. This Board of Supervisors Resolution [Board File No. 130712 ] has been enacted.
- Board of Appeals’ ruling on Appeal No. 13-030 established a precedent that signing a lease but not occupying the space counts toward the number of formula retail establishments.
- Supervisor Wiener’s controls on food trucks.This ordinance [ Board File No. 120193 ] has been adopted.
- Supervisor Cohen’s Ordinance establishing a Third Street Formula Retail Restricted Use District. This ordinance [ Board File No. 130372 ] has been adopted.
Have questions about the upcoming hearings or Planning Department study? Contact:
Senior Policy Advisor
SF Planning Department
“Chain Fight Postmortem: How Jack Spade Changed the Formula Retail Conversation”
The Mission Blog, Daniel Hirsch
January 3, 2014
“Chain store foes expected to make a stink over new perfume shop on Valencia Street”
San Francisco Business Times, Renee Frojo
December 19, 2013
“New Fight About Chain Stores May Erupt on Valencia Street”
San Francisco Public Press, MC Anderson
December 17, 2013
“What it Means to Keep Chain Stores Out of San Francisco”
The New Yorker, Lauren Smiley
September 20, 2013
“San Francisco to chain stores: Get out!”
Salon, Henry Grabar
August 31, 2013
“New Regulations for Chain Stores in S.F. Proposed”
SF Examiner, Joshua Sabatini
August 1, 2013