that may have neighborhood organizations that are part of that area. and the same could be true perhaps to a lesser degree of market octavia and that is one concern and the other thing is as we look at these in-kind arrangements, when we look at the use of in leiu fees or improvements within a neighborhood, we all have mistaken that and that is good that it comes before the planning commission and even though the cac may be neighborhood and happen citywide and people moving into an area perhaps might have certain thing they are interested in and certainly becomes a more attractive area if the in-kind aproouchlts address the whole population of congressman, not just the population that lives in an area and it is important this be vetted as broadly as possible so that would be my

feeling on it and we'll see what the other commissioners would say. i wouldn't mind a continuance for overs to have an -- to weigh in on it. >> i think the public park is a good example of the public opinion and to propose to do a public park and what we're talking about now is whether it pays for through the fees and the city built it or whether the developer built it and pay the feeses and there is a difference process about the department does and there are pub hick hearings by d.p.w. or m.t.a. and that engagement processes the local neighborhood groups and the city wide neighborhood

groups and that still happens. this is about who builds and pays for it. >> and i think i understood your graph, but there could be a situation where the cac heard and advised about in-kind agreement and perhaps was not in faif, but there is an avenue it could come to the planning commission anyway. that answers a lot of my concerns because that allows for that. >> as long as there is an in-kind fit and i think you have explained this and it fits within a public process and public prioritiy and as peter cohen was saying, some developers will want to do something that benefits the project in a more direct way.

within the department and parks and rec and d.p.w. and implements the priorities that are out there, i think we can give it a shot. president miguel: commissioner olague. vice president olague: i agree with the comments from peter cohen and not going to reiterate them and when we were looking at the neighborhood plans, i don't think the intent was to ever sort of go the route of in-kind and wasn't something that we have discuss ed in-depth or encouraged that and i didn't

support that and members of both places were participating and trying to create a policy for in-kind agreements instead of an automatic green light on them. i feel comfortable with what is before us and especially a couple of years. >> there is the commitment of the department to come back and report on that faster review. >> it seems there is a public process attached to this and so i am comfortable with moving ahead with it today given that there's been a lot of public input and the opportunity for that when we have the in-kind come before us and will be back

to us in a couple of yearses and allow for the public scrutiny and open to whatever. >> i am also open to go ahead on it today and a couple of comments on new parks and open space and a minimum of three year maintenance and the problem in the past with maintenance agreements on public parks is that rec and park doesn't have money to maintain them afterwards. and so i would personally scrutinize it very, very careful carefully. three years is nothing in the life of a park and i would have serious concerns about that.

and at least the minimum is in here. and in-kind agreements are standard and this is a different one in that it is in lieu of a payment of fees. and i have participated in a number of nonprofits that have gifted the city with in effect in-kind projects and in numerous cases a great deal for park and rec and number one, can be onerous and expensive and there were instances where it was possible for the nonprofit in effect to deliver three times the amount of merchandise at the

same price and still do it in conformity with all city regulatio regulations. the concept does work and it is very, very standard. many nonprofits utilize that process. and i don't want the public to think this is anything we're inventing here. this is very, very standard and developers can in effect take care of certain city needs without going through the city doing it on their own time. commissioner sugaya? commissioner sugaya: it will be interesting to see what happens given the current development climate since all of this is kind of dependent on development happening and we might not have a very long report in two years anyway.

president miguel: mr. graham? >> i wanted to thank the cac and the work for this and this is something the commissioner asked for a few weeks ago when that project came up. i think the advantage of having this policy is, in fact, and just having the policy in place will address the concern about overuse because it actually makes it very clear when we can and cannot or should or should not use the in lieu program and some types of improvements lend themselves to this more than others. and with the larger products or economy of scale and this will probably be the only one built within five years. other types of improvements are clearly less inclined for

in-kind. the policy of the case by case basis. president miguel: thank you. >> is there a motion? >> move to approve. >> second. >> commissioner antonini? >> aye. >> aye. >> commissioner miguel? >> aye. >> thank you, commissionerses. you are now on item 11, 2010.0464 contraction for 445 valencia street. >> good afternoon, commissioners. erica jackson, planning department staff. before you is a request for conditional use authorization under planning code to allow a new massage establishment within the valencia street commercial district at 445 va leps ya

street and -- 445 valencia street. it meets the planning code criteria. and the business has three xiing locationses within san francisco and all three locations are in good standing with the department of public health and have received all the required city approval. there are no open vying violation cases with the building department and with the planning department for the three locations. the applicant has filed a new massage permit with the department of public health for the new location. and condition approval with insures that the applicant maintains in good standing with the department of health and failure to do so can be resevened by the planning commission. given the findings discussed, staff recommends the approval of the conditional use authorization with conditions. thank you. i'm available for questions. >> thank you. any public comment on this item? excuse me. project sponsor.

the project sponsor is here and wishes to speak. if not, is there any public comment on this item? none appearing, public comment is closed. vice president olague: i might have of looked it, but i couldn't find the hours of operation here. maybe it's on this one. >> i believe it's under condition 13. page 11. from 7:00 a.m. to 10:00 p.m. president miguel: 7:00 a.m. to 10:00 p.m. the health code. vice president olague: right. those are standard. for people that live above obviously. just wanted to make sure that the tenants are not that it' going to be disturbing. >> it is an s.r.o. hotel that's

above. vice president olague: yeah. and i'm going to move to approve. i don't see anything here. >> second. >> commissioners the motion on the floor is for approval. >> commissioner antonini. >> aye. >> commissioner sugaya. >> aye. >> commissioner olague. >> aye. >> commissioner miguel. you are on item 12, 2010.0072c. 627 vallejo street. >> good afternoon, president miguel and commissioners. i'm rick crawford of department staff. this is a request to legalize the current arrangement uses at 627 vallejo street by permitting the owner to discontinue the grocery store use and legalize the establishment of a stand-alone liquor store and include the floor area for wine sales and maintain the existing accessories small fast food restaurant as a stand-alone use.

the project is located at southwest corner of vallejo and columbus avenue within the north beach neighborhood commercial district and the north beach special use district. on august 30 of 2007, the planning commission authorized a conditional use to allow the establishment as a small service restaurant of 950 square feet inside the retail grocery store and to allow wine sales as an accessory to the grocery store. the area of the restaurant was limited to 950 square feet with no physical separation between food service and the store permitted and required if the grocery store were to change to another use, a new c.u. authorization would be required for the stand-alone restaurant it. the area of wine sales is limited to 745 square feet and planning code allows wine sales as accessory provided they do not occupy more than 15% of the store floor area. the approved wine sale area is

14.9% of the 4,971 square foot area of the store excludeing the restaurant area. the sponsor has been operating the business for over a year and has never been in compliance with the terms of the 2007 c.u. authorization and conditions of approval. the department has an active enforcement case against the property for exceeding floor area limits for the wine sales and also for the failure to restore the store front to the historic character. and i have here for you a report an that of mr. dario jones of department staff. planning code section 218.2 allows the elimination of a grocery store if it can demonstrated that it is not economically viable. the section requires the applicant to provide 24 month of financial data indicating that the use is not generating a profit. the sponsor submitted financial data for 12 months because they have not been open for 24 months when they made the application.

in addition, the business has not operated as a grocery store during that period but more of a wine store with specially grocery items similar to the present request. the applicant states he cannot make a profit as a grocery store but can do as a wine shop although it appears he has never attempted to operate as a grocery store and is unprofitable as a wine shop and specialty food store. the department has received seven letters of support for the project including one for the north beach neighborhood association and the north beach chamber of commerce. we received two letters in opposition including one from telegraph hill association and the vice president of the north beach merchants association. the department recommends disapproval because they believe this project is not desirable under section 303 of the planning code for the following reasons. the stand-alone self-service restaurant is not permitted to occupy a commercial space by a

sales or service such as a grocery store and for planning code section 780.3b. and the project would eliminate a neighborhood serves grocery store. and the proposed project does not meet the applicable requirements of the planning code and is not consistent with the objectives and policies of the general plan. the commission's action to disapprove the request is necessary for enforcement to resume and compliance with the planning code and provisions of the 2007 motion to be achieved. i'll be happy to answer any questions that you may have. thank you very much. president miguel: thank you. project sponsor? >> good afternoon, commissioners.

our location has been open for about a year and a half under the conditional use permit of grocery and a self-service restaurant and a wine retail store with specialties. in 2009 which was our first year of operation we have lost $751,0 $751,000. money that came from refinancing our personal property. the accusations are that we never tried to have a grocery store. we have 6,000 square feet which is a kitchen, storage, bathrooms, grocery, self-service restaurant, a wine retail store and a location that has never

worked in the past 10 years for anything. documentation is being given to mr. rick crawford which support what all of our losses. financial statements were admitted to him, sales tax returns were submitted to him. and the letter from a certified public accountant was submitted to him. as we learned in our business, we find ourselves running out of money. and maybe at a point in time we should have some good sense and just close it down. the same way other operators have closed that location down

in the past 10 years. prauf but sometimes common sense is not so common, so we kept on going. and we started changing our operation. what we should have done is come. you and ask you for a change of use, but we didn't. maybe we should have went to the planning department and asked them for change of use, whatever the normal process is. we did not do that. am i guilty of that? very much so, yes, i am. but as we losing all this money, we come to a desperate situation and how do we stay in business? we took about 80% of the groceries out, we did. it was not done because of greed because if you do thing for greed it's because you want to make more money. we never made any money.

greed had nothing to do with that. wasn't done to spite anybody. it wasn't. we were the ones working there every day and losing must be. we never laid off anyone of our employees. all the losses were accrued because of groceries? absolutely not. we have is t same amount of employees we had when we open regardless of the losses. couple of things happen in 2010. due to the changes that we made, we have minimized the losses. which is able enough to stay in business. also triggered another thing, they complain two different departments from the planning department because we are in breach of a use permit, rightfully so. that's why we're here today.

we're asking you for an adjustment in the use permit for a change in the use permit so allow us to operate. if you do grant us that permit, we may have a chance. if you don't, and we will thank you very much for your time. i will be here until the next case comes up. if you have any questions now, i will be happy to answer. i have a number of public comments cards which i will call. i am calling cards that i have. you get three minutes and it is already taken if you want to come up and submit a card.

i am calling them in the order in which they came in. >> commissioners, i am a long time resident of north beach. as you see here i have a head of lettuce. this is a head of lettuce. i hope you, as the state, are not prepared to or are not about to tell somebody they have to sell lettuce. i do not think thomas jefferson had that in mind. this place is clean. he is an asset to the neighborhood. i think that if you rule adversely against him we will be looking at another 10-year vacancy and vacancies depress me. >> thank you. sue hester.

>> members of the commission i am the architect for the project. and i am also the applicant officially on paper. i would like to speak regarding the report which was submitted by the planner as well as try to give you a little bit of background since i have been working on this project for over 10 years. i worked for the previous owner who spent after the market went out of business and they requested to open up truly mediterranean. that went out of business for lack of neighborhood involvement and neighborhood support. the building was sold. my previous client purchased the building which was vacant for almost four years. and they spent time and money and effort and i spent many

hours in meetings looking for grocery tenants that would be satisfactory both to the planning department and the neighborhood. all we could get was restaurants, nightclubs, bars and such things. as a result of not being able to find an appropriate tenant, the previous owner sold the building at a significant loss after paying almost four years of mortgage with no tenant income. we are very fortunate to have three upstanding san francisco businessmen take over this building and spend over $2 million renovating it and upgrading it. i am very sorry that you did not mention that. $2 million spent restoring and upgrading a building that is a historical resource. we cleaned up the building. we cleaned out the graffiti. we were thanked every day by people on the street for bringing this building back to

life. one thing that was not mentioned in the report is that it says and repeatedly it seems that there is kind of a boilerplate statement that keeps coming back, eliminating the neighborhood serving grocery store would force shoppers to settle for convenient goods that don't offer fresh foods and vegetables. the report fails to mention this document submitted to the previous planner and to this planner and i will submit later on to you which lists all of the stores in the area and all of the food stores. it is very simple. if you go over there you will find lee's market, 100 feet away. little city market, 50 feet away. a pastry shop, 25 feet away. not too far away is a safe way and a trader joe's.

when we went we requested and wanted to know if people came into the market to buy anything. a little bit of pasta. not one person came in. how is it possible that -- >> thank you. your time is finished. >> i can have somebody's time? >> no. everyone gets their own three minutes. >> commissioners, good afternoon. in the 1950's when i was fwrowing up my mother frequently shopped at pialwaysa market. it was a bustling grocery store filled with color, wonderful aromas and italian dialect. that pretty much is gone now. rossi's closed a number of years ago.

it is great to have neighborhood serving businesses but neighborhoods need to resip riicate or those businesses will not survive. i spent a lot of money in north beach. i know the area. and i can tell you that other than a few cafes the residents do not patronize north beach business in a significant fashion. there is one thing, practice is another. you cannot have it both ways. a produce section was kept when the site reopened. the produce area did not do much to serve the community. there are a number of good produce stores nearby effectively new china town and a natural foods store as well. personally i would like to see a good variety of cheeses, broad selection of olives but that are not particularly perishable and that would complement the wine sales in

the store. having said that the produce section does not work. perhaps it is time to let it go. thank you very much. >> is there additional public comment on this item? >> recently i have met tiffany. in 2007 when the applicants came forward to have their vision, the principle and conditional use would be for a retail grocery. there were going to be accessry uses like a wine shop and also a catering business like a self service restaurant they also cater out of. what happened is that they went ahead and put stuff on the shelf and in the freezers that one, people did not buy because

they just did not participate or it was stuff on the shelf that people did not want so they did not come in and buy it. ultimately they threw a lot of the stuff away. and they adjusted their business model. their big mistake is that they should have came forward and said this is not practical. it is not pragmatic. they should get a new principle use, self service restaurant and wine shop. and something very unique open space in an enclosed area where people can get together. that, to me, is very practical. we are in the year 2010. they are running out of money. there is no more cushion. they put $2.1 million into a building which i thank you for, prior to that it was a complete eye sore. and it is probably never going to come back to us. but we can solve a problem. instead of create new ones or