we wish ike every success in his business. we take exception to some of the characterization of what occurred that were just stated, to the extent that ike is blaming his noncompliance with the law on the owner. that is incorrect. it is true he was a tenant of tenant gerry chao. we had no interaction with ike until november 2009, when we began receiving many nuisance complaints from residential tenants located around the business. i guess the sandwich shop had appeared on a tv show that showed it was a great place to get a sandwich. he had a phenomenal success and huge lines at side. it was a real problem for the

residential tenants because it was very noisy and open very long hours. customers for blocking the entrance. so we started getting a lot of complaints. initially, we asked mr. chao to deal with it as the master tenant. when that was unsuccessful, we stepped in and investigated and found that we felt the complaints were very legitimate and the space that was rented was very small. the phenomenal success he was enjoying -- he had outgrown the space, and it seemed like he should move. we contacted him and suggested that we negotiate some kind of time limit for him to be there and find another location. that basically was refused. as we were investigating, we found that other things were a problem besides the nuisance complaint. we checked his permit application, which was made in

december 2007, where he represented to the city that he was going to run a copy shop and not do food preparation. we discovered the permit was an improper permit. we talked to kate conner at the planning department. that was another violation. there were significant problems with work they were doing on the property, or they submitted plans -- where they submitted plans and the work did not comply with the plans. we could not get him to agree to relocate. i never lead anyone to believe we were born to allow him to stay there. during the course of the eviction action, that is when mr. shiheda made an application for a conditional use permit to match the operation he had there. the asked for our agreement or condition, and naturally we did not want that, because we wanted

him to relocate. that is what happened. we had to pursue the eviction action, which cost quite a lot of money. we were eventually successful and got a judgment. that is the story from the landlord's point of view. thank you. commissioner hwang: before we go any further, i should disclose that i believe that i have been involved in a prior case with you, perhaps when you were at a different firm. we have only spoken by phone, so i did not recognize you, but i recognize your name. >> this must have been years ago. commissioner hwang: it is not going to cause any bias on my part. thank you. >> mr. sanchez?

>> thank you. good afternoon. i would like to begin with a brief overview of the timeline of the enforcement issues here. we received our first complaint at the end of march 2010, march 31. there was a self-service operation when the permit history only had them operating as a retail coffee establishment. on april 21, the department issued an enforcement process, which is the first step of the process to determine if a violation exists. that was on april 21. in may, department staff made contact with the appellant and had several conversations about what options existed. it was determined there were a small self-service restaurant operating illegally. we looked at how we could help

them come into compliance with the planning code. we set a conditional use would be an option to legalize in place, or they could relocate to another facility. it is my understanding the appellant considered moving to other facilities but ultimately decided to submit the conditional use authorization. that was submitted on june 2, 2010. it was not until a few days later the department's staff realized the signature the head or the owner authorization did not match the property owner. i believe that was ultimately determined to be the main or the master lessee, and not the property owner. we informed them on june 9 of the need to obtain authorization and provided them time to get owner authorization. it was found out they could not get owner authorization to

complete the application process. a little over a month later, we issued the notice of violation and penalty. that was on july 13. that provides 15 days for an appeal to this board. no appeal was made of the notice of violation and penalty. the penalties do not kick in until that appeal period has passed, so they did not begin until july 28. ike's place closed 48 days later. there is a per day penalty of $250 a day. the total for 48 days operating in violation is $12,000. that is the penalty before the board this evening. in october, october 7, we sent them the courtesy reminder to let them know there was this an outstanding panel to. in october, there was the

jurisdiction request for this and the board granted jurisdiction. we are here now in april, dealing with the notice of violation and penalty. it is clear all along there was no doubt the violation had occurred here. it was a question of the penalties and whether they could or should be reduced. planning cut section 176 does provide for the board to reduce the penalties to no less than $100 a day. that would be $4,800. i would note that while there are some unique circumstances here, given the relationship between the appellant and the property owner, the department did make significant effort to try to bring the property into compliance and a significant amount of time working with neighbors during this time as well. there were very negative impact on the neighbors during this time. the department would argue a decent portion of that penalty should be retained to fund

further followed enforcement -- further code enforcement efforts. it would make a significant statement that penalties in san francisco do have consequences. if you commit a violation of the planning code, there are consequences. with that, i will be available for any questions. commissioner peterson: what about the statement that it was two years before the city asked for a conditional use permit? >> we did not receive a complete until last year. we approved a permit for retail coffee. commissioner fung: mr. sanchez, during the course of discussions between your department and the appellant from may to july, when the actual notice was issued, was the appellant made aware of potential penalties? >> it was in the enforcement

notice, the first notice that went out in april. they were aware from april 21, 2010 of potential penalties. commissioner fung: that particular document is not in our pocket. it very clearly states what the penalties are? >> yes. i apologize if it was not in the material we submitted. it is a form letter format we send to all violators. commissioner fung: it is not necessary to place it, but if you would read the relevant

portion that corresponds to the same penalties in the final letter. >> under the subsection "penalties and appeal rights," it says that failing to comply within 15 days will result in a notice of violation and administrative penalties of up to $250 per day may be assessed for each day the violation continues unabated. we believe it is very clear to all parties. thank you. president goh: it sounds like this prohibition applies to all cafes that have the retail coffee store permit. so there are many, many cafes in

the city that also makes sandwiches. could you talk about where that line is? >> we respond to any complaints we get regarding violations of formula retell -- retail, drinking allowance. i would say this is an egregious example. typically, we are dealing with people who have microwaves or toasters plugged in. we go and have them unplug their equipment and move it and that is an abatement of the violation. but this was much more of an intense use, as i think witnessed by the neighborhood reaction there was to the use. there were lines at the door. this was not your typical coffee shop. i believe that ike's has three locations and are opening their fourth now.

president goh: thank you. >> we can take public comment on this item. people interested, please step forward. i have one speaker card from dr. mick lee. how many speakers? could we see hands? two speakers? three minutes. >> i am a local resident, essentially right next door to ike's place. the old location has been there since 1998. i have watched this location failed business after business, you're after year. there has been probably a dozen businesses who have failed in this location. it came in as a strong one

person -- ike was the owner and the employee. i think the biggest problem we have here is that where he does have a problem is he succeeded so well. in an ideal world, we all want to live in a summer cottage in the country with birds and years in our front yard. but we live in san francisco, which is commercial and residential. the first floors of our buildings are commercial and the above floors are residential. those of us who live in residential floors hope for the best talent in commercial that is not going to disrupt our personal lives. ike walked around the neighborhood and introduced himself and said, "if there is a problem, here is my direct phone number." from that point on, he has been

in constant communication. i am not an avid some which either, but i have eaten there are a number of times. it is a very good sandwich. it is not a common coffee shop. it is a good sandwich. it is so good that television got involved. when television got involved, his business start to propelling. he went from being a one-person show to having to hire on staff. that started creating wines. -- creating lines. ike's placeke -- ike has done everything possible to work with the neighborhood to make it manageable. there are only three tenants that surround the location that have been complaining. there are two residents -- three residents who live directly above his actual storefront, and one that lives around the corner. their backyard faces the back door of the old location. those are the only three tenants

that have been complaining. their complaints in the last public hearing with things like once they overheard them singing happy birthday to the customer. it is a public business. it does not go on until 10:00 at night. prior to his business being there, it was a gay bar that ran loud music and pot smoke. it is a sandwich shop. i fully support it. i would live above it. i would live next door to it. a police support this effort. >> i received a card from mr. shadhadi, and i am sorry but you cannot speak in public comment. if you wish to speak in the time of your attorney, speak to him. is there any other public comment? seeing none, we can move into a bottle. -- into rebuttal.

>> thank you for listening to me today. i wanted to comment on ike's place as a coffee shop. when it first opened as an espresso bar and the like sandwiches, unfortunately customers were not showing up for the coffee and the ice cream. they started only showing up for the sandwiches. that is how the space became a sandwich shop. i think the complaints that were made to planning were not legitimate complaints. they were just made with the intent of garnering a payoff from ike's place. how do i know that? the first was for $8,000 worth of damages to pay for having a sandwich shop underneath. after that, when complete started coming in, they tripled

the number to over $3 million. that is how i can say the complaints were not legitimate. if you look at the history of what happened over the past year and a half, just half a block away from where the old ike's was, a sandwich shop opened up. they applied for a permit with planning. they are called dinosaurs. at the planning caring, not a single person came up to oppose them. meaning the neighborhood was ok with the sandwich shop. furthermore, ike's -- we personally applied to open up a sandwich shop.

we were able to garner the permit -- we would have been able to have it had begun the proper signatures from all the parties involved. it was just a bunch of "get them out of here because they are terrorizing the neighborhood." if we were, we would not have been able to get the permit across the street. we had department of public health recognition of being able to serve some witches. we had that permit. we also applied for a permit for a full ventilation hood and did get that permit as well. we were able to put in those cooking instruments with city permits while planning is saying we did not have that. so we had a lot of support from the city and were working with the planning department to find a way to move. unfortunately, when they asked for us to stop, it would have either been the closing the

business down. president goh: when did you put the ovens index -- in? when you opened, you started as just a cafe and were going to make sandwiches on the side. >> we put in the hood once the landlord got involved.

commissioner fung: when you receive the initial notice in may and the more formal notice in july, you did not file an appeal, as stated in the documents from the planning department. >> we were dealing with a lot of issues, mainly with a landlord and our neighbors. when we were working with planning, last minute, the

landlord decided to move a letter -- decided to send a letter. we had a few days to be able to get a signature. we received the notice. i was not aware i needed to appeal anything. i was still trying to resolve the situation to get the proper permits. also, we were dealing with tons of court dates with the landlord. it was kind of lost in the shuffle. commissioner fung: when you receive the final notice in july, you saw a panel to there,

yet you kept the operation going until september. >> when we got the final notice, it said we could either closed down and lay off 47 employees, or stay in business. these controls are put in place to protect the city, to protect everyone. what was in the best interest of the city was to keep the 47 people employed and all that revenue coming in for the city. you can either shut down for business or not shut down for business.

>> anything else, commissioners? >> i want to state again the first time i met with ike and his attorneys was march 2010. from the initial meeting, we said he had to move. from that time, he was aware we felt he had outgrown the space. it was pretty apparent he had outgrown the space from the lines and the number of employees he had. it is very small. one of the presidential -- one of the president's brought suit and we paid at the tenants for nuisance. another residential tenant went

to small claims court and got $7,500. the nuisance problems were real. we were trying to work with mr. shiheda so he could move in a reasonable manner, but he did not want to move. we were forced to do the eviction action. he was a government led. we always told him he wanted -- he was never misled. we always told him we wanted him to move. >> mr. sanchez? >> thank you. in regards to what the appellant raised in terms of their development over the years, they initially represented themselves as a retail coffee establishment. it is clear that is how they initially operated. that is the approval they got from the planning department. where i have the problem is

serial permitting. they are getting minor incremental permits -- a permit for a could hear and a sink their. -- for a hood here and a sink there. that led them to a process where they could not get a permit. when faced with the choice of what to do with the penalties coming into effect, the appellant made business choice. it is clear. they made a calculated business choice that the penalties were easier to pay rather than doing business. it was ultimately a business choice they made and there is a penalty for that. this is the cost of violating the planning code. we respectfully request that you withhold the notice of violation and penalty. thank you.

commissioner peterson: i do hate to penalize a successful business, yet this party does not seem completely ignorant of the risks he took. i would say a penalty of $150 a day is a middle ground. but i realize the implications of layoffs for the city. having a successful business, it is hard to stomach a severe

penalty for them. commissioner hwang: i would echo those comments as well. i applaud them for doing so well. i have had one of the sandwiches. i stood in line and it was awesome. i appreciate comments from on the property owner giving more context to the story. i would be inclined to give a reduced penalty. commissioner fung: i do not

think there is anybody here who does not support small business in the city. the issue is not the complaints. the issue is not the elements of conditional use that he potentially had to go through. the issue here is having the appropriate notice and not acting upon it. if he had acted upon the original notice, and appeal that, he would have probably been able to stretch it out until september. given notice of potential penalties, he chose to maintain a very successful operation.

i think the penalty is well served. president goh: i would kind of go in the other direction. i think a lot of cafes make sandwiches and only have that retail coffee store permit, and nobody cares and the city does not care, and nobody really knows. so maybe it was true that when he started the business he started the business with the intent of making sandwiches and doing more small restaurant work than fits within the retail coffee store, but nobody would have noticed if he had not made such a good sandwich and people have not been lining ur