corporations in terms of cus. we're not talking about the numbers or subsidiaris at this point. so that we can get through each of these points, wanted to just stay focused on the discussion of each of those points. >> we only have miss burns for another 10-15 minutes before she has to step away for another meeting. >> commissioner yee riley. >> the only difference is whether or not we count international locations? >> right. >> whether or not they go through the cu process? >> right. >> so there is still a chance they will go through? >> right. >> so i support that. >> all right, next item should locations of subsidiaries major-owned under the current definition be included in the calculation? >> it's similar to the first one.

subsidiary of the gap. they didn't have to go through the cu because they were a subsidiary? >> correct. >> so to me that would go along with no. 1. >> it's related. >> may i respond to commissioner dooley's the financial ability of companies representing these properties this is something that we're seeing a shift in people's concerns. i think it used to be the aesthetic impact, which our current drafting, but shifting to where the finances are coming from and what the backing and power that these companies have? so we can't really make these businesses happen. what we can do is prohibit other businesses to try to encourage something else. what we are hearing from developers, especially as people are more interested in redeveloping sites with retail on the ground floor and

residential above, you are seeing more and more space available while retail consolidate online. as well as developers hesitant -- [speaker not understood] so if you can't get a solid retailer down there for let's say a 10-year lease, it's hard to make that project pencil out and that is what we're hearing from developers that they tend to partner with formula retailers and if there is partnership with oewd to assist. >> commissioner tour-sarkissian. >> i have a question about the

subsidiary issue and we're talking about economy of scale. would the subsidiary involve a totally different and separate sector of the economy, would that be tied to the formula retail different than what is involved in the subsidiary? >> i believe as is currently proposed, yes. so one example that i like to give out is the owner of superdooper, who owns seven super dooper locations, but owns sixing or seven individual restaurant concepts. so one super dooper achieves that threshold number and any future restaurants that he open ready now considered formula retail and required to go to cu if he maintains 50% ownership of everything. >> if he is not in the food business? >> maybe a clothing store? >> would that count? >> yes. as currently proposed. yes. >> commissioner dwight.

>> so we see what a slippery slope we are on. this is borderline anti-competitive and i think actually would be very interesting to know if this would even withstand a scrutiny by the federal government as to whether this represents anti-competitive behavior op n our part? i think when we look at retailers like j. crew has been extraordinarily effective in creating retail experience, j.-crewed own, but different branded products. the list is a big one and very diverse in terms of what people do, whether it's in their mainline of business or unrelated line of business. so i have a lot of issues with this legislation, how to i am,

of course, here to support small business and try to preserve a level-playing field for our local businesses. i get a little queasy when we get in these cases and start working back in from the edge cases and see really what a tough place this puts our real estate sector into. you know, we're inviting potentially blight into areas where we have denied access. we have seen it happen on lombard street just last year. and these are very contentious issues and we have our own success stories within the city, who are bumping up against these limits. while on some level i support conditional use and the ability of neighborhoods to somewhat kind of tailor their own destiny, the flipside of that is that the city has a responsibility and duty of care to make sure that our neighborhoods don't get themselves in a bad situation;

that the city itself doesn't put in and of itself in the situation that one, it's becoming economically undesirable to goods and services that our citizens want, regardless of where they come from. and secondly, that we don't put ourselves in a legal bind. and so i don't -- this is just a statement -- i don't know where to go with this. here we're going through and picking this apart -- picking this apart in minutia, but there are much bigger issues at play here and i think there is some bigger global questions that need to be asked before we get too far ahead of this. >> commissioner dwight, i agree with you 110% on those comments. and that leads me to our next question here, no. 3 about should this threshold number of locations remain at 11 or more, regardless of locality of

original? and i am just going to skip to the next one because it kind of ties into that. we have san francisco soup company at 16 right now. they started here and you mentioned super dooper. let me tell you that the people who own super dooper and the other restaurants, they are heroes. look at what they have opened up and what they have done. in my personal opinion, we should up that limit for local businesses. i mean, it's sad that san francisco soup company those go through the torture of our conditional use permit and it is torture because i was thrown into that last year. let me tell you, it takes eight months to a year to even get heard. >> yes. >> which is scary and to me, it's like you are torturing local businesses. san francisco soup company in

my opinion should be able to open up on every corner. i mean they are local. same thing with super dooper and that conglomerate and even the gap, if the gap has a subsidiary, they employee thousands and they have a new concept to be able to put it out there. that would help local business -- in a lost cases where something like that, like upper fillmore, brooks brother opening up that other place. that street is crowded and people are going into all of those other businesses up-and-down fillmore street and creates a synergy. that is my two cents to subsidiaris. >> let me caution you about treating local businesses differently, we can't. we ran it by the city attorney

and violates commerce laws. we have to treat all businesses the same. >> miss burns, the ownership threshold or locations met and businesses automatically considered,is there not a secondly test of two or more criteria before it's considered formula retail? so the company could test out new concepts as along as the product lineup was different, correct? >> yes. currently, that is why athleta the gap subsidiary was able to do that. >> commissioner dooley. >> to me, the formula retail cu process is once again a part of the economy of scales. and to me, even if they are a

wonderful company, when you have many, many, many outlets you are not dealing with things on the same economy of scale. your ability to pay a much higher rent is there. you know, i just feel very strongly that everyone should have the same thing, and i was already assuming that it would be illegal to favor local companies. if you are a good guy like san francisco soup, you will get through it easily, but i do feel that people should be able to weigh in and hopefully most of it is positive. i mean, we get 75% of the cu process is gone through. so i am just in support of it, because i do think you can no longer say any business that has 12 or more is a mom and pop

business. they don't need a hand-up. they are already here and we bless them for their success and they can continue on, but they have put themselves in a different economic category. as a small business commissioner, that is of concern to me. >> director dick-endrizzi. >> commissioners, so before you is just making sort of saying that we coalesce around certain conditions and what kanishka is bringing forward those are current legislation that is on hold. so i want to make sure that you are clear we are not commenting on legislation, but making recommendations or suggestions or directions to the planning department, to the mayor and to the board of supervisors. so move on to item no. 3 in terms of the 11 and we talk about the conditional use process. and i think we need to -- one

thing to keep in mind is the conditional use process whether you are formula retail, or whether you are an individual restaurant with a full liquor license is the same process. and the problem is the process. and the amount of time. so even if we increase the formula retail numbers, we still haven't solved the problem of improving the process. so you do have the ability to make recommendations in saying that if there is going to be an adjustment, there has to be a correction and analysis to improve the process, so it doesn't take six, eight months or a year to get through that process. >> right. commissioner dwight. >> but what we are talking about here is what is the bar for getting under or over -- for avoiding the process?

because the process is so onerous? and i have to take issue with this idea that the number of outlets necessarily defines your economies of scale. sf soup company, i can tell you because of some other activities that we are doing, we have looked at their financials. they operate on an extraordinarily skinny margin to say that they are a big guy on the block is not the proper characterization. it is still a very small business. on the flipside, pet food express, a company that is revered by its customers for customer service and its outreach to the community and all that it does for charity was denied access. and a company that started here in san francisco, albeit it moved out of the city. so i don't think that we can say that the good ones will automatically get through and the bad ones won't and that the

small ones are really small or the large ones are really as large as they seem to be, because they are not. so to your point, yes, we need to fix the process. because what we are doing here, much of this debate center s around how to avoid the process because it's so onerous, as are so many things in san francisco? i don't see like we are doing about the process, but we are talking about the gates, how to get around it or avoid it? >> i just wanted to say that you are certainly welcome in this recommendation in response to the report, to say regardless of whatever gates we need to set up, this also, too, needs to be improved and dealt with. because then the gates are always going to be looked at to be extending out the gates, if the process starts to be too

much. >> maybe we could just quickly before miss burns have to leav specific to the process, no. 10, if she could maybe comment on whether there has been discussion and what input would be requested on modifying the findings required for the conditional use authorization? there as been some discussion around that topic:i don't know necessarily by the planning department, but it may warrant discussion by the commission while she is here. >> i actually have another 15 minutes. >> okay. >> but so currently the code requires planners to look at five criteria when they evaluate a formula retail application that needs a conditional use. so we're asked to look at the concentration of all formula retail within the district? which is that zoning district. the availability of similar uses? the vacancy rate of the district? the compatibility of the proposed use with the aesthetic and architecture and the mix of citywide and

neighborhoods serving in the district? so the themes in general have the bar and cus have the additional five criteria that we look at. >> commissioner dooley, i'm going to jump back to you, because i missed you. >> i was just going to say when our commission and the planning commission got together and we started our fast-track program, i think that is something that i would really like to recommend that we as a commission work to expand because the premise of that was if there weren't a lot of -- if there weren't objections to a project, it could move forward in a much speedier manner and i think that would take care of a lot of these issues because it would just have a short period of time before the cu would be granted. >> are you speaking to priority project? >> we did one and we have a

pilot program. >> that is a good idea. >> we have a pilot program. i think we should expand that program. and make that a way for a number of businesses not to go through such a long process, because many times the cu process takes a long time with something that everyone is happy to see come in. so i would think that would be a boon, no. 1 for our local businesses, you know? if people like super dooper, there is not going to be a big objection. so i think that is a way of grabbing a hold of some of that problem. >> so what we would have to do is look at the criteria that businesses currently have to meet to qualify for that sb 4p. and see what you could include from the formula retail definition that applies to that, without stepping on that

local business? >> i think we should apply that program anyway in a broader way. >> i like that idea. commissioner tour-sarkissian. >> with the proposed ordinance would that shorten -- i understand it's a new report that would be due for the conditional use permit. >> there is currently a report due with the general plan priority policy. it's a pretty lengthy report and the conditional use criteria is asking for a lot of data. and if we want more rigor and consistency applied to every formula retail case, it's going to require more leg work on our part to survey a neighborhood commercial district and see what the business mix is there? so that is sort of the time it

takes and that is why it's part of the reason why it takes so much time to prepare these case reports. >> there would be no additional reports under the new process? >> supervisor mar's proposal includes or may include more reporting information, but that is his proposal. >> okay. >> commissioner dooley. >> i just wanted to bring up the topic of the one thing in the formula retail requirements as the very nebulous and vague "necessary and desirable." and i think that needs to be tweaked in some way, because that is really the gray area on a lot of things. and christian had come up -- can you read -- you had come up with a possible change in that, just to make it a little less vague. >> one sort of formulation was

"meet the neighborhood need -- or fulfills a gap in immediate neighborhood needs." something a bit more specific was considered when we met on this topic. >> so "necessary and desirable" is for all conditional uses. >> right. >> that sort of the standard bar for any conditional use and the criteria that i mentioned sort of gets to this. is this proposed retailer filling a gap that is not currently here? if you have a neighborhood commercial district and they have a pharmacy and cvs wants to come there, that they are fulfilling a need. >> i think it leads to unnecessary vagueness. >> with "necessary and desirable." >> yes, i understand the meaning of it and i think it would be good to tweak that to make it a little more direct. >> so you are suggesting

commission dooley one area that it could have more definition? >> i am. i'm not necessarily saying it would be any big changes from "necessary and desirable" the concept but i think it would be better to state it in a better way. >> okay. >> so commissioners, if we want to move on then. >> yes. >> i believe we probably covered no. 10. i don't know that there was any sort of consensus around adding to the findings required for the cu, or formula retail other than potentially revisiting the "necessary and desirable" component. so item 3, i didn't know that i heard a consensus on whether the threshold should remain at 11 or more? i heard that may not be the best number and since we don't know what the best number is necessarily best not to change it until we do. >> right. >> no. 4, sort of wanted to

capture the concept of "online retailers" potentially with large revenue, but few brick-and-mortar locations. looking at the next steps to the evolution of retail, should formula retail controls apply to online retailers? >> i want to sort of -- we can ask the question, should it, or does the commission want to make a recommendation that this may be something that does need to be taken under consideration and have some analysis done rather than a definitive yes or no it should? the commission certainly has the purview of saying this wasn't in the report, but we do

think that x at a future date does need to be taken into consideration and given thought and analysis, too. i don't want you to think that you need to say yes or no to it, but to say it does merit some analysis. >> commissioner dwight. >> yes. that would be my suggestion that this does merit some analyses. i think that particularly to the extent that we usually think of retail, brick-and-mortar retail as a point of distribution and now that certain online retailers are getting in the business of distributing their own products, to what extent does going mobile for amazon represent multiple points of distribution that are non-traditional retail, but represent formula retail? when that truck rolls up, a fleet of trucks is every bit as retail

as a network of fixed stores. to the extent that they basically represent stores on wheels. so what precludes them from -- do we say they can only have eleven trucks in san francisco? you know, so i think there is a number you been of nuances around this sort of new economy businesses, online businesses that are establishing a physical presence that need to be studied. whether it would be parker and their bus or their showroom or amazon and their fleet of trucks? i don't think we can solve that problem here today. >> i want to agree with that, too. i think that it needs some study. i don't think we have any -- i mean it's a complicated issue where we go with this? would it only involve brick-and-mortar things? what would it entail? and i think we would need to do a lot of study about this. but i like bringing it up, because it's

coming towards us and it's always better to be thinking a little bit ahead, rather than just always being reactive. >> yes, i would agree. any other commissioner comments? commissioner tour-sarkissian? >> i think the underlying policy behind this legislation and your study is the economy of scale. and i think it is worth studying, i think, considering it, because some of these online retailers may have an unfair advantage, maybe even in my opinion, against the law, to not include them. so something to be considered very seriously and closely. so i agree with the other commissioners in this regard. >> great. thank you, commissioners. so to item 5, should personal service, business service and medickal service uses be

included in the formula retail definition? there was been discussing that expanding controls that it may cause vacancies as miss burns said, the environment shifts more from direct retail sales to services and experiences that can't be replicated from an online retailer. so an initial focus was on distinct retailing personalities in the formula retail legislation. so looking at that standardized architecture, and schemes and signage, it's not that a service varies -- >> commissioner dwight. >> again the internet plays a big role that the service is an experience that "can't be replicated." it can be facilitated by social networking and the internet. so i think more and more

business plans revolve around the replication of previously unreplicable service s around an internet model. probably again something we can't solve here, but indeed, personal services, best of my recollection services and medical services will take on a much more -- ironically a more traditional look and feel because of the way that they are facilitated by the internet. and so i don't know how to address that other than to say it's a good to have the question out there. right? >> because you are seeing and here is a good example. one medical. the look, the feel, they looking like a retail location >>in fact they are trying to do that specifically to create a cohesive brand. >> right. and let me tell you, it works. >> and by distributing their locations in multiple places throughout the city is to the benefit of the people -- who

likes to drive across town to go to the doctor? so if they can distribute those services or anything, to get your nails done; right? if you could have it done in your neighborhood from a branded source, an experience that you have come to trust and everyone online is talking about how great it is, then you have a formula retail. >> on the flipside of that, there too there are some neighborhoods that have way too many nail salons. [laughter ] . they are not formula. >> they are all locally-owned. >> we're trying to prevent small businesss from becoming extinct and i think sometimes we have narrowed our thinking here as formula retail and thinking of everything through planning and trying to have planning be the stop-all to prevent small businesss from going extinct. when formula retail is not necessarily always the bad guy. i think it's more of a bigger problem that we have to look

at, like why is small business not competitive with bigger businesss? and sometimes they do help. you know, like lombard, there is a lot of blight and maybe a bigger retail would have helped. i think just sometimes we're trying to have planning be the end-all/stop-all, the last barrier of defense and to look at other departments. like when i was growing up poor, getting ready for college, and not looking at the base problems of why small business is having difficult and look at that in the formula retail process. >> commissioner dooley. >> i think commissioner ortiz had good comments there. i have kind of mixed feelings about that, but if they have all of the hallmarks of formula

retail by their business plan, i thereby we need to at least consider it. >> any other commissioner comments? next. >> no. 6 should concentrations basing on mixed-use decisions be addressed in a citywide retail standard? >> my personal opinion it should be left up to the neighborhoods. commissioner dwight? >> my personal opinion is that it leads to issues, like -- it's not just in retail. look at what happens with 8 washington and real estate development. when we start letting small groups of voters within a city that has very low voter turnout, basically hijack the process