[gavel] >> all right. welcome to our land use committee meeting on monday, february 5, 2018. i'm katie tang, the chair of the committee. and we're joined by new vice chair supervisor jane kim. welcome. welcome back. and, of course, returning member ahsha safai. our clerk is victor young. and thank you to s.f.gov tv. any announcements? >> yes. please make sure to silence all cell phones and electronic devices. completed speaker cards and any documents to be included as part of the file should be submitted to the clerk. i would like to note that we currently have a quorum of the

board constituting a quorum. >> i forgot to mention, we're joined by fewer, yee, stefani as well. i'm going to ask you to call item three out of order because we need to make some amendments. item three, please. >> item number tlaoe. ordinance amending the planning doed accomplish the gear ri-masonic special use district in the area generally bounded by the geary boulevard to the south, masonic avenue to the east and assessor's parcel block numbers 1071, lots numbers 1 and to the north and west. >> thank you. supervisor stefani, the new sponsor of this item. >> thank you, chair tang. colleagues, thank you for hearing this item today. i'm thrilled to put the final touches on this project that has taken over two years to get

to this stage. i was ah aids when this first came to district two and it is great to see how far this project has come. this s.u.d. allows it to go from 21 ewe it in -- units to 91 units while remaining the same size. it goes from three to 22, that is more affordable units than the total number of units in the original project. these are homes for 95 families to join the neighbourhood along the transit corridor. thank you to the neighbours, laurel heights and antavista neighbours for being so great. we want to thank them for supporting such a dense project in a neighbourhood that hasn't seen any new housing, which i know is challenging for many neighbourhoods. so, thank you to those neighbourhood organisations. this project is a uniquely dense project that is labour and neighbour-supported. it took a lot of work and i

think the broad coalition of people who did work on this. i'm very happy to be carrying this across the finish line here today. i do have a couple of amendments in response to the planning commission recommendation and i've handed those amendments out to my colleagues. first, the inclusionary rate goes from 18% to 23%. and that is broken down as follows -- 10% at 55% of a.m.i. 5% at 80% of a.m.i. 4% at 110% of a.m.i. and 5% at 120% of a.m.i. and then of course the appropriate a.m.i. bands will apply. the second recommendation is around the car share spaces. the commission recommended four of the spaces be reserved for car share. so on the advice of the city attorney, we have increased the findings regarding car share to require four of the 16 parking spaces in this project to be reserved for car share use.

>> and those are all the amendments? >> yes. >> ok. great. thank you. do we want a motion to move those amendments? >> yes. i'd like to make a motion to accept those amendments. >> all right. and supervisor safair, did you want to speak on the item as well? >> no, supervisor stefani summed it up wonderfully. >> any questions or xhenzes, any staff ?rention nope. we'll go to public comment on this item three and i have three cards -- richard, michael and colleen. and if anyone else would like to speak on item three, please come on up. thank you. >> i just wanted to summarize the planning commission's actions from a couple of months ago. on november 30, 2017, the planning commission, after hearing and closing public comments approved the proposed ordinance with modifications, recommended by planning staff.

the modifications to the ordinance increased the required on-site affordable housing provision from 18 to 23% for rentals at the a.m.i. levels prescribed by section 415 of the planning code. this recommendation was made on the basis that the proposed s.u.d. confers density increases that are commons rat with the level of increase contemplated in the home s.f. bram and, therefore, an increased on-site affordable rate within the su. d. is appropriate. staff wants to thank mayor ferrell for amending the ordinance to include the commission's recommendations. at the same hearing, the planning commission granted conditional use authorization to demolish the one-storey building and construct a mixed use building containing 95 residential dwelling units above approximately 1700 square feet of ground floor commercial space, 16 off street parking spaces and 120s bicycle parking spaces. the commission added a condition of at least four of the parking spaces are

dedicated for car share use. this concludes my friendsing and i'm available for my questions. >> thank you very much. any further questions? ok. nope. seeing none, then we'll go back to public comment, actually. so, please come on up. you'll each have two minutes to speak on this item. >> good afternoon, supervisors. i'm richard frisbee with the laurel heights improvement association. it has take and lot of work as the supervisor pointed out but we have something that i think works for all three parties and i'd like to thank everyone for the work that's gone into it. it's not been receive but it has been useful and what came out of it is something we all think will benefit the neighbourhood. thank you. >> thank you. next speaker, please.

>> good afternoon, supervisors. my name is michael coholland. i'm a 40-year resident and property owner on wood street, just a block away from the project. i'd like to echo my friend dick frisbee's comments that the neighbourhood of which i'm a part of and also part of the laurel heights improvement association, is in support of this project. i'd like to extend my welcome to supervisor stefani for coming back to district two. we're glad to have you. and i also noticed on the way in that the actual developers are there in the back and i said this at the planning hearing commission. i wanted to thank them for being so transparent and upfront with the neighbourhood. i think this is a key thing for this commission and the board and the planning department to pay attention to in the future.

because there is a lot of projects coming online that things work. they work when the developmenter is up front, transparent, communicative to the neighbourhood and we all get to have a conversation. so it has been a while. really appreciate everyone's efforts. also chris mei is back here. i believe i got your name right. i think he is a staff person who has done an exceptional job at working hard to get the neighbourhood and the developer to get this project done. >> thank you very much. next speaker, please. >> good afternoon. my name is colleen ryan and i live on emmerson street adjacent to the project. and i echo dick and michael's comments. we're pleased that the developer worked with us. we were concerned that the height would be overshadowing

our properties. we thank you again for that. and christopher may definitely worked hard and called us back promptly. so, we're in support of the promise and we appreciate the fact that things are working. we do understand that the city needs housing. it should be noted that cities should be proud of the fact that you took a 12,000 foot lot, zoned for 21 units and are creating 95 units. that is impressive. our one concern is the concern of all my neighbours on emmerson is the fact that where geary-masonic funnel into, there is a small little corner and there can be a lot of traffic where trader joe's is and we know that the developer's trying to work out a plan. we're going to wait to see if the traffic is going to be ok getting home each day. our kids take the bus. we walk and bike through there. and so traffic is really a problem in that corner. so, we're really hoping that that part works out. but we are pleased at housing coming and we're supportive of

that. i walk in the neighborhood a ton. i have a dog and we never got a notice for this or saw one on any type of pole. which we did a few months ago. and while we don't have a problem with this because we have an excellent negotiator for us, there was no notice. thank you. >> thank you very much. next speaker, please. south carolina good afternoon, supervisors. danny campbell with the sheet metal workers local 104 and my colleagues alex lanceberg and with electrical workers local six, john corso, local 38 plumber and pipefitters. very excited about this profnlt it's going to deliver low-income, moderate-income and market rate housing to our city's housing supply. we worked very closely with former supervisor mark ferrell's office. i want to thank him and his staff. planning and not to mention the project sponsor.

this project gives community benefits and career pathways for residents throughs our state aproved apprenticeship programmes. so, we look forward to your support for this su. d. thank you. >> thank you very much. next speaker, please. and anyone else who would like to speak on this project. >> good afternoon. todd david on behalf of the san francisco action housing coalition. very excited to support this project. i really want to give kudos to the neighbourhood for embracing density and more housing for families in san francisco. i hope it is a model that can be repeated many places on the west side of san francisco because we certainly need more housing. as far as the traffic concerns, i know this starts to be an impetus for us to start thinking about maybe some subways to the west side or some rapid transit. but we certainly need to be making sure that we can move people around in san francisco

without having them get in their cars. thank you. we're excited to support it. >> any other members of the public who wish to speak on item three? ok. seeing none, public comment is closed. supervisor stefani, any other remarks? no. ok. at this time, we had a motion to amend per what supervisor stefani said earlier. can we get a motion on the item as amended. >> motion to move forward with positive recommendation. >> and we'll do that without objection. i'm sorry. i'm sorry. deputy city attorney. oh, to continue the item. >> ok. because it has amendments. i'll make a motion to -- i'll amend my motion and make that a motion to continue. for one week. >> ok. great. we'll -- is that ok? deputy attorney. as amended. >> the motion -- you should make a motion to adopt the amendment and then continue the item one week. >> yes. so, colleagues i heard a motion

to amend. there was a second. so we're going to amend it and then we're going to -- we had a motion to continue for one week. all right. thank you. now mr. clerk, items one and two together. >> item number one, hearing on the efficacy of the city's vai cants-abandoned property or did nation and strategies for preventing vacant storefronts. item number two, hearing on the findings of the 2017 retail study conducted by the office of economic and workforce development that reviews the state of the retail industry nationally and locally and provides an overview of challenges and opportunities for san francisco's neighbourhoods and retail commercial districts. >> thank you very much. i want to thank sponsor to the hearing supervisors fewer, ronan, yee, guest for the district two office. i don't know if supervisor stefani is taking over, but certainly although my name is not on, this it's something

that is a topic that i've been very interested in as well. i want to thank my colleagues for bringing this to our attention. we are going hear from many, many departments that are working hard day in and day out on this issue. the office of economic and workforce development, our department of building inspection, we will hear from our budget and legislative analyst office on the report and also we have planning staff as well and i forget if i mentioned d.b.i., but department of building inspection. so, with that said, i know that there is a lot of work that we all do in our representive supervisor's offices in conjunction our other city departments in trying to both recruit and detain businesses in our commercial corridors and i know that each of our corridors have their own sets of challenges or attractiveness. but especially when you throw into the mix the changing face of retail and that there is so much e-commerce going on right now. i know that it's a conversation we all need to have as a city family in terms of whether we

to reconsider how it is that we zone our city and commercial neighbourhoods. how it is that we deal with our vai cants and abandoned properties and so forth. so, with that said, i'd like to kick it over to supervisor fewer, the lead sponsor on the first hearing. >> thank you, chair tang. long before i ran for this office, vacant commercial storefronts had been a concern for residents and merchants of the rich monday district. in my district as well as across the city, storefronts left vacant for not only months but years can have a terrible impact on a neighbourhood. long time anti-storefronts contribute to blight as well as issues of safety and cleanliness. they wear down the pride that neighbours have in their neighbourhood. and empty commercial storefronts on the market may contribute to rising commercial rents. i want to thank in advance all the departments that will be presenting on this issue today and i understand that there are steps that have been taken, including legislations in 2014 from supervisor tang.

i am really looking forward to today's presentations and the discussion about next steps because while there are many reasons that contribute to vacant commercial storefronts, what is clear to me is that we aren't doing enough as a city to prevent themment. as i know we'll hear today our current mechanisms for track empty commercial store fronts and buildings are not capturing the true scope of the problem and enforcement seems to be nonexistent. for instance tb.l.a. report states that the currently reported commercial vacancies none are located in the richmond district. and let me tell you i beg to differ. just ask a neighbour who lives near balboa and 6th avenue. i hope this hearing serve toes eliminate the current status of our systems addressing commercial vacancies and some of the action steps we can take to minimize such vacancies and the negative impacts on our neighbourhoods. our goal as a city should be to support vibrant corridors with store fronts that meet the needs of our neighbourhoods.

i believe supervisor yee also has comments on this. >> thank you. supervisor ye, e? >> thank you, chair tang. i ask the budget and legislative analyst office to prepare a report on commercial vacancies because like every other supervisor in the city, i'm concerned with the vitality of our commercial corridors. while we have many vacant businesses throughout our neighbourhoods, it is obvious when you stroll down our streets that some blocks have a chronic issue with storefront vacancy and can lead to blight and make our neighbourhoods feel run down and neglected. though we passed building regulations in 2009 and again in 2014, we have not been seeing the kind of improvement that we had hoped for. this hearing is designed to

provide us with information of our current situation as well as recommendations on how we can improve enforcements of our current laws and ideas for dealing with this issue using new approaches. i -- it is not like san francisco is alone on this issue. there are other jurisdictions that have taken different approaches to improve vacancy issues. they can be addressed through zoning and high rents and the rise of an e-commerce are challenging traditional retailers in san francisco and elsewhere. places like seattle has been taking it on for a few years now and i'd like to say that i appreciate the discussion we'll have at the end of this where there is some policy options that will be presented and many they have been work on this already, but the board of supervisors can request that,

for instance, the planning department and planning commission to consider a report back on possible zoning and planning code changes. so, i'd like to say that i've been work on the issue that might change some of the zoning to benefit some of these vacant commercial propertis that we're seeing. we're seeing that there is certain areas where they build these commercial spaces and it has been sitting empty, brand-new for two to three, sometimes four years. and so one of the things that i'm doing is working with the planning department and oewd to come up with one idea with helping solve some of these issues. and i'm hoping to present that some time this month. >> thank you, supervisor yee. if there are no further comments, then we were going to have the budget and legislative analyst provide their report findings first.

>> good afternoon, chair tang. members of the committee and supervisors. excuse me. fred russo from the budget and legislative office. and we prepared a policy analysis report for supervisor yee, preventing and filling commercial vacancies that was issued last months and i'll provide a summary of it for you today. so, to start commercial vacancies, causes and effects, there's normal turnover, of course, which happens to all kinds of businesses and spaces

are vacated and put on the market and occupied again. but there are other causes for commercial vacancies, including owners' lack of information about tools and ways of finding new tenants, speculation to obtain higher rents or sales prices in the future. sometimes buildings just stay vacant waiting for a tenant who will pay a higher rent. neighbourhood conditions sometimes make property unattractive to a new tenant. perhaps the owner is trying to lease it out. but as having difficultty atracting someone. city regular leighs and zoning can be a factor. disputes among owners. sometimes there are families, for example, that own businesses or a group of business people and they don't agree on the approach to the property or what the rent should be. or, you know, how to market it. so, sometimes they sit empty while there are just internal disputes like that.

in addition, and it was mentioned in the earlier comments, the world of retail, of course, has changed dramatically in recent years. so another factor is the lack of demand. some of the commercial space cannot be filled because a lot of retailers are curtailing their businesses or turning back entirely. and so the effect of all of this is prolonged -- particularly for prolonged vacancy and abandonments, not those normal business cycle types can be bliegts. loss of community serving small businesses and weaker neighbourhood economies. to address that, there are a couple of things the city has done. one is that has adopted two ordinances to deal with vai cants and abandoned buildings and vacant and abandoned commercial storefronts. they are embedded in the

building code and they're similar in structure in that they require owners of vacant or abandoned buildings. that can be residential or commercial to register with the department of building inspection and they have to pay an annual fee of $711 as long as the buildings are vacants. then the commercial storefront ordinance, which was adopted in 2014 added, besides full buildings, just individual storefronts and it is a similar structure in that owners are to report to the department of building inspection and pay a $711 annual fee. one difference in that case is the fee is not due informal nine months after the registration to allow the owners time to market or repair the property. there are fines attached to lack of compliance with this. and they can vary based on the amount of time that has transpired. one thing that is important to point out about these

ordinances is they exclude buildings and commercial storefronts that are currently under permit for repairs or are being actively marketed so they would not be required to register, but those that are empty and don't fit under those conditions are required to register and pay the annual fee. in addition to those ordinances, there are a number of programmes and services, administered largely by the office of economic and workforce development. they're aimed at preventing commercial vacancies or assisting tenants and owners and filling commercial vacancies. the programmes are listed here and aoen they are speaking later. we can probably give you more details on all of those. but we have description of the programme in our report. we started with this analysis in trying to determine how many

buildings and commercial storefronts are vai cants or abandoned. a number we thought would be relatively easy to get. but it was not in a number of reports and measures made by both city agencies and, of course, private sector real estate companies. but none of them capture the totality of all commercial buildings and storefronts and their vacancy rates. we can get certainly a lot of information about downtown commercial properties and their van can si rates and we can get commercial spaces throughout the city that are not receiving mail. the office of economic and workforce development does just commercial storefronts. but for 24 commercial corridors only. so, it is still not the city-wide rate. on this chart, you can see some of the rates that are reported and tracked. oewd reported 5% as a whole for the 24 quarters they track.

8.2% by the city controller for commercial vacancies downtown in 2016. and the u.s. postal service, as i mentioned, which reports all commercial addresses that are not receiving mail for 90 or more days had a rate of 7.4%. and there are about 45,000 commercial sites or addresss in san francisco. so, that gives you some perspective on that. in terms of the abandoned, vacant commercial property ordinances, the two i mentioned, so those are administered by the department of building inspection and by the ordinances they maintain registris to keep track of how many buildings have reported, that they're vacant and paid their fee. and you see on this chart the numbers from 2013 to 2016, the commercial storefront ordinance was not in place in the first two years, which is why that was blank. you can see for the last two years, and focusing just on the

commercial, the commercial buildings were three in 2015 and 28 in 2016. as for storefronts, 38 were on the registry in 2015 and 25 in 2016. comparing this to some of the other numbers that we obtained by commercial vacancy, we concluded that there is low compliance with the two ordinances. the numbers are low. certainly low relative to all commercial vacancis that are reported. but in addition, they have been geographically concentrated. so, for example, in 2016, 16 of the 28 -- excuse me, 25 commercial storefronts reported were on polk streets and haight streets alone in. 2015, 23 of the 33 were on street streets. so we know just from casual observation that there are properties on other streets

that are vai cants or abandoned and this is not capturing the full inventory. there were none reported in 2016 in china town, castro t richmond district, the central mission or the financial district. and we did review a study done by hood line and they did a inventory in the castro district in march 2017 and found 53 vai cants commercial storefronts. these could include some that weren't required to register by the ordinance, but it is an indication of the volume of vacancies and commercial properties and some of which we assume are probably qualifying as vai cants or abandoned. this map is a representation of the commercial properties reported by the u.s. postal service for the fourth quarter of 2016. and we included it because it shows the distribution of vacancies and the rates. and you can see the darker the colour, the higher the rate of

commercial vacancies. again, not all of these would be subject to the ordinance and required to register. but it does tell you that they are located in neighbourhoods throughout city and we assume wherever there are blocks of commercial properties, there is going to be some in the subset, which is what qualifies as vacants or abandoned by the ordinances. in addition to a low number of properties that are on the registry with the department of building inspection, because they pay fees, we collected information on the fees that have been paid in the last four years and that's presented in this chart. it has not been a very high amount, particularly for the commercial buildings or the commercial store front as you can see, under $5,000 for both of them in 2016. and the numbers that paid are also lower than the numbers that were on the registry. seven commercial buildings and

five commercial storefronts. that can represent different things. one is the owner may not have been in communication with the department of building inspection because in many cases, the -- the vacant property is reported not by the owner, but by neighbours. neighbours will call in and inform d.b.i. that there is a space that's vacant. so, sometimes it gets on the registry without the owner's involvement. and in other cases they simply, you know, have not made the payment yet. in addition, another measure for the vai cants and abandoned commercial property programme is abatements and closures of cases and you can see here looking at the last four years also that it's a small number of cases that get abated and closed. and abated means that the -- that all the violations, because some of these properties have besides the problem of being vacant, they

may have other building code or planning code violations that are being addressed at the same time. if the owner hasn't resolved that, the case isn't abated. and sometimes the scattered showers abated but the final payments haven't been made and the payments closed can. there is a low rate of compliance on these cases. or closure, i should say. excuse me. in terms of the limitations, and we worked with d.b.i. to address some of the causes of why the ordinances don't seem to be enforced to tex -- to the extent that they should be and in many cases, you know, as mentioned, we think the owners are not registering. the department does not have a proactive programme or approach to identify the buildings and contact the owners to ensure that they register their properties and pay their annual fees. so, as mentioned, the most

common source of information about the properties is neighbours complaining rather than the owners self-reporting. which is the requirement in the ordinance. in addition to neighbours registering complaints, city employees will sometimes observe the abandoned or vacant property and report it. these can be d.b.i. employees or others who observe it when they are working in the field and report the information to d.b.i. another factor is d.b.i. does not monitor the vacancies after they are reported and added to the registries. so, there aren't updates in terms of the status of the properties once they have been added to the registry. the low fee collection has the added effect, of course, of not making resources available to expand or enhance the programmes. so, while we believe d.b.i. could extend some more proactive efforts to reach out to owners or identify other

properties, that does take resources, but there is a source of resources, which is the fees. so, this sort of circular problem here in the programme needs to be enhanced and that will generate the fees which will enable the programme to be enhanced. and finally, the registris are not posted online. so there are limitations in terms of the property aware that they are registered and whether the property they are aware of is on the registry or not. d. by. has stated that the reason nar is they don't want to make the information available for security purposes because a vai cants, abandoned building can be attractive to people to get into it for illegal purposes. as supervisor yee mentioned, we're not alone in having a problem with commercial vacancies. we did review some other cities and what their vacancy rates are and this is not just dealing with abandoned and

commercial, but commercial vacancies as a whole. new york, there was a report from last martha recorded a 5% to 20% vacancy rate in various retail corridors throughout city. what was interesting there is some of the higher rent districts are having higher vacancy rates and what they're finding is this problem with the retail industry right now in general which is there aren't enough high-end tenants that want to occupy brick and mortar space any longer. so, everyone is waiting for the big tenants, but they're cutting back. chicago had a rate ranging from 3 30i8 to 14.3% throughout the metro area. and it was 10% overall. they did cite rising costs, higher rents as being a hardship on a lot of the businesss who are subject to the same industry changes. previously mentioned. and then the 24s commercial

corridors tracked by oewd here in san francisco just for comparison range from 1.3 to 16.9% with west portals, retail area being the lowest and visitation valley, lee land street, i believe it was, being the highsest at 16.9%. we also reviewed some of the approaches being used in other cities. in chicago, there's sort of a two-pronged approach. one is economic development and funding for particularly neighbourhoods that have had a hard time filling vacant, commercial spaces. it is called the neighbourhood opportunity fund. they collect money from downtown developers who, in exchange, get density bonuses and some of those funds are used to provide capital to businesses in hard-hit neighbourhoods. the retail thrives zones is another programme and that

involves reduced property taxes for certain businesses that meet hardship criteria. and competitive grants to enable them to repair and improve their properties to enable them to be october pieed again. but on ten forcement side, chicago also has a more stringent registration and fee programme than we see here. there they require fees to be paid every since months on vai cants or abandoned property. here we're on a one-year cycle. and here the vacancies are higher if it's not reported by the property owner. if it comes in from a complaints from neighbours as we see happens here frequently with d.b.i., then the fee is higher for the building owner. and if they're cited for repeat building code violations, the fee is also higher in chicago. washington, d.c. has a similar approach where there is higher fees charged for propertis that are vacant or blighted. they tack a surtax on to the property tax which is not

something that the san francisco can touch because of state law limitations. it is just pointing out that some cities are using an approach of disincentives for leaving properties vai cants or who are abandoned. and dallas, the city of dallas and state of michigan have both adopted acquisition programmes or land bank where is they acquire and hold properties through the foreclosure process and if they have been vacants or abandoned and take posession of them and turn them over for uses that fulfill their economic development objectives. finally, seattle. and i think supervisor yee, you mentioned that and that is an interesting carefuls and this is probably dealing with the broader issue of commercial vacancies, but like san francisco, they have had a lot of requirements in their planning and zoning codes to -- particularly for multistory residential buildings to have retail uses on the ground floor. and we have, of course, those

requirements in san francisco as well. they are removing many of those requirements or making them more flexible so that other uses can go in, including housing on the ground floor, child care on the ground floor and other use. and i think it is an acknowledgment of the process of the fact that building owners can not fill all the available space in these residential towers. and i know just around city hall here, you see it in many of the new buildings being built, there is space reserved for retail on the ground floor and it is empty and has been sitting empty for months and months, if not longer. this issue has come up several times here in san francisco. the planning commission did consider, for example, a proposal to allow retail space in a building in union square to be converted to office. it was ultimately denied but the proposal was made and considered. there was a decision made by

the planning commission and approved by the board of supervisors last july to expand the definition of neighbourhood commercial districts and make it easier to open child care without conditional use permits. and that includes using what has previously been ground floor retail space for that purpose. and the planning department, central soma plan and implementation strategy includes proposals to require smaller ground floor, retail spaces in central soma and that would allow for a mix of retail uses and types. right now there's certain size requirements that may be inappropriate now that there is -- that the retail market is changing sophomore and different types of businesses and different types of spaces are needed to fulfill the changing requirements of the industry. so we included a number of policy options in our report. here they are.

the board of supervisors could enhance funding for existing small business programmes. again, the oewd programmes. we did, as i mentioned, look at owl of them. we couldn't put them all together to determine which ones in particular have resulted in occupying a previously vacant or commercial space. but we know that is the objective of a lot of their programmes. so we think combined with some additional performance metrics, that's something that the board could consider for additional funding if the programmes are proving effective. another is for the board to consider requesting the planning department and the planning commission to consider and report back on possible zoning and planning code changes. to allow for more flexible uses of commercial spaces. another is to suggest to d.b.i. that they apply t their outreach on commercial storefront ordinances so owners are more aware of the requirements and that they could also help reduce barriers

for the public and city employees to report on vai cants and abandoned commercial properties. the ordinances could be -- the existing ordinance could be amended by the board of supervisors to raise fees and penalties. similar to what i was pointing out in both chicago and washington, d.c. where there are variable fees and if owners aren't registering or keeping their property vai cants for prolonged periods of time, higher fees could be attached. right now it is a flat fee for all properties, regard less of the kfnlts another is that the city require in combination with d.b.i. to access the information that's compiled by the u.s. postal service. i mentioned that they do compile that information, but it is a rich source of information that could finally give the city a city-wide database on commercial properties. that would be extremely useful in monitoring the situation and

how it's changing over time. and finally, that the board could request a d.b.i. make the vacant building and commercial store front registries publicly available. that would help get the public more involved in reporting and monitoring vacant commercial properties in their neighbourhoods. so that is the summary of the report. christina is also here and we're available to answer any questions you might have. thank you. >> thank you very much for that overview. i know that our office work add lot on the registry issue. given that a law was passed but we also noticed that it wasn't really updated as well. and i think as we go on into our other presentations, one of my observations now is that even if we were to have this wonderfully filled database of all the vacancis that that still might not address the issues that we're dealing with in terms of the changing nature of retail. i really like the suggestions that were offered in this

report. supervisor fewer? >> thank you very much. i just have one question. you mentioned that the city of chicago charges a vacancy property registration fee every since months if property is vai cants with higher fees charged if the property is reported by complaint rather than self-reported by the owner. >> cefjs >> i'm wondering has the city of chicago spaoefrntion add decline in vacant store fronts since it has implemented higher fees and propertis that were not self-reported to see if it's had any impact? >> we do not have information looking at it over time, supervisor. we saw -- we got a point in time and saw that, you know, they still have a problem also. but the interesting question would be to see if fewer are being reported by complaint and we could get that information, but yoift on hand. >> thank you very much. >> thank you. and seeing no other questions or comments, thank you to the budget analyst office. i will now turn this over to

the economic office and workforce development and they have a presentation on neighbourhood retail and strategies for store front vacancies. >> good afternoon, chair tang. committee members kim, safai, yee and stefani. thank you for including oewd about these informational items. we recently completed a study and our strategies for addressing store front and other commercial vacancies in our neighbourhood. today i'll be co-presenting with my colleague amy cohen and with our retail study consultant sarah graham strategic economics. our joint presentation will start with an overview of national retail trends and key findings from our recently completed can study by strategic economics and this information will them city

department, policymakers and the public understand the restrictions that we're working within. the retail centre reviews current research and best practice which is will help inform and guide our policies and programmes so we may better support our store front businesses and neighbourhood shopping districts informed by the notable shifts in the national retail sector and local economy. amy and i will also share afterwards oewd's goals, strategies and considerations in support of vibrant, neighbourhood commercial districts and how we work to prevent and manage store front vacancies. aaron starr from the planning department will provide an overview of its tools as well that relate to store fronts. we'll close with considerations and next steps. so, thank you very much. >> hi. good afternoon. as mentioned, i'm sarah graham. i'm with strategic economic for an urban economics consulting firm located in berkeley. and i'm going to be going over

the findings from our forthcoming report of state of the retail sector, challenges and opportunities for san francisco's neighbourhood commercial districts. and you've no doubt seen the headlines of the current challenges that the retail second is to is facing and these concerns about how national retail trends can impact us here in san francisco were one of the motivating issues that -- that led to this study. so other motivating issues are about the specific challenges faced by local businesses and how businesses and n.c.d.s may need to adapt to remain competitive in the change retail environment. so to explore these issues, we have prepared a study that includes three issue briefs and a related executive summary. i think you may have the executive summary in front of you today. but the report is forthcoming

later this month. the focus of the study, it looked at the types of uses that typically occupy grounds floor retail space in the corridors. in the n.c.d.s. so, we didn't focus in on everything else in those corridors and everything else that goes into commercial space, but rather focused on traditional retail, restaurants, night life and entertainment and personal services and fitness centres. so, the conclusion to the study that i'll be getting to in this presentation reflects the changes that are occurring and the uses that are going into those spaces and corridors now, under current conditions. so probably the big trend that has been making headlines is store closures. you've probably seen articles talking about all of the major retailers that are closing. but it turns out that the story

is quite a bit more complicated than that. and that there are a lot of stores closing, especially in categories like apparel, electronics, office supply and. department stores. other types of stores are actually seeing continued growth and store openings. so, stores like discount retailers like dollar stores, discount clothing stores and warehouse stores have actually been adding stores and sales at restaurants. and bars also continue to grow. and the other big trend that has been making a lot of headlines is nationally online sales are driving retail growth. so and not only driving the growth, but expanding into new categories. it used to be that we thought of online sales as being, you know, amazon was a book seller. but we all know that that's expanded into a lot of

different categories now ands that online retailers are taking on a growing portion of growth. so,s in 2016, what we call nonstore sales, and so thiss a big term basically to refer to anything bought online and some other things. but those nonstore sales accounted for 12% of total national retail sales. but more than 50% of recent growth in retail has been happening online. so it's a small segment to date, but it is taking up a lot of the growth. and it is a segment that's growing fastest. the influence of e-commerce is also playing out in employment where national retail employment has been flat but e-commerce employment is growing. along with this is changing technology that has been

influencing how traditional retail is occurring. so, retailer, restaurant owners and service providers are sbeg rating their brick and mortar sales and locations with online sales strategies. you see this if you order food on a third party delivery app or if you use an online booking platform for restaurant reservations. and the final trend that i'm going to talk about today is the growing importance of offering an experience or what is sometimes referred to as experiencial retail. households in the u.s. are spending more and more on eating out, fitness, buy advertise and travel. so retailers have been looking for way toss appeal to this increased emphasis on experience by doing things like holding classes and events or serving food and drinks in a retail location.

and on the slides here, we have a couple of examples of this in san francisco the retailers. on the left is a store called byrd and beckett with a music event. it is a record and bookstore. and on the right is san francycle with another event where people are encourage to come from the event, but these types of veterans draw in shoppers and hopefully also to purchase. well, so then i'm going to move on to the impact of these national trends on san francisco retail. and i'm going to start with the good news first. the good news is that san francisco san francisco has been somewhat insulated from the national trends in retail and this sufferst buffering is in part due to our many competitive advantages in san francisco. and these are -- and these advantages include the really strong economy, a local cull thursday that places high value

on buying local and on dining out. and strong tourism trends. however, recently sales in the general consumer goods categories and some other categories have been leveling off and even declining in the most recent pers for which data is available. so we see that the retail sector in san francisco now appears to be slowing. other indication of this are we've heard from brokers that rent for commercial space in the n.c.d.s have plateaued after years of increased rents. they have now at least leveled off, if not declined in some places. and also fewer traditional retailers are seeking space in retail districts. to counter this, there has been an increase in interest from personal service assist, restaurants and medical services.

or offices. but the brokers are reporting a decline in traditional retail seeking space. as was mentioned in the previous presentation, oewd surveys 24 corridors biannually. looking at vacancies. and those surveys also show an increase in vacancies in some corridors. and oewd staff is actually going to provide more detail on this in a following presentation. in addition to these pressures, these national trends and other pressures on local retail, there are other challenges for san francisco businesses. the challenges that we found in talking to retailers, to businesses here in san francisco and through the research include employee recruitment and retention and high labour costs.

the high rents in many of the n.c.d.s, the loss of long-time customers as households move out of the neighbourhood or even out of the city all together. and also land use regulations and permitting requirements. you know, some of these -- oh. and public realm challenges as well. so those include challenges like real and perceived feelings around safety and cleanliness, long-term vacancies, the perception of vacancies, how they look on a corridor and other factors that may droiblt a sense of disinvestment. [please stand by] please stand by] and many.

>> and many businesses are thriving by providing these strategies. some businesses don't want to change. they've -- they've been in

their business for dlever, and they don't want to change or they may not be able to overcome fundamental challenges, like a lack of market demand for what they're selling or their services. and that brings us to assisting individual businesses is not enough. it's actually the strong -- the district, the importance of the district really influences the aspects of businesses. so we found that retail businesses function as part of -- as part of the neighborhood commercial districts. and they rely on each other and other businesses in the districts and food traffic in a way that cannot be accomplished by themselves, so customers may

come to an ncd to shop or get groceries or get a haircut, and then they may stop and shop at other stores when they're there, so each individual business can provide some of the foot traffic that helps support other businesses. other drivers of retail demand include local employers, people on their break at work and cultural, educational and medical institutions, professional services, medical, and other offices. so i'm now going to move into the conclusions of our study. so based on the data and study, we've developed four main implications, and that will wrap me up. so we have these four. the number one conclusion is to thrive in a more challenging business environment.

retailers need to embrace new technologies, and i've mentioned several of these technologies already today, and they include on-line sales, social media and app-based delivery services. this means that businesses may benefit from technical and financial support in expanding their on-line presentation, adjusting their inventories or adjusting to a changing customer base. in addition, the city's curb management policies may need to be revisited to maintain an enhanced customer access and effectively meeting changing transportation needs what i will enabling businesses to take advantage of emerging delivery technologies, and i believe there are some pilot projec projects taking a look at that: the second main conclusion is that retailer need to be flexible and creative to

provide customers with a more interesting retail experiences. examples of this are offer classes and workshops, hosting events and serving food and bench beverages at stores, and these events draw shoppers into the stores. this conclusion means that land use policies may need to be modified to provide retailers more exibflexiblity so that th can expand their services, like providing drinks in a retail setting. the third conclusion is about the importance of the district. diver diver diverseifying can help expand their customer base. the right mix really depends on the ncd or the corridor or the specific district. the components of a healthy mix include an anchor that drives foot traffic to the district,

and an anchor could be a full-service grocery store or another large retailer or it could be a cluster of smaller stores, related retail stores or restaurants; some sort of use that's a little cluster. other businesses in a healthy mix include restaurants, nightlife and entertainment that compliment retail sales and provide gathering spaces for potential customers and potential services and fitness centers that provide needed services and also help to draw foot traffic. professional services provide needed services in an office-like setting directly to the general public, but even uses like office and housing that may not serve the general public help generate foot traffic and the demand for retail and