At the Moby Dick, a gay bar on 18th Street, and Mendels, an arts and crafts store on Haight Street, you might catch a glimpse of fabulous outfits or the materials to make one.
But they have at least two more things in common. First, they’re both official San Francisco legacy businesses, longtime ventures that city officials have deemed significant to the city’s history and culture. Second, they both sit on what could become some of the most politically contentious streets in San Francisco.
City Hall could soon allow taller buildings and denser living along many busy corridors as part of a push for tens of thousands of new homes that supporters say will help ease San Francisco’s crushing rents and home prices.
But critics of the upzoning say new construction could displace neighborhood businesses that occupy the ground floor of buildings tabbed for renovation or demolition. SF lawmakers have listened to the critics and agreed – at least temporarily.
At the beginning of this month, Mayor London Breed signed a bill to force construction projects that affect a legacy business to go through extra review, including permission from the Planning Commission – a delay that may dissuade developers from moving ahead.
The law is a stopgap measure that will need to be renewed or revised in 18 months, just in time to potentially run into a bigger SF development debate.
Because the move only covers legacy businesses, it seems like more of a speed bump than a road block. That is, until you open the city’s registry and see that there are more than 400 of these businesses spread across the city, enough to fill the Mission District.
The bill was born on Fillmore Street, where two favorite neighborhood restaurants faced closure this summer thanks to a new landlord. The uproar provided Sup. Aaron Peskin, a critic of the upzoning plan, a chance to parry it. “We began asking Planning last spring […] how we intend to prevent small business displacement, and I’ve continued to get no satisfying answer,” Peskin said in an October hearing.
Peskin staked his mayoral campaign in part on opposition to what he frames as rich developers’ exploitation of neighborhoods. But Daniel Lurie, who has called for more density along commercial corridors, will be San Francisco’s next mayor, and the Board of Supervisors come January (Peskin is termed out) is likely to be friendlier to housing as well.
Even so, confrontations over the legacy of SF’s legacy businesses are likely to ratchet up, as the San Francisco of ten years ago collides with the San Francisco of tomorrow.
From Coltrane to Doda
San Francisco can thank one man for putting legacy businesses in the current spotlight: venture investor and Fillmore neighborhood native Neil Mehta. In August, restaurants Ten-Ichi and La Mediteranée received notice that their buildings’ new owner was shutting them down. They were among half a dozen neighborhood purchases – including the defunct Clay Theatre – that a Chronicle report traced to Mehta.
A month later, Mehta clapped back against the “misleading” coverage in an SF Standard opinion piece. He said he’s not the owner – he’s the sole investor in a “revitalization fund” buying the properties.
La Med, as it’s known, got its legacy business status in 2019. Ten-Ichi just received its status in September after a July nomination. The labels and the perks will follow the restaurants if and when they find new locations.
SF budgets $1 million a year for the legacy business fund. ‘It’s good PR, and I know sometimes it helps with the landlords.’
Martha Asten, CFO of Cliff’s Variety on Castro Street
And the perks are nothing to shake a fork at. Legacy businesses qualify for an annual subsidy of $500 per full-time employee, up to 100 employees. The city also offers landlords up to $22,500 yearly if they offer legacy tenants a 10-year lease. SF budgets $1 million for the fund annually.
“It’s good PR, and I know sometimes it helps with the landlords,” says Martha Asten, CFO of Cliff’s Variety on Castro Street, a legacy business since 2017. (She adds that Cliff’s doesn’t have to worry about landlord woes, since they own the building.)
The notion started ten years ago, when SF’s economy was in full boom. As housing prices soared, so did prices on commercial space. In 2015, San Francisco dethroned New York City as the hottest retail real estate market in the US.
In the midst of all this, then-Sup. David Campos pitched a registry for legacy businesses to help protect them from soaring rents, and voters backed it up by approving November 2015’s Prop J, which added a fund for grants.
Under Prop J, supervisors can nominate any venture at least 20 years old that they deem significant to the city’s culture and history. Some are indeed legendary, like the Saint John Coltrane African Orthodox Church and the Condor Club, where Carol Doda did the nation’s first topless strip tease in 1964 – then the first bottomless act five years later.
Then there’s Escape From New York Pizza on Haight Street, significant mostly to locals on late-night munchie runs.
The Chronicle argued at the time the fund would allow politicians to reward friends and favorites, but they haven’t chosen as many as predicted. Originally, the city controller estimated there could be some 7,500 potential businesses. Today’s roster includes 427 entries, up from 388 at the beginning of the year.
It’s no longer a hot market endangering SF’s longtime ventures but a chilly one. “Small businesses have largely not recovered from the pandemic,” says Michelle Reynolds, spokesperson for the Office of Small Business, which promotes the subsidies as part of a “multi-pronged approach” to pandemic recovery.
With downtown recovery still a big question mark, the city can’t afford to drain the economic vitality of the “neighborhoods.” More rezoning drama seems inevitable: Of those 400-plus legacy businesses, at least 139 sit on a parcel that SF Planning suggested for an upzone in the last year.
Map quest
In early 2023, SF lawmakers under pressure from state housing regulators approved a sweeping plan for more density across the city. Planners have since worked on a map that concentrates on “well-resourced neighborhoods” – mostly residential, on the north and west side, that have seen little new housing for decades.
City Hall could soon be friendlier to new construction than perhaps it’s ever been, but many residents are still allergic to higher skylines. “People are hardwired to have a particular affinity for [their] environment,” says SF Planning Chief of Staff Dan Sider.
Peskin the mayoral candidate stumped hard against the upzoning plan and allied himself with a group called Neighborhoods United SF, which says upzoning will lead to “wealth-extracting luxury development.”
Planners released a map early in 2024 that focused upzoning mostly along busy transit and business corridors in the Richmond, the Sunset, West Portal, the Ingleside, the Castro, and several other neighborhoods.
A few corridors were zoned as high as 30 stories, but the map left the height restrictions of most low-rise residential blocks unchanged. It still became a political football. Breed ordered a re-do in April, demanding an emphasis on midrise development along transit and commercial corridors – six to eight stories – but more density in between. Nothing new has emerged.
Meanwhile, as aggressive state laws and regulators restrict local control over housing, critics have pivoted to a new concern: What if small businesses are in the path of a wrecking ball? “The rezoning legislation, as it stands today, would have a disastrous effect on San Francisco’s small businesses,” says Shae Watson, spokesperson for Small Business Forward, which has joined Neighborhoods United and Peskin for a series of presentations.
Unlike residential renters, businesses have relatively few protections against eviction. With this in mind, Peskin’s bill sailed through the board in October. Breed signed it just before the election.
The new rules don’t prevent construction on properties with a legacy business, but doing so demands a “conditional use approval.” The state housing department found that on average developments requiring a “CU” take nearly three years.
Planning staff say there’s no timeline for a new map. But the city has until January of 2026 to approve one. “The project team is continuing to meet with stakeholders to gather additional feedback,” says Planning spokesperson Anne Yalon. “We anticipate scheduling topical informational hearings at the Planning Commission in 2025.”
In many cases, new housing is good for local businesses: denser neighborhoods mean more foot traffic and more customers. But when complications arise, San Francisco’s new mayor and four new supervisors will be on the clock to resolve them.
