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Supervisor Breed pushes legislation for exception to Hayes Valley chain store ban

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Before New Seasons Market can open at 555 Fulton St., the Planning Commission must approve a special conditional use permit due to a ban on chain stores in Hayes Valley. (Sarahbeth Maney/Special to S.F. Examiner)
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In 2004, San Francisco adopted the first ever controls on chain stores with a ban in Hayes Valley. Thirteen years later, The City may grant its first exception to allow the Portland-based grocery store New Seasons Market to open in the ground floor of a new condo development at 555 Fulton St.

When that condo development was permitted, the understanding was the ground-floor retail space would go to a grocery store to help address the area’s food desert. But when it came time to find a tenant, Board of Supervisors President London Breed said there was no alternative but to go with a chain to ensure products were affordable.

The obvious problem was that Hayes Valley had already banned chain stores, also called “formula retail.” The ban led to other chain store prohibitions in other neighborhoods and special conditional use permits for chains to open in commercial corridors throughout The City.

New Seasons announced its plans to open on Fulton Street in March. For that to actually occur, the law needs to change, and the company needs to acquire a permit.

Breed has introduced legislation that would allow for a special conditional use through the Planning Commission for the grocery store to operate on one parcel in Hayes Valley, and the proposal is wending its way through the bureaucratic process.

The Planning Commission is scheduled to vote Aug. 31 on both Breed’s legislation and New Seasons’ permit application to occupy the 30,000-square-foot space.

Last month, Breed’s proposal passed muster with the Small Business Commission, which unanimously approved it. Breed told the commission that “unfortunately, the harsh reality” is that the “speciality stores that are not formula retail are a little bit more expensive than formula retail.”

Breed said she worked with the Planning Department and reviewed data that showed chain grocery stores offer less expensive goods than non-chain grocers. She said that “we also discovered that formula retail establishments hire more from the neighborhood.”

Those comments may not sit well with chain store opponents, but the Hayes Valley Neighborhood Association supports lifting the ban for New Seasons.

“We struggled with it because we don’t like this idea of having chain stores as the solution,” Gail Baugh, the president of the Hayes Valley Neighborhood Association, told the San Francisco Examiner on Monday. “This is going to be an OK compromise. It’s a one-time only. It will revert back to the chain ban if New Seasons leaves.”

Baugh is working with New Seasons on a community benefit agreement that is expected to become finalized and public by the Aug. 31 hearing. The agreement will likely enshrine expectations, like New Seasons hiring of all its 110 employees from Hayes Valley or the Western Addition as well as added requirements around traffic mitigation, beautification of sidewalks, murals and community events.

One main concern from Baugh is traffic with a 70-space parking lot for the grocery store. Baugh said they are looking at infrastructure and ways to encourage alternative trips by bike, bus or walking.

“There will be some ideas around renting cargo bikes to take your groceries home,” Baugh said.

The large space seemingly precluded non-chain grocers, which tend to prefer smaller spaces. Baugh said efforts to interest non-chain local grocery stores Duc Loi or Haight Street Market in the space were unsuccessful. She also said developer Fulton Street Ventures was not inclined to divide the retail space, preferring one tenant.

Breed said her focus was on healthy, affordable products.

“I was concerned that if we put in a grocery store that was not affordable, how is it fair that it gets built directly across the street from where they live and they won’t even be able to shop there,” Breed said, referring to the nearby blocks of the Western Addition, where household incomes can be as low as $12,000 and people live in federally funded affordable housing

Just a few blocks over in Hayes Valley, incomes can exceed $200,000.

Breed said she and some area residents were taken on a trip to Portland, Ore., to see first-hand the New Seasons store there and meet with executives.

New Seasons paid for Breed’s travel expenses, according to a gift disclosure with the Ethics Commission. Breed traveled to Portland on Jan. 15, 2016, and received $200 in travel expenses from New Seasons, according to the filing. Breed said Wednesday that the grocer paid for the airfare and transit for what was a day trip of a couple of hours, on which five people traveled.

“They not only had a dozen eggs that they would sell and a six pack of eggs, but they had individual eggs that you can buy,” Breed told the Small Business Commission. “When you are on a fixed income, sometimes you may only be able to afford to buy one or two eggs at a time.”

Jerry Chevassus, New Seasons’ chief development officer, said in a statement to the Examiner on Wednesday that the grocer will “bring a mix of fresh, local and organic foods alongside grocery classics and plentiful prepared options to Hayes Valley and the surrounding neighborhoods.”

“We’re still in the planning process and are working with Hayes Valley Neighborhood Association and others to create a store that best serves the area,” he said.

Despite the need to make an exemption in this case, Baugh said the Hayes Valley chain store ban is a success.

“The chain store ban is working extremely well and it’s keeping our neighborhood vibrant, active,” Baugh told the Examiner. “It’s a destination for many people all over the world as well as in the Bay Area. Is it neighborhood serving? Not particularly. I can’t afford most of the clothing.”

But she said the ban keeps rents lower and serves as a business incubator. “All sorts of new businesses get a chance to get started here, and if they didn’t, then all we would have is Gap and whatever,” Baugh said. “Chain store bans really help to define a neighborhood. And if you allow it, chain stores will take away that neighborhood feeling.”

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