Officials are considering continuing the program that authorizes restaurants such as Napper Tandy’s Irish pub to serve customers outdoors. (Kevin N. Hume/S.F. Examiner)

SF could waive outdoor permitting fees for business

An ordinance proposed by supervisors Aaron Peskin and Rafael Mandelman would waive fees collected by the Department of Public Works for permit applications and renewals that allow for businesses to use the public right-of-way for outdoor tables and chairs, sidewalk display merchandise or parklets through April 15, 2022.

The legislation was unanimously recommended for approval by the Board of Supervisors Budget and Finance Committee Wednesday, and will next go to the full board.

During ordinary times, those fees can rack up quickly.

A restaurant owner who wants to put tables and chairs outside her establishment, for example, must pay $148 plus $8 per square foot to secure a permit for the first time. Annual renewal costs $74 plus $7 per square foot. Costs are higher for a parklet, which requires a $306 payment for the first permit, followed by a $244 inspection fee and $306 annual renewal.

Though steps toward a fee waiver program were first taken as early as last August, the current economic crisis brought on by COVID-19 has given it increased relevance.

Peskin and Mandelman argue these fees encumber business owners now just looking to survive in an environment wrought with COVID-19 restraints.

Some experts predict as many as one-third of San Francisco small businesses that have been forced to close due to the COVID-19 economic shutdown will never reopen, even once shelter-in-place restrictions are fully lifted.

Budget implications

The ordinance suggests these fees are nominal line items on The City’s budget, but sizable barriers to entry for small businesses already struggling to stay open.

Fees from these three types of permits and their renewals generated roughly $663,000 in fiscal year 2018-19, the last full fiscal year before the pandemic. If rates were to continue at this level, the estimated fees waived over the two-year period would be approximately $1,324,992, according to the Budget and Legislative Analyst.

However, the BLA reportprojects the actual amount of revenue lost would likely be less than this amount because of the number of businesses that have shuttered.

The ordinance also forgives fees retroactively to April 15, 2020 and promises to reimburse eligible dues already paid.

Concerns were raised about foregoing revenue while San Francisco is severely strapped for resources.

“Yes, this is going to be a relatively modest drain, but on the other hand small businesses, if they’re able to survive and thrive, which is very much a question right now, do generate money for our general fund in other ways,” Mandelman said.

The ordinance only waives fees collected by Public Works.

Supporters of the ordinance voiced interest in having the fee waivers work in tandem with the newly minted Shared Spaces so that businesses who have received permits under that program don’t have to re-apply once the emergency ordinance has lifted.

Shared Spaces, part of The City’s COVID-19 economic response, has greatly expanded the ability of businesses to use the public right-of-way outdoors for commercial activities by waiving application fees and streamlining the approval process.

Staff time

Ordinance language emphasizes the co-sponsors’ belief that Shared Spaces has allowed more efficient use of staff time by shifting implementation from The City to merchants, who themselves are responsible for installing and maintaining their own outdoor facilities and ensuring they adhere to city guidelines for emergency response and Americans with Disabilities Act accessibility.

It asserts the model has shown businesses are capable of overseeing their own sidewalk and street encroachments without violating guidelines and transfers limited city resources to enforcement, and it seeks to expand upon that alleged finding.

Mandelman committed to working with Public Works to identify additional ways to decrease the amount of staff time required to process applications so the loss of fee-generated revenues won’t result in a sizable deficit when considering continued labor costs nor will it stymie business owners looking to take advantage of the lower cost to entry.

San Francisco’s Small Business Commission supports the proposed ordinance, but its seven members unanimously advocated for extending the fee waivers “in perpetuity.”

“The Commission emphasized that the ability for small businesses to utilize the public right of way for tables and chairs, display merchandise and parklets helps to generate sales tax revenue, supports local jobs and contributes to the beautification of The City,” it wrote in its response to the committee.

It also suggested waiving fees assessed for outdoor fitness providers that currently pay $15 per hour to use outdoor park space.

Neither of these amendments were incorporated into the version considered by the committee that will go to the Board of Supervisors for approval.

cgraf@sfexaminer.com

Editor’s Note: This story has been revised to remove incorrect information about the status of the Shared Spaces program.

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