San Francisco Sun

San Francisco, CA – Mayor London N. Breed introduced legislation today to remove a costly fee for businesses opening in locations previously used for industrial purposes. The legislation aims to waive "impact fees" associated with commercial projects transitioning from Production, Distribution, and Repair (PDR) use to other non-residential uses, provided there is no change in the square footage of the space.

Currently, impact fees apply in some neighborhoods when a property shifts away from manufacturing or industrial use. These fees are generally intended to offset increased demands on San Francisco’s public services and infrastructure due to new development. However, changes between types of businesses within existing buildings have minimal impacts on services and infrastructure and should not be subject to these costly fees.

The proposed legislation could save businesses upwards of $100,000 by removing impact fees in these cases. Businesses affected by these fees range from childcare facilities to biomedical laboratories and dance schools.

“San Francisco has built a reputation for creating red tape issues, making it extremely difficult to do business here, especially for our small businesses,” said Mayor London Breed. “The pandemic presented a myriad of challenges, but it also allowed us to get into the weeds of the City’s policies and rework how we do business in San Francisco – housing, construction and conversions, and a total overhaul of fees and permitting so that businesses can have a better opportunity to thrive in our City. We are taking a critical look at each and every fee we charge to change that. Lower start-up costs will result in greater investment in San Francisco’s economy.”

“When government can find sensible ways to reduce fees for small businesses, the entire city benefits,” said Katy Tang, Director of the Office of Small Business. “Entrepreneurs can invest back in their business to innovate, hire, and grow.”

“We opened our lab in the American Industrial Center in Dogpatch to research immunotherapies and find treatments for cancer,” said Dr. Li Sun, PhD, CEO and Founder of Shennon Biotechnologies. “The many fees and hoops to jump through to open in San Francisco were significant and we are very supportive of efforts to reduce them.” Shennon Biotechnologies was charged nearly $15,000 when they moved into a space formerly occupied by another biotechnology company but categorized as a different type under the Planning Code.

“We actually manufacture all of our chocolate right here in San Francisco and these surprise fees were a big obstacle for us building our factory in the city,” said Todd Masonis, co-founder of Dandelion Chocolate. “I think this legislation is a step in the right direction for helping small businesses make things here.” Dandelion Chocolates paid $85,000 in impact fees to open their two Mission District manufacturing locations.

This legislation is part of Mayor Breed's broader strategy under her Roadmap to San Francisco’s Future initiative aimed at making it easier to start and grow a business in San Francisco. Her plan includes creating transparency, streamlining processes, and improving systems.

Key initiatives include:

- Cutting Red Tape: The passage of Prop H in 2020 and the Small Business Recovery Act in 2021 removed neighborhood notification requirements for projects allowing most permits over-the-counter.

- Easing Permitting Costs: The New Permit Center consolidates various permitting agencies into one location for efficiency.

- First Year Free Program: Waives first-year permit, license, and business registration fees for new businesses until June 30, 2025.

- Simplified Event Permits: Creates an annual permit for special event food vendors covering multiple events throughout the year.

Mayor Breed continues her efforts with additional measures introduced on August 5th aimed at further simplifying the permitting process by removing requirements for architectural drawings where no new construction is involved.

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