Mayor London Breed Introduces Legislation to Remove Costly Business Fees

San Francisco, CA - Mayor London N. Breed today introduced legislation that would remove a costly fee for businesses opening in a location that was previously used for mostly industrial purposes. The legislation waives what are called "impact fees" associated with commercial projects that are changing from a Production, Distribution and Repair (PDR) use to other non-residential uses, where there is no change in square footage of the space (no building expansions or additions).

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

This proposed legislation would remove impact fees for these cases, which could save businesses upwards of $100,000. Businesses that have been subjected to impact fees range from childcare facilities to biomedical laboratories to dance schools. These businesses are vital to the quality and character of San Francisco and its diverse economy.

"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 a nearly $15,000 impact fee when they moved into a space that was formerly occupied by another biotechnology company but categorized as a different type of use 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.

Mayor Breed's Work to Make Starting a Business Easier and Less Expensive

This legislation is one component of a broader strategy championed by Mayor Breed as part of her Roadmap to San Francisco's Future to make it easier to start and grow a business in San Francisco. Her plan calls for creating transparency, streamlining processes, and improving systems to support new businesses opening in San Francisco.

Highlights from these initiatives include: 

Cutting Red Tape

• The passage of Prop H in 2020 and the Small Business Recovery Act in 2021 removed the requirement for projects to undergo neighborhood notification and allowed for most projects to be processed "over the counter," allowing applicants to receive their permit immediately or within two business days.
  • Since these changes took effect, nearly 5,600 commercial projects have been able to get their permits over the counter.
  • In 2023, legislation that Mayor Breed sponsored took effect, which made over 100 changes to the Planning Code to ease business restrictions, including:
    • Allowing more business uses on the ground floor
    • Lifting restrictions on bars and restaurants
    • Incorporating new liquor license for music venues
    • Removing certain public notice requirements (adding on to what Prop H did)
    • Enabling priority processing for nighttime entertainment, bars, and restaurants
• On August 5, 2024, Mayor Breed introduced legislation to further simplify the permitting process by removing the requirement for businesses to submit architectural drawings for projects that involve no new construction and only a transition of one business type to another.
  • This legislation will save businesses an average of $10,000 and months of work to secure and pay for architectural drawings.

Easing Permitting Costs and Time

• New Permit Center - Opened by Mayor Breed in 2021, the Permit Center consolidates the various permitting agencies in one place to more efficiently serve applicants.
• The First Year Free program, which passed in 2021, waives first-year permit, license and business registration fees for new and expanding businesses. This program was extended for a third time and will be in effect through June 30, 2025.
  • Since the program began, approximately 7,761 businesses have enrolled and over $3.7 million in fees have been waived.
• Simplified event permits - Mayor Breed signed legislation that creates a new annual permit for special event food vendors, known as Temporary Food Facilities, which allows them to apply for a single permit to cover multiple events throughout the year.

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