Rent on the space is $7300 a month so this cost him $87600 in addition to whatever he spent on lawyers and his own energy.
Every single person involved knows it's bullshit, every variance and zoning committee meeting has been in my favor, but my competitor is notorious for using the legal system to to keep others tied up long enough in the hopes they bleed enough money to give it up. Or at least enjoys a competitive advantage in the meantime.
So far, that project is 7 figures in the hole.
There also aren't strict schedules with these zoning and permitting decisions, it's a "we'll get to it when we get to it", and if the hearings run late into the evening, and they don't get to your issue, then maybe you have to wait a month or two until they reconvene.
So once the approval was given by the town, the hotelier, who had been watching all along, files a lawsuit against the town and my company, claiming it was granted improperly (which is technically true).
Once that happens, you're now in the thicket of the legal system, and as the saying goes, "the process is the punishment". You win one battle, competitor appeals (waiting for the last day to file the appeal each time), you win that one, competitor appeals again. Your lawyer makes a mistake, go back to square 1. And months go by between decisions. Meanwhile, you're paying property taxes and legal fees like nobody's business.
In many countries, this is a sure sign that palms need to be greased.
Even the town hates my competitor, as he's been wasting valuable resources of everyone, but at the end of the day, the ordinance was what it was.
Stupid, naive me.
It's like Trumpism for liberals.
edit because hacker news won't let me reply:
Big Businesses are literally banned from most places in San Francisco. If a business is over a certain size, they cannot open a franchise in around 90% of San Francisco. Last I heard, the cutoff was 6 franchise locations -- any bigger any you can't get approval. There are a couple of areas in the city where exceptions are made, but that's a very small part of the city.
To be fair - it did take a lot of VC money to build out the company and it has a pretty impressive footprint. Still kind of funny to get kicked out of your own home turf.
FWIW - as a former SF resident I love the diversity of stores without all the large chains coming in.
I find drawing a parallel to Trumpism to be apt, since these are core defining traits of Trumpism. Yet despite all the valid hatred that Trumpism gets, the people abusing the same things in liberal cities get no criticism at all.
As far as I’m concerned the more the merrier, and it sucks that this particular project became a nightmare for the owner, but objectively this is already one of the most small-ice-cream-shop-friendly neighborhoods on the planet.
How many total groups attempted to open a business? How long does it take to open a business? What are the costs? Have these factors changed across time? And so on.
But sure, using that as a rough heuristic, I agree it doesn’t seem likely to be the worst place to open an ice cream shop.
I think the biggest problem is that like 3/4 of the city is zoned as low-density residential (pale yellow areas), only allowing detached single-family homes or – in some places – duplexes with low building height limits, and not allowing mixed uses like small ice cream shops, bodegas, bookstores, or cafés. As a result small businesses get crowded into a few streets zoned as “commercial corridors” (purple areas), and both residential and commercial rents are much higher than they would be if more parts of the city allowed construction of low-rise apartment buildings with bottom-floor storefronts (e.g. to RC3 from RH1/RH2 zoning). The real winners are large-scale property owners, who end up skimming a substantial margin from all economic activity in the city.
If the rent weren’t so punishing, an extra couple months of permit bureaucracy wouldn’t be nearly the nightmare it is now, and existing small business owners wouldn’t be so desperate to protect slim profits. (A once-in-a-century pandemic still might kill many nascent businesses, but it’s hard to plan for that one.)
Wasn't there a commercial rent moratorium during this time? Why did he keep paying the rent?
I'd have been very up front with the landlord. The lease is signed with an LLC that will be worthless if the city doesn't approve the licenses. The cash is there. But it won't go to the landlord or to the LLC until the earlier of the (a) city approving or (b) moratorium expiring.
I understand this is unsavory, but it's what these sorts of licensing processes force. There is a reason the New York restaurant business is notoriously scummy, and it's not because restauranteurs are bad people. (Far from it.)
No. The eviction moratorium is not a rent moratorium.
Prior to the pandemic, I saw a boba tea shop in our SF neighborhood take well over a year to open (only then to have the pandemic crop up); there's a small specialty grocer is going into the second year of construction and waiting on city issues, there are other shopfronts where they started work and just stopped not to speak of empty storefronts that just never even rent for years at a time and all of this prior to the pandemic. This in a neighborhood which still gets some decent foot traffic.
From my perspective, and I do have a fair amount of experience in retail, I wouldn't touch San Francisco as a small independent proprietor; it's risky without these hurdles and with them you'd better be packing substantial investment, be already well connected within the city bureaucracy, and have some sort of prior reason to think you'd be successful in the market (business already known from elsewhere, famous chef, etc. )
It would be interesting to hear how other folks actually, do this thing.