What the Measure Would Do

Proposition X would make two changes to development projects within the Mission and South of Market neighborhoods. First, it would require a conditional use authorization from the Planning Commission if the development project would demolish or convert space used for production, distribution or repair (known collectively as “PDR”), arts activities or nonprofit community uses. Second, it would require the new development to replace the PDR, arts or community space that is converted or demolished.¹

The conditional use authorization would be triggered by the conversion of more than 5,000 square feet of PDR use, more than 2,500 square feet of nonprofit community use or any amount of arts use within the following Eastern Neighborhoods Plan Areas: the Mission, Eastern SoMa, Western SoMa and, when a plan for it is adopted, Central SoMa.

The requirement to replace the PDR, arts or community space would vary based on zoning designations between 100 percent replacement and 50 percent replacement:

Prop. X's Replacement Requirements by Zoning Designation

Prop. X would also provide for 25 percent reductions in replacement space for certain projects if the replacement space is rented, leased or sold at 50 percent below market rate for at least 55 years.

In Western SoMa, public property, affordable housing and existing nonconforming uses smaller than 25,000 square feet would all be exempt from Prop. X requirements. Additionally, projects that already received their entitlements or that have started the environmental review process would be exempt.

The measure states that in the future the Board of Supervisors could adopt an in-lieu fee and/or off-site replacement provisions to meet the replacement requirements. The fee would be used for the preservation and rehabilitation of existing PDR, arts and nonprofit community spaces.

Under Prop. X the Board of Supervisors could amend the measure legislatively by a two-thirds vote of its members.

The Backstory

Like most cities, San Francisco long had a zoning code whose most permissive designation was manufacturing. Any land classified as manufacturing could also include offices, housing and many other uses, some of which were not compatible with manufacturing activities. Over time, new residential projects in industrial areas resulted in conflicts between new residents and existing industrial users. Concerned that such conflicts would continue and the city might eventually lose most of its industrial lands, the city embarked on a major rezoning of the city’s Eastern Neighborhoods.

The discussions during the rezoning process led to the creation of a new name for the manufacturing areas: production, distribution and repair (PDR). The new PDR classification was meant to reflect more accurately the kinds of activities that use industrial space. PDR uses include making clothing, food and art; distribution, including the distribution of people (e.g., Muni bus yards are considered PDR); delivery services and transporters; and repair work such as car and furniture repair. This new term was woven throughout the designation of new zoning classifications, which created several explicit PDR zones that exclude office and residential uses and limit retail uses. Other zoning districts have been created that allow for a mixture of uses, including PDR.

The PDR sector is valuable to the city for a number of social and economic reasons. PDR businesses help San Francisco retain a diverse economy while providing needed supplies to key sectors such as tourism (e.g. laundries), restaurants (e.g. bakeries and distribution centers) and professional services (e.g. printing). These goods and services will become more costly if the PDR businesses move out of the city and transport their goods (or offer their services) from farther away. In addition, PDR businesses often create wellpaying jobs for those without a college degree.

PDR uses are very important to the city, and they are also at risk. Complaints from adjacent uses such as housing can lead to restrictions on PDR uses and to higher rent expectations that ultimately drive PDR uses away. PDR businesses tend to employ fewer people per square foot, and are less able to pay the same rent as and compete with higher intensity residential and office uses. For many of these reasons, it can be economically unfeasible to designate PDR space in new developments. As evidence of this, the majority of new and proposed Eastern Neighborhoods developments with mixed-use office or urban mixeduse zoning are either office/retail or residential/retail. Discussions have begun about ways to incentivize the development of PDR space, including redefining urban mixed-use zoning. It should be noted that more recent developments that are up for approval have opted to include some PDR space.

The city is taking additional measures to protect PDR space:

• The Central SoMa Plan, currently being drafted, may limit conversions, require new PDR in office developments and provide incentives to create new PDR.

• The city has hired six new inspectors to enforce the Planning Code to prevent PDR space from being illegally converted to office space.

• Mayor Lee’s October 2015 Five Point Plan to Preserve PDR included a range of policies to preserve, upgrade and promote the creation of new PDR space on public and private sites.

This measure was developed by advocates who support local artists and businesses and oppose market-rate housing in their neighborhoods. It could have gone through the legislative process but instead was placed on the ballot by a 7 to 4 vote of the Board of Supervisors. As an ordinance, it requires a simple majority (50 percent plus one vote) to pass.

Pros

• Prop. X highlights important planning issues that the city should address, namely the retention of space for PDR businesses, the arts and nonprofit community groups in rapidly transitioning neighborhoods.

Cons

• This measure does not need to be on the ballot. The issue of PDR, arts and nonprofit retention can and should be handled legislatively. The changes that would be made by this measure are extremely complicated. Usually, such changes are best made by going through the normal legislative process, which allows for public input and vetting by various city departments. This measure had almost no public vetting before being placed on the ballot and could only be changed by a super-majority vote of the Board of Supervisors or another ballot measure.

• This measure would provide one-size-fits-all requirements for PDR replacement based on zoning designations. It would be better to analyze the consequences of these changes on a neighborhood-by-neighborhood basis.

• The new requirements outlined in this measure have not been evaluated for feasibility. It is not clear whether new developments could meet these requirements while also providing the other public goods that neighborhoods seek from new development (such as affordable housing and retail).

• It’s also not clear that Prop. X would create space that PDR businesses, artist and nonprofits can use. Some of the new spaces might be too small and too expensive for these users, which would not result in the policy outcome that this measure is seeking to create.