Board of Supervisors Approves Mayor Breed's Legislation to Save Restaurants, Bars, and Nightclubs Thousands of Dollars Annually

12/10/2024

[ Article originally appeared in www.sf.gov ]

The Board of Supervisors unanimously approved approved legislation put forward by Mayor London N. Breed to eliminate annual license fees for businesses, making it easier to operate, grow, and open a small business in San Francisco. This proposal was co-authored and supported by Treasurer José Cisneros, and Supervisors Rafael Mandelman and Aaron Peskin. 

The announcement builds on Mayor Breed’s continued effort to remove barriers and fees to support businesses citywide. Reducing costs for small businesses was a key goal of Prop M, the new business tax measure approved by the voters in November. Prop M cuts taxes for thousands of small businesses, and revenue from Prop M will be used to cover the permitting costs previously paid by businesses. The fees will be eliminated starting in 2026.  

Drafted in partnership with the Office of the Treasurer & Tax Collector, Office of Economic and Workforce Development (OEWD), its Office of Small Business (OSB), multiple City permitting agencies, and small business stakeholders, the legislation indefinitely waives 49 annual license fees, providing $10 million annually in relief to San Francisco business owners. ? 

“To help small businesses, we’ve cut red tape, we’ve cut taxes, we’ve improved public safety, and now we are cutting more fees,” said Mayor London Breed. “The transformation we’ve made in helping small businesses to open and operate started with Prop H in 2020, which cut months off permitting and approval times, and continues today with the elimination of these costly fees. San Francisco is supporting small businesses like never before, and we must continue to build on this progress.” 

Currently, small business owners pay thousands of dollars in annual fees to operate restaurants, food trucks, bars, and bakeries. There are individual charges for outdoor seating, having billiard tables, and extended hours, among others. A business even incurs an annual fee for things like a cash register or having candles in their establishment.  

Most of the fees are charged by individual departments and combined on a unified license bill issued by the Office of the Treasurer & Tax Collector. With the passage of this legislation, 91% of restaurants and 87% of bars and nightclubs will no longer receive this annual bill from the City.? 

“The elimination of numerous annual license fees will truly benefit small businesses in San Francisco,” said Laurie Thomas, Executive Director of the Golden Gate Restaurant Association. “We are grateful to the Mayor, the Office of Economic and Workforce Development, and everyone involved for recognizing the needs of our business community and taking action to help us survive and thrive.”? 

The eliminated fees have a disproportionate impact on small businesses. Most fees cost the same regardless of the size of the business incurring the cost, and these fees are generally only paid by smaller businesses, particularly restaurants.?In contrast, business taxes are progressive – meaning that smaller businesses pay less than larger businesses. However, revenue from Prop M will cover the eliminated fees. ? 

"Cutting $10 million a year in costs for small businesses is a big win for our City," said Treasurer José Cisneros, whose team led the analysis of the current system and the design of the proposed legislation. "This was a great team effort to make San Francisco a better place to open and grow a business." 

“Small business is the beating heart of our neighborhoods, and helping these businesses thrive is one of the best strategies to support San Francisco’s post-pandemic recovery,” said District 8 Supervisor Rafael Mandelman. “This legislation does just that, making good on one of the core elements of 2024’s Business Tax Reform – fee relief for our small businesses. I want to thank and congratulate the Treasurer and Controller for their work to identify these fees, and I look forward to working with the Mayor and my colleagues on the Board to pass this proposal.”? 

“Our small business sector is fueling San Francisco’s revitalization,” said Sarah Dennis Phillips, Executive Director, OEWD. “By eliminating these burdensome flat fees, we are making operating a business in San Francisco easier, supporting local operators and opening the doors to new entrepreneurs, so they can continue to contribute to our economic recovery.”  

“This legislation will provide both immediate and lasting financial relief to thousands of small businesses in San Francisco,” said Katy Tang, Director of the Office of Small Business. Together with Prop M’s expansion of the tax exemption to more businesses, this legislation will significantly improve the environment for small businesses investing and operating in San Francisco.” 

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 the City. 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.???? 
• On September 17, 2024, Mayor Breed introduced legislation to reduce costly business impact fees for commercial projects that locate in a former a Production, Distribution and Repair (PDR) space when there is no building expansion or additions.?? 

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.

SOURCE: https://www.sf.gov/news/board-supervisors-approves-mayor-breeds-legislation-save-restaurants-bars-and-nightclubs