Planning Commission advances Eastern Neighborhoods plan with new hybrid PDR, legalization and fee proposals

San Francisco—Planning Department staff and a coalition of neighborhood groups, property owners and small business advocates presented a refined Eastern Neighborhoods rezoning package July 24 that would preserve industrial capacity while creating new, flexible paths for office and small production businesses to remain and grow.

Planning director-level staff described three linked approaches the department says will reduce conflict between retaining job-producing PDR (production, distribution, repair) uses and the reality that many industrial‑zoned buildings already function as offices or mixed creative studios. First, staff proposed a three‑year legalization track that would allow existing office‑like uses that have operated for several years to seek permits and become legal nonconforming uses, subject to building code compliance and reasonable fees. Second, the commission heard a staff-proposed conditional‑use route to allow modest expansion (up to 25%) of nonconforming uses. Third, the proposal would add two new land‑use categories: "small enterprise workspaces" (S E W) for new construction designed as many small, low‑cost spaces for artisanal and creative micro‑businesses, and a "hybrid PDR/office" category for buildings combining at least one‑third production function with office/program activity for the same business.

Ken Rich of the Planning Department said the department——wants to "grandfather" roughly the existing stock of office space in the Eastern neighborhoods—(estimated in the presentation at millions of square feet) so it remains flexible for tenants while preventing unconstrained new office construction in former industrial zones. Dan Seider, planning staff, explained the legalization process would place legacy office uses on a nonconforming track and that both formerly permitted nonconforming uses and legitimized uses would be eligible to seek modest (25%) expansions through conditional use.

Community representatives from the Northeast Mission Residents Association, the Mission Anti‑Displacement Coalition and others said they worked with property‑owner groups and shared goals: keep buildings occupied with productive uses, retain and create jobs that benefit local residents, and avoid wholesale loss of neighborhood retail and services. Kate Sophos (Northeast Mission Residents Association) and Nick Pagalatos (Mission Anti‑Displacement Coalition) urged continued, detailed work on fees and implementation rules so legalization doesn—t simply become a pathway for unaffordable office firms to displace local jobs.

Planning staff stressed the fiscal and legal complexity of fees. The department proposes charging impact fees that reflect the incremental public cost of a change in use (for example, the difference between industrial and office impacts) rather than full office fees in all cases. Staff said they would develop specific fee levels with the City Attorney—and return to the commission with numbers before final action.

Housing staff also proposed small but targeted changes to inclusionary housing implementation: small projects (defined as 20 units or fewer or under 20,000 square feet) could fulfill inclusionary obligations on a fractional (per‑square‑foot) basis and be allowed to pay half the fee at permit and half at certificate of occupancy to ease cash‑flow constraints.

Commissioners generally welcomed the direction but asked staff to clarify several operational details: how to apply hybrid PDR to buildings vs. tenants, whether S E W should be limited to new construction, how to avoid creating demolition incentives, and how to map and legalize existing live/work and unauthorized dwelling units. Staff agreed to continue stakeholder talks and to return with revised language and concrete fee proposals at the next hearing for final action.

The commission also signaled interest in limited adjustments such as expanding NCT (neighborhood commercial thresholds) along key commercial corridors like Sixteenth Street so small retail can thrive, and to examine RTO zoning in more parts of the Mission residential fabric. The Eastern Neighborhoods agenda item generated many hours of public testimony from residents, small business owners and property owners who urged either greater protection of industrial jobs or more flexibility for housing and mixed uses, depending on neighborhood circumstances. The commission asked staff to bring the refined package back for action after the outstanding implementation issues have been tightened up.