In San Francisco’s North Beach neighborhood, where espresso bars and old jazz clubs still echo the city’s bohemian past, new rules could soon change what types of businesses call the storied area home — stirring both hopes of renewal and fears about losing what has long made it special.
San Francisco, CA
San Francisco’s North Beach divided over proposal to loosen zoning rules
Residents are worried that a change in zoning could mean that neighborhood staples like Molinari Delicatessen on Columbus Avenue could lose protections that have helped them survive.
“It’s a really unique ecosystem that allows there to be, on one block, a record store next to a flower shop, a candle shop, a souffle restaurant and a jewelry store,” said local business owner Stuart Watts, who is also the president of the North Beach Business Association. “That’s unheard of in most neighborhoods because … it can become really expensive for micro businesses like that to operate.”
In recent months, Watts joined the chorus of more than 50 small business owners who opposed legislation authored by the area’s supervisor, Danny Sauter, that stands to set aside longstanding zoning restrictions meant to protect the diverse mix of small, locally-owned businesses in North Beach and several surrounding neighborhoods, in favor of more permissive regulations.
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The legislation, called “District 3 Thrives,” would, among other things, expand the types of commercial uses allowed in North Beach and the neighboring Nob Hill and Jackson Square neighborhoods and permit the merging of small storefronts into larger storefronts.
Patricia Lanao sells flowers to Arielle Christian on Columbus Avenue in San Francisco’s North Beach neighborhood in 2023. Some residents worry that a change in zoning could threaten small businesses.
On Monday, Watts and other opponents were dealt a blow: A City Hall committee advanced the controversial legislation to the city’s Board of Supervisors, which is expected to hold a hearing on the legislation Tuesday.
District 7 Supervisor Myrna Melgar, who chairs the Land Use and Transportation Committee, perhaps said it best: “As San Franciscans, it’s very rare that we all agree on something anytime.”
But in a city where recalling elected officials over land use decisions already has a precedent, crossing constituents means toeing a fine line. While a notable list of supporters on Monday welcomed Sauter targeting “archaic rules” that no longer make sense for the district, others said that the effort left them feeling blindsided and alienated.
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“Our supervisor doesn’t care,” said District 3 resident Romalyn Schmaltz during Monday’s hearing. “We know these changes will push a lot of us out in favor of larger, more corporate businesses, all while creating more vacancies. But he just stays the course.”
“My neighborhood’s morale is extremely low,” said another North Beach resident during the hearing, who gave his name as Apollo. “Here again is our new supervisor trying to fix something that isn’t broken.”
Not everyone agrees — neighborhood and business stakeholders including the North Beach Neighbors, the Jackson Square Merchants Association, the Golden Gate Restaurant Association and the San Francisco Chamber of Commerce have shared their support for the legislation.
Sauter said that his legislation will solve a problem that many commercial corridors throughout the city are experiencing: stubborn vacancies. Storefront mergers of up to 3,000 square feet would be permitted, allowing new businesses to enter North Beach, where such consolidations have long been banned. The legislation would also legalize new walk-up establishments and “flexible retail” — meaning a bookstore could now co-locate in the same space as a coffee shop.
Businesses like Knitz & Leather, on Grant Avenue in the North Beach neighborhood of San Francisco, are central to the area’s character.
“District 3’s reputation as the hardest district in San Francisco to start or run a small business is not something I think anyone should be proud of, and I believe our legislation will go a long way towards changing that,” Sauter said.
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Sauter said he’s also honored requests from constituents who are worried that his effort will open the door to well-funded businesses that have the ability to outbid mom-and-pop retailers, like medical offices.
On Monday, Sauter amended his legislation to walk back a provision that would have allowed “health services” uses in ground floor spaces in North Beach.
But the change did little to appease constituents who do not believe that streamlining is an appropriate approach for revitalizing historic neighborhoods like North Beach and Jackson Square, where restaurants and bars dominate and retailers are bucking citywide trends.
“North Beach is not a struggling corridor. … Our commercial vacancy rate is 6%, among the very lowest in the city,” said Nick Ferris, who is the president of the Telegraph Hill Dwellers association. “These policies that have created that stability are the very policies that this legislation would undo.”
A cable car heads down Columbus Avenue in the North Beach neighborhood of San Francisco, in 2023
According to Ferris, larger storefronts equal higher rents, which would make it difficult for a range of small businesses to compete.
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“For nearly 40 years, storefronts have been capped at 2,000 square feet, with conditional use allowed up to 4,000 square feet — this has preserved small, independent businesses and prevented large format retail from dominating,” Ferris said.
The concern is that the legislation, coupled with a current effort by Mayor Daniel Lurie to upzone commercial corridors citywide and a stalled effort to declare much of the North Beach neighborhood as a historic district, would incentivize the replacement of the neighborhood’s quaint commercial buildings with large box retailers.
Opponents have also taken issue with a provision in Sauter’s legislation that would remove restrictions on new restaurants in North Beach and Jackson Square, by allowing limited restaurants — such as cafes — to open in spaces that were previously occupied by non-restaurant businesses.
“If any business was able to turn into a restaurant, that would cost more per square foot. And as soon as that kitchen is put in, a candle shop is not going to pay to take out that kitchen — it doesn’t have the budget for that,” said Watts, adding that of the eight vacancies that his organization is tracking in North Beach, five are abandoned restaurant spaces.
Watts said he is not opposed to more flexible zoning and incentives for new businesses to set up shop in the stretch of North Beach that he said is currently struggling with multiple vacant storefronts. The North Beach Business Association is pushing for an amendment to the legislation that maintains stricter restaurant density controls in the neighborhood’s core, he said.
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But if the committee’s vote on Monday is any indication, the future of North Beach may already be decided. Melgar described Sauter’s legislation as a “modest proposal.”
Alejandra Prieto spends time with her 2 1/2 months old baby, Gonzalo, at Washington Square Park in the North Beach neighborhood of San Francisco, in 2023.
“I think it is wise to look ahead and plan ahead into changes that are going on around us, and adapt and give a little bit more flexibility. I don’t think these changes are all that earthshaking,” Melgar said.
District 11 Supervisor Chyanne Chen acknowledged that preventing an “over saturation of specific kinds of establishments” is crucial in protecting a neighborhood’s small business ecosystem.
“I would like to see data that actually shows how the existing controls are working or not working, and I haven’t seen much of the data that could really help justify the changes that are being proposed,” she said, before voting to advance the legislation.
Sauter agreed that the city “collectively” should do more to gather such data, and made a promise to the legislation’s detractors: “They have my commitment to monitor concerns, like the balance of restaurants and retail, to explore the idea of an inner and outer North Beach Neighborhood Commercial District, and to explore ground floor use reforms,” he said.
Regardless of whether or not the legislation will win approval in its current form Tuesday, views on it are likely to remain divided.
“No one wants to lose (North Beach’s) loved and iconic businesses,” said North Beach resident Barry Schiller on Monday. “This legislation isn’t about that. It’s about removing archaic rules that do more harm than good.”
Few things are more valuable in the Bay Area than real estate. In San Francisco, the median house price is now over $2 million. Last month, at least seven houses in the city sold for $1 million over the asking price, and buyers regularly offer to pay in cash or waive contingencies to stay competitive. Yet there is one thing that remains even more valuable than a house, and possibly more valuable than money itself: stock in Anthropic or OpenAI.
Last week, 160 Noe Street, an Edwardian home in San Francisco’s desirable Duboce Triangle neighborhood, was listed for sale at $2.9 million—or the equivalent amount in Anthropic or OpenAI shares, as based on those companies’ current valuations. Rachel Swann, the listing agent, says she was inspired to set these unusual terms after meeting several Anthropic employees at an open house for a different property. “These people have a lot of paper wealth, but they don’t always have the liquidity to do things they want,” Swann says. Some of these employees were expecting to come into as much as $50 million from their Anthropic shares, and wondered if they could use that as leverage to buy a house, according to Swann. “This kept coming up over and over again.”
Swann’s listing is unconventional, but not singular. In April, an investment banker named Storm Duncan offered to exchange his Mill Valley home and an adjacent parcel of land for Anthropic shares. And in May, Vijay Chattha, who owns an agency that does PR for tech companies, listed his Healdsburg home for $2.5 million, or $2 million in Anthropic stock. “I want to sell my house, and I want to invest in Anthropic,” Chattha says. “Why not combine the two?
Chattha’s house—a three bed, three bath with a pool and a bocce court in a part of Sonoma County that abuts some of the region’s most famous wineries—also comes with coveted short-term rental status, allowing the owner to list it on platforms like Airbnb. Only a handful of properties in Healdsburg come with that status, and only about a dozen come up for sale in a given year.
Chattha is offering a $500,000 discount to Anthropic employees because he believes the value of Anthropic shares will grow faster than any other investment, and his vacation home in wine country is the best bargaining chip he has to try to access them. “If you look at Anthropic’s growth last year, it’s insane,” he says, noting the $380 billion valuation the company claimed in February. “Now they’re raising at $965 billion. That’s three X in like three months.” He added that he was open to exchanging the house for shares in Anthropic, but not OpenAI, because he prefers using Anthropic’s products.
The real estate listings come at a time when investors are salivating at the record-high valuations of Anthropic and OpenAI, and even those considered wealthy by Bay Area standards are feeling FOMO about the affluence that could come from these companies’ debuts on the stock market. (On Monday, Anthropic submitted paperwork for its initial public offering; OpenAI is also reportedly preparing to file in the coming months.) Despite the unprecedented valuations of these companies, many people believe their stock prices will only go up, and that anyone who gets a piece now could win the jackpot.
People are clamoring to buy equity in OpenAI and Anthropic on the secondary market, leading to a frenzy of transactions that may or may not be legitimate. As a result, Anthropic updated its policy around “unauthorized Anthropic stock sales” this spring, which notes that “if someone purports to sell Anthropic shares without proper board approval, that transaction is invalid.” A spokesperson for Anthropic pointed back to this policy when asked about the possibility of exchanging company shares for real estate.
Welcome to our running tally of Election Night results. Or, as this is California, well beyond tonight, as results continue to trickle in.
The first batch of results should arrive at 8:45 p.m., with three more to follow tonight. The Department of Elections has the breakdown.
San Francisco is voting in three special elections, for District 2 and District 4 supervisors and for a Board of Education member. Both supervisor races are referendums on housing, especially District 2, while the main backdrop of the D4 race is all the hot feelings around the fate of the Sunset Dunes Park (nee Great Highway).
The winners of all three special races will have to compete again in November for their seats.
Keeping it local, SF is also voting on four ballot measures. Prop A is for a bond to pay for an emergency water-system. B is for term limits. C and D are dueling measures related to the “overpaid CEO” tax. (Links go to our reporting on each race or issue; or click here for our Election 2026 page.)
Vote local, think national: Which two candidates will advance to the November election to replace Nancy Pelosi?
Statewide races include the primaries for governor, education superintendent, lieutenant governor, and much more.
Polls close soon. If you haven’t voted yet, find your polling station here.
Tuesday, June 2, 5:40 p.m.
Two and a half hours until our polls close. Before we go down the local rabbit hole, a reminder that other states have primary action today: New Jersey, Iowa, New Mexico, South Dakota, and Montana.
Why does it take so long to get results in California? CalMatters has you covered on that story. We shouldn’t expect a call tonight on the governor’s race.
The last big election was November 5, 2024. (Remember?) Ten days later, there were still races to call in San Francisco.
So if you’re waiting for the pundits (and maybe even us) to tell you What It All Means, you might have to wait a while.
More from The Frisc…
San Francisco, CA
San Francisco voters to decide on dueling measures on Top Executive Pay Tax changes
San Francisco voters weighed in Tuesday on two competing measures that seek to change the Top Executive Pay Tax, with one of the measures also including a change to the Gross Receipts Tax.
Should both measures pass, the one with the most votes will take effect, according to the propositions’ legal text.
Currently, the measures state that most businesses with San Francisco gross receipts up to $5 million are exempt from the Gross Receipts Tax. And businesses that use more than half of their city payroll for in-house administrative and management services pay an Administrative Office Tax instead of a Gross Receipts Tax.
The Top Executive Pay Tax is a tax some large businesses pay if their highest-paid managerial employee earns more than 100 times the median pay of their San Francisco employees. Businesses that have city gross receipts up to $5 million and are not subject to the Administrative Office Tax are exempt.
Proposition C
Proposition C states it would increase the number of businesses that could be exempt from the Gross Receipts Tax and would stop any further increases to the “Top Executive Pay Tax” after a final rate bump.
The proposed measure says it would raise the Gross Receipts Tax exemption ceiling to $7.5 million. The $7.5 million ceiling would also apply to the Top Executive Pay Tax exemption.
As for changes to the Top Executive Pay Tax, Proposition C states it would implement the 2028 tax rate increase in 2027, but then stop any future increases.
Supporting Proposition C are Rodney Fong, CEO of the San Francisco Chamber of Commerce, and Chris Wright, senior vice president of Advance SF, an organization of companies, which includes Bank of America, OpenAI, Waymo, the SF Giants CEO and others.
Fong and Wright, in their argument for the measure, say giving businesses more tax breaks would help keep more employees on payroll and would give companies the ability to “contribute to city services in a predictable and balanced way.”
Critics of Proposition C, such as the San Francisco Tenants Union, slam the measure as “billionaire-backed” and argue it would kill the Top Executive Pay Tax and would hand out more tax breaks to businesses at a time when the city is in a budget deficit and faces cuts to essential services.
Proposition D
Proposition D also seeks to change the Top Executive Pay Tax, which is collected from some large businesses where the highest-paid managerial employee earns more than 100 times the median compensation paid to other employees.
If approved, the measure would change the calculation of the tax using the compensation of all employees, not just employees based in San Francisco. Top Executive Pay Tax rates would also be increased for San Francisco gross receipts and payroll.
Supporters have billed the measure as a way to counteract federal cuts to Medicaid. A report by the City Controller’s Office said the measure could result in $250 million to $300 million in additional revenue.
“Proposition D is the solution to our budget deficit. It asks large corporations — not small businesses, not working families — to contribute a little more,” supporters said in the city’s official voter guide.
The measure has the backing of most of the Board of Supervisors, along with labor unions and Rep. Nancy Pelosi.
Opponents, including Mayor Daniel Lurie and state Sen. Scott Wiener, have argued Proposition D would negatively impact the city’s recovery following the COVID-19 pandemic.
“San Francisco is already one of the most expensive cities in the country to live and do business. Adding extreme and unpredictable tax increases risks driving employers away just as we are trying to bring jobs, workers, and foot traffic back downtown,” said Supervisor Matt Dorsey in the city’s voter guide.
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