commercial real estate

This article comes to us courtesy of SF Weekly . By Jonathan Kauffman When Anamika Khanna and Tim Volkema, two of Kasa Indian Eatery’s owners, learned that the Department of Public Works would start taking applications for food-truck permits on Mar. 7, 2011, they camped outside the office for three rainy nights, joining other food-truck owners eager to claim prime locations. Khanna and Volkema had spent weeks scouting locations for their two unbuilt trucks, and they had specific criteria. “We wanted to not block a storefront, not be near an Indian restaurant, and to observe all the rules around sidewalks and parking places,” Khanna said. Most of the spots they chose were in the Financial District, where they could park for a few hours in a busy area, sell lunch, and leave. They filed their permit applications and paid to send notification letters to all businesses within 300 feet of each site. Soon after, Moneshpal Josan, owner of a Subway and a 7-Eleven on Drumm Street, received his notification that Kasa was applying for spots at 50 California and 61 Beale, both close to his shops. He immediately filed a protest, as did several other restaurant owners and FiDi property managers. At the April 2011 hearing, the DPW granted six of the eight locations Kasa had applied for, including 50 California and 61 Beale. Meanwhile, Josan had received notice of four more permit applications, including a coffee-and-pastry truck applying to park directly in front of his 7-Eleven. “This guy wants to block my front view and steal my customers off the sidewalk, and the city has allowed him to apply,” he fumes. Downtown businesses have decided to fight back en masse against the trucks. An informal coalition of lawyered-up restaurateurs and property managers filed nine separate appeals against Kasa’s two FiDi spots, as well as four more appeals against two nearby spots the city had awarded to Doc’s of the Bay, a hamburger truck. An acrimonious showdown took place Wednesday, Dec. 14, at the Board of Appeals, ending in defeat for both food trucks, despite their having followed the DPW process to the letter. The hearing, a de facto town hall on the validity of the city’s new food truck ordinance, demonstrated the fear that downtown businesses are feeling about the food truck scene — and the considerable flaws in the new ordinance as it has been crafted. With dozens more trucks applying to park on the same blocks, the board’s decision last week may determine the future of food trucks downtown. Before Mar. 7, 2011, a food truck owner wanting to park on the street needed to apply to the Police Department for a permit to park at up to five specific spots. The process was expensive — $9,300 for the initial fee — but straightforward, and did not include public input. In late 2010, then-Supervisor Bevan Dufty, seeking to help out the exploding food truck movement, worked with numerous groups to streamline the permitting process, reduce fees, and move it under the aegis of the DPW. The Board of Supervisors unanimously passed the new ordinance in December 2010. Instead of fostering the food truck scene, the Dec. 14 hearing showed that the supervisors may have made it harder — and ultimately more expensive — for trucks to park on the street. Especially downtown. The two spots Khanna and Volkema selected are blocks of tall buildings, with few street-front businesses and no trucks to date. Most of the existing restaurants serve similar food. “There is an oversaturation of one type of food: sandwiches, soups, and salad,” Khanna says — nothing like Kasa’s kati rolls and curry rice plates. The parking places are one-hour metered spots, some in yellow zones, but that didn’t seem to be a problem to Kasa’s owners — dozens of long-permitted food trucks park in identical spaces. Another nonissue, they thought: the Health Department’s requirement to secure an agreement from an existing business to let Kasa’s employees use the bathroom. Kasa paid $5,000 for the permit that was subsequently contested. It named four locations, one of which the DPW rejected before the first hearing. After the hearing, Khanna and Volkema now only have one approved Mission Bay location left on the permit. If they decide to move or change hours when their year is up, they’ll have to repeat the entire process. While Khanna and Volkema assumed they were bringing something new to office workers, downtown restaurateurs saw the Kasa truck as a direct competitor — one whose operating costs were far below their own. “Downtown restaurants’ rent is $9,000-$15,000 a year, and most are quick-service restaurants,” says Alex Aguilar, owner of Orale Orale, two blocks away from 50 California. Kasa may only have been applying to park near him a few hours a day, but those were the hours when Orale Orale does the bulk of its business. Another group anxious to block downtown food trucks are real estate management firms representing building owners and restaurant tenants. They’re convinced that the onslaught of food trucks is going to drive down rents and, ultimately, the value of commercial real estate. The managers have gained the support of the powerful Building Owners and Managers Association (BOMA), whose San Francisco director of government and public affairs, Ken Cleaveland, came to the hearing to speak in favor of the appellants. “The new legislation was supposed to bring life and vitality to parts of the city that didn’t have established food vendors,” he told the SF Weekly in a telephone interview. “I completely concur with that. But the mobile food facilities have descended on downtown with an overwhelming number of permits.” The DPW says 89 applications have been received since Mar. 7, and each one can include up to seven locations; roughly half cite spots in the FiDi. Only 15 of the first batch of permits have been granted, eight of them for downtown sites. With many more applications in the pipeline and energized opposition, there will be many more hearings like last week’s. The Board of Appeals upheld the appeals based on several technicalities, including a bathroom agreement form that Kasa hadn’t had signed. But board members universally condemned the new food-truck legislation for its vague language and potential for economic harm. While the battles heat up in city hearing rooms and along gossip grapevines, Supervisor Scott Wiener, who has taken on Bevan Dufty’s oversight of the food-truck ordinance, has organized a working group to address some of the challenges and gaps in the new legislation. BOMA is involved in the group, which has met once so far, as are the Golden Gate Restaurant Association, and Matt Cohen, founder of Off the Grid. Being discussed, members say, are critical questions like “Should there be a density cap on food trucks downtown?” and “What should we do about metered parking spots?” Then there’s the quandry of what constitutes fair competition: Are Kasa’s kati rolls distinct from ham sandwiches, or should both be considered takeaway food? Khanna and Volkema say that though they are disappointed in the outcome, they remain “resilient and respectful.” Subway owner Josan, meanwhile, is angry at the city for all the time and money he’s losing fighting off the new trucks. “The city administration has handled this very callously,” he says. “Very irresponsible. That’s harsh, but I’ll use that term.” For more news from around town, follow SF Weekly on Twitter .