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The $35,000 Plumbing Bill: The adventures of a hopeful café owner

Under CC license from Flickr user Taber Andrew Bain

It all started a couple of years ago, when a happy-go-lucky guy I swim with named Joe Omran showed up at Aquatic Park one day in a foul mood. Thirty years ago, he bought a small grocery and deli on the western edge of Nob Hill called Le Beau Market. Now he wanted to open a café nearby. Just a little one.

“It’s a small space,” he said. “Only 950 square feet.”

And he told me he was stunned at the process the city was putting him through: a seemingly endless list of fees, fussy building requirements, delays, and mixed messages from various city departments.

“I had to pay rent, I had to pay property tax, I had to pay property insurance, I had to pay workman’s comp on workers who weren’t there. We had to apply for all these things and start paying premiums on them despite the fact that we weren’t open for business yet,” he said.

To Joe, the craziest of these rules came from the city’s health department, regarding how many sinks were needed in his little café. He planned on seven tables. The department wanted him to have eight sinks. And by the time his plumber had finished putting in those eight sinks, his bill was $35,000 – just for plumbing.

“So my plumbing contractor was smiling when we saw what was necessary to open this thing with just 950 square feet,” he said. “It was a plumber’s dream!”

Judging from Joe’s account, the plumbing bill was just the capper on an excruciating, five-month process. So how did this whole fiasco happen?

Into the bureaucratic process

Joe first got the idea to open a café back in the spring of 2012. During his daily walks to the Bay, he kept passing an old, run-down market at the corner of Union and Leavenworth Streets. This was a prime hilltop spot. It looked down on North Beach to the east and on Fisherman’s Wharf and Aquatic Park to the north.

“As I looked at the neighborhood, I saw what was not really around was a cafe. And it’s a great little corner,” he said.

He then talked to a clerk at the Planning Department to make sure he could proceed.

“He came back and said, ‘Yeah, it should be no problem to convert it into a café.’ So armed with that information, I proceeded to contact my architect. He came and took the necessary measurements to work on a permit for remodeling the location. And that’s when it all began,” he said.

The paperwork.

“And as soon as they saw the address, and they punched it up, all these bells and whistles went off and the flag went up, and they indicated the location was in the North Beach enterprise zone,” he said.

Apparently it wasn’t the whole property. Just part. Which part?

“The toilet,” he said.

Joe now had to appeal to the city for special permission – what’s called a "Conditional Use Permit". Which he did in November of 2012, two months after he had already signed a lease and started paying rent. So when could he expect an answer from the city?

“It normally takes four to six months for the permit, from the beginning of the permit to the actual determination to occur,” he said.

At this point, Joe hadn’t even gotten into all the plumbing costs that awaited him. But just going on the city’s verbal approval, he had already spent close to $6,000 – to hire an architect, a plumber, and an electrician, along with various permit fees.

Frustrated by the city’s mixed messages, Joe sought some official relief. First he met with an aide to the mayor, who set him up with Dan Sider, a high-level troubleshooter at the city’s Planning Department.

“We had a meeting. I told Dan Sider what had happened: that I went to the counter, got this bad information, proceeded on it, only to find out the rules of the game had changed, and I was already into the process,” said Joe. “And he was very sympathetic, although he told me the reasons why city bureaucracy is what it is, or what it had become, and there’s not a whole lot he can do.”

Since he was already so far along on this venture, Joe decided to see the process through. So he kept visiting different city departments.

“Easily about a dozen and a half trips down,” he said.

By the time all was said and done, his costs – just in city fees – were staggering.

“Oh, wow. Let’s see. I pulled up some numbers,” he said.

And they came to $18,392.

For one tiny café.

On to the San Francisco Department of Public Health

It seemed to me that a mess like this had to have some rational explanation. So I went looking for one. Obviously, one of my first stops would be the city's Health Department – the office that made Joe put in all those sinks. There, I met San Francisco Environmental Health Specialist Mohanned Malhi.

The city employs roughly two dozen health inspectors. Almost none of these inspectors have ever worked in restaurants. But Mohanned has. Knowing this, I asked him to estimate, for a café of only 950 square feet, how many sinks the department required.

“Three,” he said. “Different types. And a mop sink. So four. Hand sink, prep sink, different sink, mop sink.”

When I told him the answer was eight, he asked me what Joe was trying to offer in his café. In addition to coffee, it would serve soups and salads, hot dishes and cold sandwiches, even ice cream. All these different services raised Mohanned’s eyebrows.

“You know, hand sinks need to be strategically placed wherever any food preparation is occurring,” he said.

Part of the problem, Mohanned told me, was that Joe has different kinds of food services spread throughout his kitchen.

“We’ll walk in, and we’ll see chicken thawing in one compartment, and vegetables being washed in another, being prepped right next to dirty dishes. So what we try to do is delineate between the different processes to prevent any cross-contamination issues,” he said.

Before I left Mohanned’s office, I asked him what he would do if he could change the city’s regulatory process. He laughed.

“I feel like what I have learned in San Francisco is there is a lot of ordinances that people have to go through,” he said.

I felt like I was learning that, too. But I wanted to see exactly how many.  So I dropped by the Building and Planning Departments to see what it would take to open a café.

Around to the San Francisco Planning Department

I picked up a two-sided pink form that listed nine different city departments that would have to approve an application. After waiting with hopeful business owners, and being shuffled around to find the right person, I eventually ended up in the office of Dan Sider – the advisor Joe sought out to plead his case.

I told him about all the mixed messages Joe got, in particular regarding which neighborhood his café would actually sit in.

“The planning code is clear,” Dan said. “And it draws lines between distances and use points. At a certain point, the line has to be drawn, somewhere.”

In this case, right across Joe’s bathroom.

“I did talk with Mr. Omran about this a while ago,” he said. “I think we were both frustrated that the line happened to fall here. But the law is the law.”

Okay, but Dan told me that the department’s approval process normally takes three months; or, if there is a backlog, up to four months. So why would it take the city five months just to fix a misunderstanding?

“I’m sure Mr. Omran would have loved to have our staff wave a wand and have him go through that process without that scrutiny, but regardless of whether or not we wanted to do that, we didn’t have the discretion.”

Was there any way to move him through faster?

“No,” Dan said.

As it turns out, over the last decade, the most common amount of time for projects like Joe’s to get special approvals – those "Conditional Use Permits" in Planning Speak – has been roughly 10 months. Many delays have been caused by the applicants themselves, who drag their feet while they wait for financing, for partners to commit, whatever. But Dan said approvals also typically stumble over one main obstacle: conflicts with the rules. And in this case, apparently, size doesn’t matter.

“You may have a rear deck addition in the Outer Sunset that, because of appeals, reviews, challenges, and the approval process may take two years. At the same time, you may have a downtown high rise that meets all the planning codes and is non-controversial, and it can fly through in six months,” he said.

By that measure, Dan pointed out, Joe’s ordeal wasn’t terribly unusual.

He said, “My sense is that other applicants would say, ‘Five months. That’s not bad!’”

But is it good? Well, maybe, for a city with the quantity of regulations that San Francisco has.

“The reality of the situation is that the city is going through a tremendous boom. And our planning code is 2,000 pages and growing,” Dan said.

I actually saw it, when I stopped at the Planning desk. It is a massive set of volumes.

“Yes, let me choose my adjectives wisely,” Dan said. “It is a robust document.”

I asked him if he’d read the whole thing.

“From cover to cover,” he said.

Given Dan’s wide knowledge base, I asked him to guess how many sinks the city told Joe to put in his café.

“Let’s call it one kitchen sink and one three-basin sink,” he said.

He was six short.

Over to the Internet

After learning all about Joe’s experience, I wanted to see what would happen to me if I tried to open a cafe like Joe’s. I soon discovered that the city has actually made it pretty easy to get the process started. Last year, it created a website called SFLICENSE123. The site automatically estimates the various permits and fees that any new project requires. Within seconds, I was told that I would need 15 different permits and licenses. And the cost – just for applying for these permits – was estimated to be between $18,500 and $20,000.

Joe Omran certainly did all that, and a lot more. And on May 13, 2013, after spending roughly a quarter of a million dollars on city fees and renovations, Joe’s new venture was finally ready to open. It was called La Paloma Café.

In the months that followed, the café did fairly well. And Joe's staff, all of whom are family, seemed to adjust.  Even to the sinks, according to his wife, Leslie.

“I love them,” she told me. “It’s convenient.”

Down to the finish

But that’s not the end of this San Francisco story. The neighborhood’s interest in Joe’s cafe soon flagged. And just over a year after La Paloma opened, Joe decided to shut it down. He’s now trying to figure out new uses for the space while he looks for someone to take it over – all while paying rent each month on an empty business.

The enormous amount of trouble and expense that Joe went to for this little café made me realize why San Francisco is still occasionally called “The City of Love”. All those regulations might be time-consuming, costly, and annoying. But each one is also an act of compassion – a stake in the ground for one interest group or another. In a world that is only getting faster and more expensive for the average citizen, each of those rules represent a tiny but crucial piece of the action for somebody.

Joe understands all of this. And, at this point, he knows he made his own mistakes with this venture.

“I probably did not do what I should have done,” he says. “Now that I know what I know, the first thing I would do is go through it step by step, so I know there are no surprises on the back end.”

In the end, given all the lessons that Joe has now learned, I ask him if he would consider opening another store or cafe in the city if he had the opportunity.

“What?” he says. “Are you nuts?”

Have you ever tried to open a small business in San Francisco? We’d like to hear about your experience. Leave a comment below or leave us a message at (415) 264-7106.