Is it hard to do business in Berkeley?

It took owner Veronica Bradley over seven months to open Amphora Nueva Oil on Domingo Avenue.

On May 5, 2010, Robin Dalrymple walked excitedly into Berkeley’s Planning Department to apply for a use permit. She wanted to convert the vacant Ritz Camera store on Solano Avenue into an ice cream parlor.

Eight months later, her store is still not open.

Veronica Bradley signed a lease in April 2010 to transform what had been Left Coast Cyclery on Domingo Avenue into a store selling olive oil from around the world. After working with five city departments — building and safety, health, zoning, public works and engineering, and fire prevention – she finally got a permit in November. The store opened Dec. 24.

It took Jim Meyers only six weeks to launch his store, Wine Thieves, in Lafayette. It hasn’t been that easy in Berkeley. He has been trying since March to open a branch on Domingo Avenue. He is crossing his fingers that he can open the store next week.

“We have had the most difficult time,” said Bradley, who said she paid more than $50,000 in rent before Amphora Nueva opened.  “We heard this about Berkeley, but we had no idea it would be so challenging. I blame it on the city of Berkeley. Given the vacancies you would think they would do whatever they could to make the process a little less painful, a little less costly. In other parts of the country cities bend over backwards to help business.”

Berkeley has long had a reputation of being a difficult city in which to do business. There are many factors contributing to this perception, including complex zoning laws, neighborhood business quotas, and a 60’s era desire to give neighborhoods, rather than the planning department, discretion in saying what kinds of businesses can move into nearby commercial districts.

The impediments to doing business, and the large number of vacant storefronts, so frustrated City Councilmember Laurie Capitelli that he introduced a number of measures in December to overhaul regulations governing Solano Avenue. The City Council directed city staff to return with a series of recommendations to simplify Berkeley’s zoning ordinances, permit processes, design review and neighborhood quotas. Staff is scheduled to go back to council with a set of ideas in early February.

“If we make some simple tweaks for things that aren’t controversial, we can make a significant difference,” said Michael Caplan, Berkeley’s manager of economic development.

Berkeley is a dense city where neighborhoods abut commercial districts, so Berkeley’s government has always wanted to give residents a say in what happens near them, according to Dave Fogarty, a project coordinator in the economic development department. In the mid-1980s, concerned about rising rents and the spread of cookie-cutter chain stores in commercial districts, Berkeley adopted its first store quotas for the Elmwood District. From 1982 to 1987, the city had commercial rent control, but the state legislature overturned it with a 1988 law.

There have been large economic changes in the world of retail business since then, but many of Berkeley’s laws, like quotas, still reflect those earlier times, said Fogarty. The Elmwood quotas were established in part to protect the Elmwood pharmacy and hardware store. Both those stores have since gone out of business, but due more to the rise of big-box retail stores like Home Depot and Walgreens rather than rising rents.

But Berkeley still has different rules, different quotas, and different standards for different neighborhoods. Practically, this means prospective merchants have to go through numerous city departments, sometimes have multiple public hearings, and follow arcane design rules that aren’t even written down, in order to open a business.

“The residential districts have been framed by history to believe they ought to have a big say in what goes on in commercial districts,” said Fogarty. “Years ago the zoning ordinances were written to make it very discretionary and to allow neighbors to have a say what goes on in their neighborhood. That means the city requires a lot of permits.”

Dalrymple ran into this situation with her plans for iScream, a 1,037 square foot ice cream parlor that will sell artisanal ice cream. Regulations on Solano Avenue permit only 12 restaurants, but the upper part already has 28 food businesses. Since Dalrymple was seeking to convert a camera store into a food store, she had to apply for a use permit. That meant she had to work with the planning department and pay about $4,400 for a public hearing in front of the Zoning Adjustments Board.

Eight months after applying for a first permit the iScream store on Solano is still not open.

As it turned out, that part was relatively easy. While one neighbor expressed concern about smells wafting from iScream into her back yard, ZAB approved the permit in July.

That’s when the troubles began.

The Health Department ordered her to get a bigger water heater. Once she got it installed, she had to wait a week before it was approved and the delay added $1,000 to her costs.

She got a permit to renovate the interior of the store and outfit it with a few tables and install cabinets and sinks. But her plans to put up a black and white awning in the front, a retro/nostalgic look that Dalrymple thought would remind people of the long-gone Ortman’s ice cream store, did not get approval at first from the city.

When a planner working in design review looked at Dalrymple’s plans, she told her she didn’t think a black and white awning would fit in with the neighborhood, said Dalrymple. The planner didn’t give her any specific recommendations for a different color, but just nixed her idea.

“There is nowhere it says you can’t have a striped awning,” said Dalrymple. “I like a striped awning because I thought it would stand out down through the block. That’s what they didn’t like. They don’t want it to stand out. This is my last $100,000 and I need it to stand out.”

Dan Marks,  director of the Planning and Development Department, said that the design requirements for different commercial neighborhoods are not written down anywhere. There are informal codes, however, suggesting what will fit in and what won’t. The planner working with Dalrymple knew the taste of the neighbors on Solano Avenue and thought the black and white awning would provoke a formal challenge to Dalrymple’s plan. That would mean she would have to go through another public hearing.

“Rules aren’t written down anywhere,” said Marks. “But the planner has worked in the neighborhood a long time and she knows what the neighborhood likes. It is her role to guide merchants to something that won’t be challenged. There are not any black and white awnings on Solano so it would be a big change on that street.”

Dalrympole has since gotten the backing of the planner and has a notice on iScream alerting neighbors to her proposed awning design.

New Wine Thieves store on Domingo still has old Red Wagon sign on it.

Jim Meyers has also had to deal with numerous city departments as part of opening Wine Thieves. He took over the space on Domingo Avenue from Red Wagon, a children’s clothing store. Since he was trying to sell alcohol and do tastings at the store, he, too had to apply for a use permit.

At first, the Claremont-Elmwood Neighborhood Association objected to the store. They were concerned that Wine Thieves would be more like a bar and bring in traffic and unruly patrons, said Meyers. But the store will just offer wine tasting, not imbibing. After numerous discussions, CENA withdrew its objections and Meyer got a use permit in June, according to city records.

But to offer tastings, the Health Department required that Wine Thieves instill a three-compartment sink, which meant that the store needed a 6-foot drain in the floor. To do that, Meyers had to hire an architect, apply for a building permit, and make sure the store was compliant with regulations from the Americans with Disabilities Act. The process added another five to six months, he said.

“We didn’t really think we would have to pull building permits because we weren’t changing anything structural in there,” said Meyers. “We were just pulling out sales racks. But putting a drain in created the problem. It did take a little jumping through hoops.”

Interested in issues surrounding doing business in Berkeley? Be sure to attend Berkeleyside’s first Local Business Forum on Monday January 24, 7-9pm at the Freight & Salvage. Doors open at 6.30 and it’s free.

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  • Name Withheld

    @ Matthew – As someone who recently bought a home in Berkeley, I completely agree. The City of Berkeley demands ridiculous fees for even the most minor work. I’ve barely been in my home a year, and it’s already gotten to the point where I simply don’t bother to check with the City of Berkeley about things I’m doing any more because I’m sick and tired of trying to do things the right way and then getting shafted with pointless fees.

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    @ DC – Permits have nothing to do with the quality of work. One of my friends at work had their heater replaced with a more efficient model and had all the ducting re-done. Paid out the nose for all the proper permits, and had a City inspector come and check that the work was done up to code.

    Fast forward to six months later when she noticed that the ceiling in her kitchen was damp all the time. She went up into the crawl space above the room, and discovered that the brand new exhaust duct from her brand new heater was venting out directly into the crawl space and not being vented to the outside as it was supposed to be per the permit and the work order.

    The moral of the story is that building permits in Berkeley are extortionist and have nothing at all to do with ensuring quality of work.

  • Tim C.

    I used to make the joke many years ago that since there were so many Chinese restaurants, antique stores and real estate offices on Solano Ave, that if you opened “Chinese Antique Realty” you absolutely couldn’t lose. The point being that competition weeds out the businesses that will succeed and the ones that won’t. Quotas are protectionist and anti-democratic. I believe that the planning process in Berkeley needs changing, but in this climate, the only way I see it happening is if the current leadership is fired, or someone files a lawsuit.

  • Stacy

    The City of Berkeley’s bureaucratic processes are out of touch with the times. Plenty of cities are vying for businesses to create jobs and bring additional tax revenue to the City, which would improve our schools, infrastructure, etc. Berkeley seems to oblivious to this, as businesses move or establish themselves in other communities. Instead, they would rather raise property taxes and issue bonds to create more indebtedness, rather than looking at ways to be more competitive for jobs and revenue. Shame on the City of Berkeley for allowing the community to bear the financial cost of their incompetence.

  • r wright

    A nice black and white awning won’t fly on Solano? Take a look at South Berkeley; a tobacco shop was allowed to open on Ashby Av even though it is too close to the elementary school by code. The tobacco shop also “head shop” and the Metro cell phone shop next door have an extreme amount of over signage, plastered all over the place,often a sandwich board sign on the narrow sidewalk there ( near the corner of Otis and Ashby.) Why doesn’t code enforcement do any enforcement?
    The over signage drags down the image of the Ashby Adeline business district. We do have some really cool shops are in the area, Antiques and Modern, Katz’s, Laci’s and European Sleepworks to name a few. Berkeley could show some respect for the antique stores in the area by making the Tobacco shop and Metro shop follow code.

  • Rialto Cinemas Elmwood, Ky Boyd, Proprietor

    Lots of good points of view and issues raised here in the comments. It is interesting that in and amongst all the comments not once does anyone say anything about the citizens of Berkeley supporting the businesses in Berkeley. Yes, the City has much room to improve, streamline, and document the processes for business owners. But at the same time those of us doing business in Berkeley need the support of the citizens of Berkeley. The number of comments from Berkeley residents who don’t shop in Berkeley is alarming. If you want to have vital shopping districts then you have to be willing to patronize the businesses that are there because without customers businesses can’t survive.

  • fran

    I agree with Ky above, in the quality of comments. Which is evidence of residents concerns. I live in San Leandro, but do a lot of shopping in Berkeley, and practically ALL my food shopping. 99% of my eating out at restaurants is in Berkeley, as well. Like most, I could care a less, and probably not even notice something as mundane as an awning. Like some mentioned, I think a lot has to do with them justifying their cushy jobs. I no longer go into the city anymore because of the parking, and Berkeley is catching up in that regard. Those little parking vehicles are always in my way! And yet they worry about an awning. The needless ordeals they put businesses through is plain wrong to say the least. I was surprised nobody bought up bribery. My husband is a contractor, and while he has never been bribed, he personally knows some builders in Oakland who have been. Alameda also just had some convicted I believe. Just something to think about.

  • George Berkeley

    Ky Boyd wonders about shopping locally. Sounds like a cue for a followup discussion about Berkeley’s traffic “planning”…a discussion guaranteed to be much more fractious than this one! I suspect (and it’s no more than that) most Berkeleyans DO patronize the shops they can get to easily…and don’t patronize the shops on the other side of Berkeley because it’s easier to go to another city than to drive THRU the middle of Berkeley and find parking. [Cue even more fractious argument about driving cars vs. walking/bicycling/taking imaginary buses.]

    But one thing at a time. Let’s start by pressuring the City to fill the empty storefronts we’ve got. There’s no question that empty stores kill neighboring businesses faster than anything else. And the reactions to this one article make it clear that Berkeley voters have a pretty strong and consistent opinion that the City isn’t doing enough.

  • withheld

    We need help. The local residents need to become less complacent. The only way the city council will get the necessary changes done is if they hear from the people in their districts. Does anyone know that Goodwill is negotiating with the city to open a 6000+ sq ft store on Solano right next to Peet’s? (where Front Row Video and World Dance studio used to be, as well as the post office when and if it closes) There are no businesses that big on the street and is it the right thing for the Thousand Oaks neighborhood? Interesting that the city might allow this and iscream has been given such a hard time two doors down.

  • Jane Tierney

    I agree with the last post that people need to get more involved, and try to understand the underlying issues, not just the immediate knee-jerk response to every idea that comes up. As far as the Post Office on Solano, the latest, as published in the Wall St. Journal earlier this week, the Landscape Station Post Office (on Solano) has escaped the ax for the time being. BTW, it is profitable for the Post Office, and more than covers its expenses each year. Neighbors also met with the Postmaster in a public meeting last spring to voice concerns over the planned closing and many also wrote letters.

    As far as the Goodwill moving in next door, I’ve spoken to neighbors who have both wanted it and some who have concerns. The concerns center around donations being dropped off out front in the doorway during non-business hours and attracting homeless who might rifle through them or set up camp on the sidewalk. There are currently at least two “career” panhandlers nearby everyday. And also the possibility of repeated donation deliveries using the back entrance (current zoning does not permit), and increased traffic and disturbance for the neighbors and merchants behind the store and the adjacent dead end street.

    The SAA (Solano Ave. Association, i.e. merchants) has the view that bringing in a used clothing store will adversely affect the five clothing stores already on that block of Solano, including two that sell used clothing. While the Goodwill will eliminate the vacancy, it will bring no tax revenue to the City, as it is a non-profit and introduces a business that will compete with current retailers.

    TONA (Thousand Oaks Neighborhood Assoc.) board has not discussed or taken a position on this issue and is seeking input from neighbors. The next public meeting is Thurs., March 3rd, 7pm, at the Baptist Church at Colusa and San Pedro Aves. That’s if people have an interest in getting more involved or attending. At that meeting there will be a discussion of Council-member Capitelli’s zoning de-regulation proposal, currently being reviewed by the Planning Commission for a recommendation, prior to a vote by the City Council.

    If I got any of this wrong, please let me know.

  • El Chancho

    I don’t believe you are correct when you say that because the Goodwill is a not-for-profit it won’t generate revenues for the city. They have to charge a sales tax just like any other business on Solano. They will also be employing people who pay taxes and spend money on food or products on Solano. So you can’t use that argument for denying Goodwill from opening a store. However, your other points are valid.

  • Jane Tierney

    El, does the sales tax go to Berkeley, or to the Governor?

  • Jane Tierney

    Oh, also, I’m not taking a position, I’m just recounting what people have told me on both sides of the argument. : )

  • El Chancho

    My understanding is that sales tax goes to state and local government. I don’t know the allocation but it is a big money maker for cities. My point is it really doesn’t matter from a revenue standpoint if it is a for profit or not. Anybody selling product on Solano pays sales taxes and that is one of the revenue generators for the city. No sales = no taxes.

  • Jane Tierney

    Okay. Well, doing a cursory check online, I found that California charges 9% sales tax, and Berkeley’s is currently 9.75%. So I think I can deduce that Berkeley gets (point) .75% on each dollar of sales. Anybody out there know any differently?

  • name withheld

    If Goodwill opens on Solano it will drive out other businesses that are there and the net result will not generate revenues for the city. What happened to the vibrant, unique character of Solano Ave? Goodwill doesn’t represent the kind of business that people I know would want to see coming to Solano. Especially at 6000 sq ft! Think of the possibilities if other businesses came into that space. And then think- would new, exciting businesses want to come next door or across the street from a giant Goodwill store?

  • Peggy

    When the Salvation Army was on Solano Ave., down the street in Albany, it had a parking lot and easy drop off for donations. It was not a successful location for their business and moved out (CVS is there now.) Donation stores need vehicle access for drop off and for people who make larger purchases and that top block is very congested as is. Even the Goodwill in downtown Oakland has more parking and a loading dock. Goodwill as a merchant will not work without a loading dock or area, and none exists. Even though I hate to see empty storefronts, getting a tenant that is doomed for failure, in a location that lacks critical features, is not a good move.

  • Bruce Love

    Jane,

    According to the City’s web site, the City gets $0.01 per dollar in sales tax, the county gets $0.0175, and the state gets $0.07. Penny a buck.

    Property taxes and transfer taxes, for comparison, are maybe something like 37% of general fund revenues, sales tax around 11%. City budgets for quite a few years all peg sales tax revenue as a little over $14M, overall revenues $140-$150M. Property and transfer last year were listed at just a little under $48M.

    Of course, things are more complicated than that. I’m not sure if, beyond that initial allocation, Berkeley gets more back from the state than it puts in or the other way around. With the university and some of our political powerhouses, I’d be surprised if the state doesn’t subsidize us on balance. We might in that sense get back more sales tax than we officially recognize. But the State controls that.

  • George Berkeley

    On how business affects local revenue via taxes, don’t forget:

    (1) a portion of the state’s share of sales tax comes back home, through any number of state-funded channels.

    (2) Berkeley also collects money from a crazy “business license fee” program. It’s crazy enough to merit a story of its own, in my opinion. The rates vary widely (by a factor of more than 10) and sometimes irrationally. Some fees are a flat rate, some a percentage of payroll, most a percentage of gross receipts, even at least one is based on square footage. Anecdotal stories abound of the city demanding licenses from businesses that “do business” in berkeley only incidentally or even accidentally. In the case of politically unfortunate landlords, who commit the sin of providing housing, the fees are more than 1 percent of GROSS revenue–an extraordinary line-item cost. Most Solano retailers might pay between 0.10 – 0.24 percent of gross revenues to the city; some (grocers) less, some more. I believe Goodwill would pay a flat fee of just $26, unless it occupied more than 125K square feet of space.

    In short, the city double dips on most retail revenue via the business license fee.

  • Albert Sukoff

    The business license fee for rental property is more the one percent cited above. We property owners are not only political pariahs for daring to engage in something so venal as providing others with housing, we are also in the only business that cannot just up and leave. That unique characteristic makes it possible for the City to make our properties into essentially a public utility, only in our case with a fanciful definition of an acceptable return.

    Although it does hurt, at least the one-plus percent business license fee doesn’t preclude the operation of the rental housing business.The CIty also uses the business license fee for other purposes than raising revenues. As gun control is clearly part of the Berkeley municipal ethic, it is perfectly acceptable for the fee for gun stores to be 15% of total revenue. This effectively precludes gun stores from the City. (It is ironic that the City’s last gun store probably stayed in business many years more than it would have had it not been protected by commecial rent control, a uniquely Berkeley concept since disallowed by State law.) Of course, this is merely a gesture because there are still gun stores in the East Bay for those so inclined. If you think it is fine for a city to use whatever means possible to stop a perfectly legal business because you approve of the goal, consider how you might feel if a city precluded wine sales or the sale of certain books and magazines because it offended that electorate’s sensibilities.

  • Mike

    I tried opening an art gallery in the Elmwood and was told that the quota for “art” was full, so that I would have to have an alternative use hearing that would cost approximately $4,000 with no guarantees of a permit. There are no art galleries in the Elmwood, but some stores sell art. I declined to give the city $4000, since I sensed that that would be the first step in a long and fruitless process.
    When a person talks about opening a business in Berkeley or buying investment property, I tell then that they are insane and should go some place else.