Business and property owners and city officials offered mixed opinions about the value of retaining zoning quotas for restaurants and hair salons on Telegraph Avenue during a planning meeting Wednesday.
They were contributing their viewpoints to the economic development section of the Southside Plan that must be approved by the city and UC Berkeley and is slated to be used by the city and the university in future actions.
The Southside area, as defined by the plan, extends south from Bancroft Way to a half block south of Dwight Way and from one half block east of Prospect Street to one half block west of Fulton Street.
In the Telegraph Avenue commercial district – which extends from the University’s Sather Gate to Parker Street – a quota limits the number of restaurants to 78 establishments and hair salons to 10. That was the number of those establishments that operate in the district in 1988 when the quotas were put into place.
Dave Fogarty, community development project coordinator, explained the origins of the quotas, which prevent new restaurants and hair salons from opening in the district unless they purchase permit rights from an existing restaurant or salon.
Fogarty said that exceeding the quota is difficult because it requires a zoning variance with legal findings related to the structures of buildings. He said he was able to help one restaurateur obtain a variance because the building had an overhanging awning that sheltered loiterers. The prospective owner argued he could afford to remove the awning.
In the Elmwood, Solano and North Shattuck retail districts, prospective restaurant owners can exceed quotas and obtain use permits with findings if they prove they meet a unique need and are not detrimental to the districts.
The suggested policy change for quotas mentioned in the Southside Plan is to “allow for the mix of businesses in the Telegraph retail district to be more responsive to market demands.”
Such a change would make Telegraph more like Solano, Elmwood and North Shattuck.
Betsy Morris, a community development consultant and member of the Planning Commission, said it could be possible to make the “fifth block” of Telegraph, between Dwight Way and Parker Street, more flexible with a use permit or the block could be exempted from quotas.
The quotas came about in the early 1980s, Fogarty said, when chain stores such as The Gap and Orange Julius opened up and elicited protectionist feelings from independent business owners.
Commercial rent controls were instituted because merchants feared they would be priced out of the market, but the state ruled such restrictions illegal and a quota system took the place of rent controls.
Quotas were instituted to prevent more restaurants from proliferating, said Fogarty.
“It was felt they would take over,” he said.
Currently there are three zoning categories for restaurants in the Telegraph Retail District: carryout food service, 19 establishments; quick service restaurants, 30; and full service restaurants, 29.
Dana Ellsworth, a major Telegraph Avenue property owner and board president of the Telegraph Avenue Business Improvement District, would like to abolish the quotas.
Quotas force down quality in restaurants, she contends. Restaurant owners have to pay from $60,000 to $100,000 to buy the permit rights from another owner.
When they do that, Ellsworth said, they can’t afford to hang an attractive sign, redesign the kitchen to the needs of their own ethnic cuisine or change the decor left over from the former owner.
Additionally the existing situation with sought-after permits allows a bad restaurant to stay in business because the ability to sell the permit increases its value, said Ellsworth.
Vacant spaces remain empty unless businesses other than restaurants or hair salons become new tenants, and restaurants and hair salons are charged higher rents than other businesses in the district, she said.
“Consumers should get an open market choice,” said Ellsworth.
Hair dresser Alan Batt, who said he had worked for more than 10 years in Telegraph Avenue salons, said he wants to own his own shop to serve his clients in the heart of the district, but is unable to obtain a use permit.
Councilmember Kriss Worthington, whose district includes Telegraph, said he favors retaining the quotas because he believes maintain the small business, unique character of Telegraph Avenue. Without the quotas the big chains would come in, he said, and “Telegraph would lose its specialness.”
Roland Peterson, executive director of the Telegraph Avenue Business Improvement District, argued that the buildings on Telegraph Avenue are too small to interest big box chains.
Worthington said if the zoning laws on the quotas are changed, it’s more likely that a restaurant chain would consider tearing down several storefronts to build its own.
He also mentioned “myths” about sales figures computed for sale tax purposes being down in the mid-1990s, a factor that could lead toward opening up the market to more restaurants by eliminating quotas.
He also said that sales figures used for computing sales tax for the UC Berkeley bookstores are now reported with downtown sales numbers, instead of with Telegraph’s and that reduces sales figures.
The Telegraph Area Association took a brief survey of its constituents that include merchants, residents and students and found a mixed reaction to the quotas and that some respondents were unaware quotas existed.
The association did not take a position for or against the quotas, said Gianna Ranuzzzi, the TAA’s community coordinator. She recommended more education about quotas.