Deregulation I Can Believe In
Here’s a sad-but-typical tale of life in the big city:
The owners of Columbia Heights Coffee, located on 11th Street between Park and Monroe, informed me this weekend that they will not be expanding after all. I feel really bad for them because they told me they had paid two years rent for nothing. It seems that the permitting process was just way too cumbersome. Oh well, at least the original spot will remain. For those curious the for rent sign says $1K per month.
I’m someone who believes that regulation is necessary in a variety of fields to protect public health, public safety, the environment, etc. But it’s unquestionably my experience that the volume of regulation on retail establishments—especially in urban areas—is completely beyond any reason. A city has a strong interest in making it possible for people to open businesses. Huge numbers of DC neighborhoods, including Columbia Heights, are plagued with a bizarre situation in which existing establishments are unpleasantly crowded and yet there are plenty of vacant storefronts. Life would be much better if those storefronts were filled with shops, cafes, bars, and restaurants offering people some goods and services.
44 Responses to “Deregulation I Can Believe In”
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February 9th, 2009 at 6:45 pm
I would have been interested in more details about what the permitting process was like and what getting the expansion permits entailed.
February 9th, 2009 at 6:51 pm
People love to complain about homogenization and chain stores taking over everything, but the fact is, in most cities if you can’t pay a few land-use lawyers and consultants, you can’t open a business. Starbucks can afford those lawyers, and your corner coffee shop can’t.
February 9th, 2009 at 7:14 pm
Where do these rules come from? Do the incrementally accrue over time to try to address complaints and then become a costly tangle? And don’t existing large establishments like these rules, since it keeps the competition out? And the people who create new rules to keep the big stores out end up creating a system that keeps the small stores down?
It would be nice to know more. But getting stores sited and doing the permit process as well as the real estate deals is the main value of many large chains and one of the main management preoccupations.
One of my distant relatives has a firm that managed to successfully a German municipality for several (I remember more than 10) million Euro in damages for violating his firms due process rights (on rational basis review!) in a siting process. And it looks like he’ll get his store sited as well. This sort of thing is great for keeping the smaller competition out.
February 9th, 2009 at 7:18 pm
Tyro, I want to know more details too. Were they trying to convert a former hardware store into a coffee shop? The permitting process is going to awful for that no matter where you are. Most of it is going to revolve around building a kitchen and bathrooms. And fire regulations.. I don’t know about you but I really really like that I can be reasonably assured that a restaurant has the equipment to keep the place clean and the food fresh. And that they aren’t going to squeeze 100 people into a space that can only safely contain 45. and that they haven’t wired the lighting so that it bursts into flames when they turn on the air conditioning in June. Or drape the ceiling with artistic fiber sculptures… that haven’t been made fire resistant. . .
February 9th, 2009 at 7:31 pm
Regulation is necessary of retail establishments based on precisely the criteria that you mentioned above: businesses must file environmental impact, public safety impact, etc.
I agree, however, that it many cases it clearly becomes onerous for the businesses and causes more harm than good.
I wonder what the strategy of people who are generally pro-regulation, but who believe in the reality of regulation turning “bad,” is to prevent such degeneration in the fields of regulation that they favor.
February 9th, 2009 at 7:38 pm
It is my hope that this subversive talk is stamped about by the fairness doctrine. You will speak only when directed so Mathew Yglesias.
February 9th, 2009 at 7:50 pm
I’m not saying it isn’t so, but enough arouses suspicion that I wish the post hadn’t leaped on this without making any effort at all to find out the facts or even describe the allegations. I’m sure seeing an awful lot of store renovations in New York City. Whole neighborhoods have gone through massive convulsions in the last few years.
February 9th, 2009 at 8:09 pm
As a land use attorney in the San Francisco Bay Area, I have seen my share of unreasonable land use regulations.
If you want to change the score, Matt, you need to convince reputable environmental non-profit organizations to say “yes” as often and as forcefully as they say “no.” The public needs to see trusted green organizations coming out in favor of smart growth projects. As it stands, it is typically the developer and the politicians lauding good development projects, two constituencies are that are, rightly or wrongly, viewed with suspicion by your average local activist.
I am starting to see more balanced environmental advocacy in Northern California, but not nearly enough.
February 9th, 2009 at 8:19 pm
Wierd. Why plunk down two years of rent if you don’t understand what you are getting into?
February 9th, 2009 at 8:25 pm
“One of my distant relatives has a firm that managed to successfully a German municipality for several (I remember more than 10) million Euro in damages for violating his firms due process rights (on rational basis review!) in a siting process.”
I guess you don’t follow the patten of billboard companies thwarting city zoning codes with 1st Amendment (Free Speech) lawsuits. When they win one, the damages can be in the millions,cities typically cave before it gets that far.
http://antiadvertisingagency.com/blogroll/billboard-industry-gums-up-anti-blight-enforcement-in-sf
http://illegalsigns.ca/topics/san-francisco/
February 9th, 2009 at 8:39 pm
My business (a tech consulting firm) recently lost a beautiful space in a restored 19th century police station due to the landlord’s inability to get a permit. Not enough parking apparently. So much for urban renewal.
February 9th, 2009 at 9:12 pm
I use to live a block away from the coffee shop and talked with the owner when he was opening the original store. In my view, it’s not so much a regulation issue as a public administration issue. It was clear that he couldn’t get accurate information about what was required, often received contradictory information, couldn’t figure out why things were delayed, and on and on. The relative stringency of the regulations weren’t the issue, the management of the process was.
February 9th, 2009 at 9:36 pm
re: Why plunk down two years of rent if you don’t understand what you are getting into?
Because you have to have the space first before you can start getting permits to modify it.
The big problem seems to be the length of time it takes to get these things done. Maybe we need a voter initiative to require that all permits must be determined within some reasonable length of time (10 business days?) or they are automatically granted.
February 9th, 2009 at 10:41 pm
This really makes me sad, as I used to frequent that place. It has been around for a few years now, and you’d really like to see the city reward places like that, instead of making it so hard.
February 9th, 2009 at 10:44 pm
@JonF: There are laws of that type in some jurisdictions. California, for example, has a state-wide statute (the Permit Streamlining Act) that requires local governments to act on applications for certain non-legislative land use approvals (subdivision maps, use permits, etc.) within prescribed time limits.
My experience is that such laws are not terribly effective. Whenever a land use approval is discretionary, politics are involved, and whenever politics are involved, applicant’s have an incentive to waive the protections of mandatory deadlines. After all, if you force a local agency’s hand and push them to consider an application within statutorily prescribed time limits, the agency is more likely to deny the application.
In fact, if a developer is requesting a city to comply with the Permit Streamlining Act’s timing requirements, more often than not the developer only wants the agency to act promptly and issue a final decision that is reviewable by the courts.
February 9th, 2009 at 11:27 pm
Ah, a liberal encounters reality.
February 9th, 2009 at 11:31 pm
“A land use attorney in the San Francisco Bay Area” says:
“Smart growth” is being used in northern California to sell all kinds of destructive and inappropriate sprawl in greenfield open space. This is completely different from the story at the root of this thread, where permitting is strangling urban infill.
I’m willing to bet that environmentalists didn’t keep the coffee shop to expanding into the next storefront.
February 9th, 2009 at 11:57 pm
Michael B. Sullivan,
Democracy. Lots of public meetings.
Community organizing.
Local participatory democracy.
February 10th, 2009 at 12:12 am
Democracy. Lots of public meetings.
It’s my experience that “lots of public meetings” every time a store wants to open causes more trouble than the ostensible increase in democracy is worth. I mean, really, we don’t need to hold “lots of public meetings” over whether Bob wants to open a restaurant. All I ask is that the appropriate food safety and fire codes be obeyed and that the civil servants process everything in a transparent, timely manner. One of the reasons we have a government is so that I don’t have to spend all my time going to local meetings and engaging in “organizing” to ensure that business runs smoothly in my community. This is what people want when they mistakenly call for “small government”: they don’t want “small government”– they want a government whose gears turn smoothly without needing petitions and community meetings and endless public controversies in order to function.
And while I’m sure some concerns are quite local in nature, for the most part, there should be some kind of “prevailing standard” for such things.
February 10th, 2009 at 12:12 am
@barry: jurisdictions with unreasonable permitting processes tend to be jurisdictions with high levels of sophisticated citizen activist participation in local planning. California greenfields are being developed inappropriately because they tend to be located in local jurisdictions where activists do not participate to the same degree and, therefore, local land use laws tend to be less cumbersome and politicians more favorable to development. more watchdogs = more regulation
because it so politically difficult to reform burdensome regulatory schemes without appearing to weaken land use and environmental protections, needed change will require buy-in from the environmental community. hence my argument: those organizations that do such an admirable job opposing dumb greenfield development also need to come to the planning commission meetings and speak out in favor of urban land uses and regulations that make sense.
February 10th, 2009 at 7:28 am
Tyro,
I was thinking more along the lines of “lots of public meetings to talk about how the zoning is working,” not “lots of public meetings every time someone moves into a storefront.”
You can change zoning regs, to anything you want, including by-right retail uses in established districts.
February 10th, 2009 at 7:54 am
My guess, the owners thought it would be no big deal to take the adjoining property, knock out some walls to join the spaces and have one big shop. But since fire codes say you can’t create an opening like that in a fire-rated party wall between two properties, you need to first join the two properties into one through a subdivision process. The subdivision process is a serious legal (not regulatory) process that adds significant time, much longer than any permitting or zoning process. The shop owners probably didn’t know this when they started.
If that’s not the real reason, then it can easily be something else. But since the zoning appeal process takes 6 months (a long time for some), the permit process is much shorter than that, and the proprietors had control of the property for 2 years, something’s not adding up. I think you’re only getting one side of the story. The more likely reason isn’t the “permitting process was too onerous,” but rather “we lost our financing,” or more simply, “we didn’t know what we were doing.”
It’s a lot easier to blame boogey-men bureaucrats than it is to blame yourself.
February 10th, 2009 at 8:25 am
You’re not against regulation in general, but you’re against crappy regulation. Me too.
February 10th, 2009 at 8:53 am
None of us know the details, and more would be interesteing, but I’d bet long money on what AndyB says. Mostly, it’s not the height of the paperwork mountain, it’s the extent of the [here place 11 letter word beginning with'cluster']
I completely favor fire, safety and various other regulartion; really, anybody with a brain does. Anybody who hasn’t been gone through, or closely observed, what small business owners go through in these situations can’t appreciate how difficult it is. Not in the ‘high hurdle to climb’ sense. Not in the ‘lots of paperwork’ sense. In the confused, contradictory, nobody knows what’s going on sense. The sense that the 11 letter word referenced describes tso well.
Many, if not most, cities and towns have no coherent means of publishing regs and filing requirements in one place. Municipal employees will tell you things that just aren’t true, or if true, are absurdly incomplete. Most of this is is not because they are stupid, and in many cases not because they are incompetent. More than anything, it’s the fault of city fathers who have stitched together an incoherent mess for the beleaguered employee and small business alike to deal with, and for which their is no training or documentation budget.
In the end, it often falls to the business to become expert in the field, and explain how it works to the city employee.
February 10th, 2009 at 9:11 am
Anonymous at 7:54 has a good point: “expanding” into an existing building is probably a lot more complicated than it sounds.
But whether or not the specific regulatory hurdles involved here make sense, it seems another problem is the two years’ rent. I assume they weren’t just jumping the gun, were they? I mean, they didn’t rent the place blithely assuming a permit would be no problem at all; rather, renting it was a necessary step before their application could be processed, right?
If so, that seems like low-hanging fruit for improvement: make some way to start the approval process before buying or renting the property. Like, the coffee shop and the landlord would fill out some “intent to lease pending development application approval” form and the process would go ahead as if they had already rented it. Are there any land use attorneys around to explain why that wouldn’t work?
February 10th, 2009 at 11:31 am
I would have been interested in more details about what the permitting process was like and what getting the expansion permits entailed.
Seconded
February 10th, 2009 at 11:40 am
But if the permitting process wasn’t so cumbersome and byzantine, how would I be able to fleece Stringer Bell for greasing up the wheels of the bureaucracy? Sheeeeeeeet!
February 10th, 2009 at 2:31 pm
I would have been interested in more details about what the permitting process was like and what getting the expansion permits entailed.
What, you think Matt’s a journalist or something?
February 10th, 2009 at 3:06 pm
As an architect, trust me when I say don’t get me started on the permitting department. The process in any city is always a tangle of issues. As General Plan notes, the larger the city, the more stakeholders have been getting rules issued, the more complex the process is. Cities like San Francisco, NYC, and DC are all mazes at this point. Which is why an inexperienced building tenant in a major urban center shouldn’t attempt this process on their own. A contractor or architect is much better equipped to handle this process, which really does require an amount of expertise.
I agree that this is an unfortunate situation, and in anticipation of comments saying that hiring an architect or contractor is expensive: yes, that’s true, but it probably would not have been as expensive as paying rent on empty space to the tune of $24,000.
To say something quickly on questions of expanding into an existing building, and the unknowns of this specific situation, 2 things I can think of off the bat: if the building was some other type of business (office, retail, etc.) switching to something that falls into the restaurant category is what is called a “change of use.” This is something that typically entails greater scrutiny, usually involving not just the building department but the planning department as well, so that would add a hurdle. Second, if there is any additional kitchen equipment, or even something as simple as the installation of a floor drain, then the city’s health department would probably have to review it as well.
February 10th, 2009 at 8:03 pm
Sorry, this is late, but:
A couple of points:
1. My impression is that Matt Y tends to be (in vague generalities, with the acknowledgment that it’s not this simple) in favor of federal regulations and against local regulations. So I’m guessing that his reasons are different from yours.
2. In general, my impression is that most regulations, including most burdensome ones, are local, and most towns have regular public meetings, etc. What I’m saying is, if we accept for the moment that unreasonable regulation of things like local businesses is a real problem, keeping it local and having public meetings doesn’t seem to work, in practice.
February 12th, 2009 at 3:14 am
DCRA is a mess. Not only is overburdened with regulations, it’s woefully understaffed, AND they are operating like it’s the 1980’s. What’s this business about having a cashier’s office that closes BEFORE DCRA closes?
If you can’t extend the cashier’s office, then at least close the DCRA doors early enough so the last person in there can still have a reasonable chance of getting their damn permits paid, instead of wasting yet another day to come back to.. GIVE DC some money. They operate that cashier’s office like it were a bank.
But in this city, it’s NOT JUST DCRA, it’s freaking these ANC’s that constantly harass an coerce business owners into “voluntary agreements”. These ANC’s are just armchair wanna be politicians, busy bodies that can have detrimental influence this city’s businesses. They have WAAAAAY too power.
I hate to say it, but the guys that have the toughest in this city are restaurants and where the heck is the Restaurant Association? I have never seen one single rep from them at an ANC to help defend their members.
It’s a total mess to start a food service business in Washington DC, and that stinks. That’s our foot traffic going to down the drain. It’s a damn freakin’ safety issue! If you just have boring storefronts but no restaurants in between, these places get desolate at night, like big swaths of the downtown area.
This is how you fix this mess…
1) Get rid of the ANC system all together, like the other cities have experimented to their detriment with this concept. I think Washington DC is one the last to continue with this antiquated community governing system.
2) Split out DCRA… commercial permitting here, residential permitting there, and give each off the ability to pay by freakin’ credit card at any time of the day.
3) Extend commercial permitting office hours 7 days a week, put in shifts and extra staff. I don’t how they do it, just do it. I dunno, use the “polar point” money to fund this or get some that stimulus package to cover it. Frankly DC should be handling commercial permitting faster than late night pizza in Adam’s Morgan because anyone willing to open a new business in this economic climate, should get all the help they need to get going.
DC keeps raising taxes on it’s residents and here we’ve had this awful bottleneck for DECADES… it’s freakin’ shameful.
D
February 12th, 2009 at 3:19 am
And btw, I hope this coffee shop sues the city for negligence.
D
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