City's Permit Process Hinders New Businesses

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Correction Appended

New businesses seeking to open in the city of Berkeley are often impeded by a lengthy and cumbersome permit process that creates a costly waiting game for prospective business owners.

The city's zoning ordinance, which defines the types of businesses permitted in each business district and the level of review imposed on the uses of buildings, lengthens the process of starting a business.

Businesses must have a zoning permit in order to obtain a business license, which is where they run into complications, according to Berkeley City Councilmember Laurie Capitelli.

There are three levels of zoning approval, the longest of which is called a "use permit" and can take up to 12 months to be issued. The shortest, which does not require administrative and public review, can be issued over the counter at the city's Planning and Development Department.

"Time is money," said Roland Peterson, executive director of the Telegraph Business Improvement District. "If it takes too long, businesses just won't open. A lot of businesses just won't take the time."

In some extreme circumstances, the process can take years, as was the case with Hudson McDonald LLC, a development company that wanted to build on a space that would eventually house Trader Joe's grocery at the corner of Martin Luther King Jr. Way and University Avenue.

Hudson McDonald LLC first applied for a use permit in 2002 and went through many public hearings, reviews by city departments and even a lawsuit before the permit was approved by the Berkeley City Council in July 2007.

After eight years, the project is slated to open in June, following what Chris Hudson, a principal at the company, said was the most complicated process the developers had ever experienced.

"It was very time-consuming," he said. "You really have to have a lot of patience to make it all the way through."

While the company could afford to wait out the process, many small businesses may not have similar resources.

"The system discriminates and tilts the playing field towards larger multi-store chains because they have the resources to wait out the process," Capitelli said. "This is not a cheap process."

The city's quota system may also hinder businesses from starting. While the zoning ordinance states what uses are allowed in certain business districts, quotas limit the number of each type of business.

"The quotas system ... was intended to protect the mom-and-pop store from unfair competition by the large chains," said John Lineweaver, a landlord who owns a mixed-use building in the Telegraph area. "But now it's only the large chains that can afford to go through the process. It needs to be changed."

Many city officials agree that the system is unfair toward smaller businesses, especially in tough economic times.

Berkeley Mayor Tom Bates created a permit-streamlining task force to find ways to improve the permit process when he first took office in 2002, according to Julie Sinai, Bates' chief of staff.

"The mayor feels is that there needs to be a thought process," she said. "But at the same time, sometimes things take so long."

Capitelli, who was a member of the task force, said only half of the tasks on its list of recommendations are complete, though the list was made six years ago.

Downtown Berkeley has already benefitted from the streamlined process, according to Deborah Badhia, operations director for the Downtown Berkeley Association.

"We trust that (city officials) are trying to do their best, but there is a bureaucracy," she said. "And we are in a city where the public wants a lot of review."

Lineweaver added that the process-not the city-is the inherent problem.

"It's not so much that the departments don't do a good job, but the ordinances that people have to conform to are ridiculously confusing and obsolete in some cases," he said. "I get frustrated just thinking about the process."

In the meantime, Capitelli said progress is being made incrementally.

"The stories pile, and at some point people say, 'Maybe we need to look at this and see what's going on,'" he said. "(Zoning) is entirely complex, and that's why it's so difficult to start a business in Berkeley."


Correction: Tuesday, March 23, 2010
A previous version of this article incorrectly stated that the conditional use permit in Emeryville takes two weeks to process. In fact, it takes a minimum of seven to eight weeks.

The Daily Californian regrets the error.

Denise Poon covers local business. Contact her at [email protected]

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