A San Francisco restaurateur is eager to stop a competitor from opening up down the street. The city's byzantine permitting process might let him do just that.

For the past several months Assaf Pashut, owner of Mediterranean restaurant Flying Falafel, has been trying to open up another location at 463 Castro St. All things considered, this should be a relatively easy sell.

The Castro Street location Pashut has his eye on is already zoned for restaurant use. It's currently occupied only by a vintage clothing pop-up store. Another Flying Falafel location would bring additional business to a commercial corridor that's seen a sharp uptick in vacant storefronts in recent years.

Enter San Francisco's complex regulatory framework, which is forcing Pashut to jump through bureaucratic hoops, and is inviting mischief from a rival restaurant not eager to see another eatery open up on their block.

In order for Pashut to move ahead with his expansion plans, he needs to get a change of use permit to convert the Castro Street site from retail to "limited restaurant" use, which, in turn, requires a few months of review from the city's Planning Department.

Unnecessary as this might be, obtaining one of these permits shouldn't have presented too much trouble. Pashut wasn't asking for any special zoning variances and was only proposing some light alterations to the interior of the building.

In May, Pashut filed for his permit and awaited approval from the department. That's when Cem Bulutoglu, co-owner of the Gyro Xpress at 499 Castro Street, requested the project receive discretionary review.

In San Francisco, any building permit application—even if it complies with all applicable laws on the books—can be appealed to the city's Planning Commission (which oversees the Planning Department) through a process known as discretionary review. The seven-member commission is empowered to attach conditions to a permit beyond what is required by law, or even reject an application completely in most cases.

This can slow things down for months, as applicants have to wait around for a public hearing, which in turn requires giving neighboring businesses and residents proper notice of that hearing. Should the Planning Commission attach additional requirements to a permit, an applicant has to start the planning process over again, delaying things even more.

The cost of appealing something to the Planning Commission is usually pretty low. Given that Pashut is asking permission to perform only $7,500 in renovations, the cost of appealing his change of use permit should cost $409, according to the city's fee schedule.

"Literally everything in San Francisco can be challenged, everything can be stopped by an idiot with $100," says Steven Buss, an activist with the group YIMBY Neoliberal and a candidate for San Francisco's Democratic County Central Committee.

The fact that any permit application can be appealed by anyone at a relatively low cost creates the perfect opportunity for regulatory capture, Buss tells Reason. "There's a mythology that having community input empowers the little guy against the big guy," he says. Instead it "empowers people who know how to work the process."

This seems to be exactly what is happening in Pashut's case.

Bulutoglu runs a similar falafel-selling restaurant that would have to compete with a new Flying Falafel location, something he even acknowledges in his request for discretionary review.

"There are three falafel shops on the 400 block of Castro…one more fast food walk-up counter style limited restaurant is the last thing this community needs," he wrote.

Bulutoglu—arguing that converting the building at 463 Castro Street to a restaurant would cost the area valuable retail space—is asking that the Planning Commission require Pashut to instead take over a vacant limited restaurant space.

According to a 2017 Hoodline study, 13 percent of the storefronts on Castro Street are vacant, compared to the citywide 3 percent vacancy rate.

A hearing on Pashut's permit application will be held on October 24. (It was supposed to be on October 3, but a "noticing error" saw the commission postpone it to October 24.)

Buss says that it is likely the Planning Commission will reject Bulutoglu's request given that Pashut has the support of the Castro Street Merchants Association. Regardless of the outcome, the delay is still costing Pashut money and time he could be putting into his business.

That any of this is even up for debate before a governing body shows just how out of control regulation has gotten in San Francisco. Because of an endless series of regulations and the massive amount of discretion given to regulators, San Francisco has made it increasingly difficult to add anything new to the city, whether that's a falafel shop or an apartment building. The city's Board of Supervisors is even considering requiring permits for businesses looking to test out "emerging technologies."

The end result is that San Francisco is empowering incumbent interests—whether those be homeowners, bureaucrats, or business owners—while choking off the dynamism that's needed to make a city thrive.