The ongoing conflict between business owners, neighbors, and the San Francisco Planning Department over the future of 463 Castro St. entered a new phase yesterday, when the Planning Department ordered Socialhaus to cease operations within 15 days.

Hoodline readers will recall that Socialhaus opened last week in the former Outfit and All American Boy space. However, on the same day the new co-working and social club opened, a complaint was filed with the Planning Department.

The complaint stated that the property is currently permitted by Planning as a limited restaurant, but is operating as a general entertainment use, given that it's a membership-required social club.

Members inside Socialhaus. | Photo: Socialhaus/Facebook

Planning Department staff quickly issued the notice just a week after receiving the complaint.

"Our records indicate that the subject property is currently authorized for retail uses," the notice states. "It has been reported that the above property is being used as a General Entertainment use (DBA Socialhaus) without such authorization."

Previously, Flying Falafel owner Assaf Pashut undertook a lengthy city approval process to move in to the space. Pashut first announced plans to open a third location of his falafel chain at 463 Castro St. in July. In order to do so, he needed a change-of-use permit from SF Planning, converting the former retail space to a limited restaurant.

The change of use drew pushback from neighboring restaurant Gyro Xpress, whose owners filed a request for discretionary review with the Planning Department.

The conflict even caught the attention of a group of activists from "YIMBY Neoliberal," a subset of the political organization YIMBY Action, which advocates for zoning reform in San Francisco.

Ultimately, the Planning Commission voted 3 to 1 to reject Flying Falafel's change of use request. However, an insufficient number of commissioners were present at the meeting to vote, and Flying Falafel's change-of-use permit was approved on a technicality.

YIMBY Action Board Member Steven Buss (front left) with Flying Falafel's Assaf Pashut (center) and YIMBY advocates. | Photo: YIMBY NEOLIBERAL/TWITTER

According to the Planning Department, the limited restaurant permit is still under review by the Department of Building Inspection. So for now, the space is still permitted as retail.

"The proposed use [as a limited restaurant] is not considered authorized until the building permit is issued and deemed ‘complete’ by the Department of Building Inspection," the notice states.

Pashut told Hoodline he intended to open a "Flying Falafel Express" inside the Socialhaus space, but did not have an opening date. The general public would be allowed to drop into the space to purchase wraps, salads and sauces, all pre-made off-site.

Now that the Planning Department staff has deemed the current use of the space as General Entertainment, Socialhaus would be required to apply for a separate conditional use permit in order to operate.

According to San Francisco Planning Code, 'General Entertainment' is defined as, "[a] Retail Entertainment, Arts and Recreation Use that provides entertainment or leisure pursuits to the general public including dramatic and musical performances where alcohol is not served during performances."

The co-working and social club offers "social" memberships for evening and weekend events ($30), as well as two types of co-working memberships (12 visits per month for $89, or unlimited visits for $159).

Socialhaus membership plans. | Photo: Socialhaus/Facebook

Now Socialhaus founder Coco Liu and Pashut have 15 days to abate the violation by shutting down the business, "until such time that additional information has been provided to the Planning Department and all appropriate permits and entitlements have been obtained."

Failure to comply will result in issuance of a notice of violation from the Zoning Administrator and administrative penalties of up to $250/day.

"We simply don't trust the city's rate of processing permits for [the Castro], largely due to a few bad apples in the neighborhood that make it difficult for new businesses to open," Pashut said earlier this week.

"A great example of [a] bad apple at work," he said of the complaint. "The fun never ends in the Castro."

While the surrounding block of Castro Street is thriving, the neighborhood overall is suffering from long-running retail vacancy issues, which city leaders, the president of Castro Merchants, and others have promised to address.