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Proposed San Francisco Legislation Could Put the Squeeze on Amazon

Proposed legislation in San Francisco could stunt Amazon and other companies’ delivery network ambitions as the city joins a growing number of municipalities applying greater scrutiny to warehouses in their communities.

San Francisco Board of Supervisors President Shamann Walton on Tuesday introduced legislation that would tighten zoning requirements around facilities used for parcel delivery service. Such uses would require additional study into community impacts.

“This legislation is critical to the San Francisco community as we have seen some companies try to come into cities and neighborhoods and increase pollution and traffic, bringing along jobs that pay below industry standard wages and, in some cases, facilities with serious health and safety concerns,” Walton said during this week’s board meeting.

The proposal, while it does not target one company specifically, follows controversy stemming from the uncovering of a memorandum of understanding between Amazon and the Office of Economic and Workforce Development last year related to terms on the company’s proposal to turn a 5.8-acre site on 7th Street into a last-mile delivery station.

Walton said he has “no idea” such an agreement was struck until just before it was reported by local press.

Amazon acquired the site in San Francisco’s Showplace Square neighborhood in late 2020, paying waste management company Recology $200 million for the property. Recology had previously proposed building a mixed-use project there that would have included housing.

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“This is incredibly frustrating when companies attempt to slide their projects under the radar with little to no accountability,” Waltson said. “Large companies must come to the community and discuss what they plan to do. They must have conversations with folks who live and work in the community and, at least, the Office of Economic and Workforce Development could have reached out to our office to have a courtesy conversation. As a community, we must be allowed to decide if we want these types of facilities and businesses, and not just be told that they are moving into this neighborhood.”

Amazon did not respond to a request for comment Wednesday.

The legislation’s specificity around “parcel delivery uses” is somewhat unique, but the aim of what’s being proposed is not unlike other temporary moratoriums rolled out in California as cities seek to fully understand what a distribution center could mean for a neighborhood.

Morgan Hill in Silicon Valley banned fulfillment centers used for e-commerce storage and distribution in an emergency ordinance the city council passed in April. The matter is also expected to go before voters in November, which would make it more difficult for future city councils to reverse course without another ballot measure.

Other municipalities in California that have enacted temporary moratoriums on industrial development include the Inland Empire cities of Colton, Chino, Jurupa Valley and Riverside. Carson, in the Los Angeles Harbor Area located near the Los Angeles and Long Beach ports, temporarily halted new industrial development in 2017.

Amazon
An Amazon driver loads a van for delivery. Courtesy

Labor unions and community groups are backing the San Francisco legislation.

Doug Bloch, Teamsters Joint Council 7 political director, said the issue’s a tricky one for the union. The top concern is the impact to United Parcel Service, which employs some 325,000 Teamsters members in the U.S. Amazon is UPS’ largest customer, so Amazon’s successes have also been good for UPS. Teamsters who work at UPS make about $40 an hour, have health insurance and a pension, Bloch pointed out.

“Amazon is proposing to build this giant same-day delivery facility and they want to pay people $21 an hour with a lousy health plan and no pension and very few of the benefits to do the exact same work that our members do, and this is not the only place they’re doing it,” Bloch said.

The Teamsters have challenged other Amazon developments in about nine other counties, but San Francisco could be precedent setting, Bloch said.

“Those have all been skirmishes. Now the front has been moved to San Francisco, and this is where the big battle’s going to take place,” he said.

The San Francisco Southeast Alliance (SFSA), comprised of labor and community groups, was also involved in working with Walton’s staff on the legislation. The group said it wants to work with Amazon on a community benefits agreement that would guarantee fair wages, the right to unionize, affordable housing investment and sustainable initiatives among other things.

“We believe that the proposed logistics facility can be a positive addition to Showplace Square and surrounding neighborhoods through a commitment to addressing key issues,” SFSA said on its site.

Industrial zoning hasn’t necessarily caught up with the evolution in retailers’ logistics operations, pointed out Jim Araby, strategic campaigns director for UFCW Local 5, which represents 30,000 Bay Area workers in mostly grocery in addition to other retail.

“Last-mile delivery stations are something that [is] fairly new. It’s not your typical warehouse where you have scheduled deliveries,” Araby said.

Workers inside the warehouse will not be making much more than San Francisco’s minimum wage and drivers will be contractors, he went on to say.

“Are those the types of jobs we want to create in San Francisco, coming out of this pandemic? They’ll be competing against UPS or Safeway workers with better benefits, so the community needs to have the ability to have a real discussion on the real impact of this facility. Ultimately, we’re not against Amazon coming to the city, but if Amazon comes into the city with a big footprint, they need to negotiate with the community, which includes labor.”

Bloch reiterated that point saying the legislation offers time to consider implications to traffic, wages, working conditions, housing and air quality.

He added of the legislation: “The reason why this is really significant is this is San Francisco saying, ‘You know what? We actually need to do a pause here and make sure that all of our planning and zoning codes and the laws that govern development can catch up to this style of development and what’s happening in the region.’”