Letter of Determination

SAN FRANCISCO PLANNING DEPARTMENT May 6, 2011 Letter of Determination 1650 Mission St. Suite 400 San Francisco, CA 94103-2479 Steven L. Vettel Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor San Francisco CA 94104 Site Address: 2455 3rd Street Assessor s Block/Lot: 4109/001 Zoning District: PDR-1-G/68-X (Innovative Industries Special Use District) Staff Contact: Corey Teague, (415) 575-9081 or corey.teague@sfgov.org 415.558.6378 Fax: 415.558.6409 Planning Information: 415.558.6377 Dear Mr. Vettel: This letter is in response to your request for a letter of determination regarding the property at 2455 3rd Street. This parcel is located in the PDR-1-G Zoning District, the Innovative Industries Special Use District (SUD), and has a 68-X height and bulk limitation. The request is to determine the correct land use classifications for Dogpatch WineWorks ("WineWorks"), which will include varying levels of space for wine making, wine tasting, barrel storage, laboratory, bottling, office, and retail in a 12,600 square foot ground floor space. WineWorks is described as a small-batch wine producer that allows individual retail customers to place specific wine orders based on grapes, style of wine, and other production details. WineWorks will carry out the production plans, bottle the wine, and label the bottles. A type 02 winegrower s license is required from the California Department of Alcohol Beverage Control, which permits the winery to manufacture, export, wholesale and retail sells to customers. Wholesaling One of the principle uses at WineWorks is the wholesale sale of wine. This use is permitted as of right in the PDR-1-G Zoning District per Planning Code Section 225(b). Light Manufacturing The other principle use at WineWorks is the light manufacturing of the wine. This use is permitted as of right in the PDR-1-G Zoning District, with limitations, per Planning Code Section 226(b). The limitations are 1) that no part of a building so occupied shall have any opening, other than fixed windows and exits required by law, within 50 feet of any R District, 2) that the mechanical equipment required for such uses, together with related floor space used primarily by the operators of such equipment, shall not in the aggregate occupy more than of the gross floor area of the building in which the uses are located, 3) it may not occupy more than one half the ground story of a building, and 4) it involves no machine that has more than five horsepower capacity. www.sfplanning.org

Steven Vettel May 6, 2011 Farella Braun + Martel LLP Letter of Determination 235 Montgomery Street, 17 th Floor 2455 3rd Street San Francisco CA 94104 The project site for WineWorks is not within 50 feet of an R District. The light manufacturing portion of the business will include the loading dock, sorting table, destemmer, bladder press, and bottling and labeling machine and cover approximately 1,200 square feet, or 9.5 percent, of the project site. The bottling and labeling machine has a maximum of 3.5 horsepower, and the combined horsepower of all the winemaking equipment is less than five. Additionally, the bottling and labeling machine will be used no more than five times per year for up to 5,000 cases of wine. Retail and Tasting Room WineWorks will include a retail sales area and tasting room of approximately 2,000 square feet that will be open to the public. Additionally, the tasting room will be used for occasional wine-related events such as one or two "release parties" each month for friends and family of customers whose wine orders are complete. The break room kitchen will include a warming oven that will be used for catered food at these events. However, there will be no gas ovens or ventilating hoods. Assembly is permitted as of right in the PDR-1-G Zoning District per Planning Code Section 221(a) and retail uses are permitted as of right, with limitations, in the Innovative Industries STJD. Based on the information and plans provided for WineWorks, the use is classified as Light Industrial and Wholesaling per Planning Code Sections 226(b) and 225(b). The bottling and labeling, when limited to a single machine and used no more than five times per year for up to 5,000 cases per year, is considered an accessory use. Any expansion of bottling and labeling activities must be reviewed to determine if results in the use being considered as a bottling plant per Planning Code Section 226(h)(2). Per Planning Code Section 204.3, up to one third of the space may be used for accessory uses. The retail and assembly space make up only 15.9 percent of the total space, and are clearly subordinate to the principal winemaking use. Therefore, the small retail sales area, tasting room, and occasional events (as outlined above) are considered accessory uses. Any expansion of these uses must be reviewed to determine if it results in a principle retail or assembly use. APPEAL: If you believe this determination represents an error in interpretation of the Planning Code or abuse in discretion by the Zoning Administrator, an appeal may be filed with the Board of Appeals within 15 days of the date of this letter. For information regarding the appeals process, please contact the Board of Appeals located at 1650 Mission Street, Room 304, San Francisco, or call (415) 575-6880. Sincerely, Scott F. Sanchez Zoning Administrator cc: Corey Teague, Planner American Industrial Center, Property Owner SAN FRANCISCO 2 PLANNING DEPARTMENT

CO FARELLA BRAUN+MARTEL LLP Attorneys At Law Russ Building / 235 Montgomery Street San Francisco/ CA 94104 T 415.954.4400 / F 415.954.4480 www.fbm.com STEVEN L. VETTEL svettel@fbm.com D 415.954.4902 March 16, 2011 \J AA (j 2c Scott F. Sanchez Zoning Administrator San Francisco Planning Department 1650 Mission Street, Suite 400 San Francisco CA 94103 Re: Dogpatch WineWorks 2455 Third Street Request for Letter of Determination 2 7 Dear Mr. Sanchez: We represent Dogpatch WineWorks ("WineWorks"), which intends to lease an approximately 12,600 square foot ground floor (plus 1,800 square foot mezzanine) space to operate a winery and retail tasting room at the American Industrial Center at 2455 Third Street (near 22nd Street in the Central Waterfront area). The premises extend from Third Street through to Illinois Street. The approximately 2,000 square foot tasting room would be located at the Third Street frontage and be used for wine tasting and retail sales of wine produced on-site. Winemaking, barrel storage and aging, a small winery office, laboratory space, and wholesale operations would occupy the remaining approximately 12,400 square foot premises behind the tasting room extending to Illinois Street, where a loading dock is located. Assembly events, such as winemaker dinners, would also occur on occasion within the winery premises. The most recent use of the premises was for a wholesaling operation, Bouvet door hardware, which relocated to a smaller premises in the AIC last week. 2455 Third Street is located in a PDR-1-G zoning district and the Innovative Industries Special Use District. Light manufacturing and wholesaling are principally permitted uses in the PDR-1-G district (Planning Code Sections 225(b) and 226(b)); and retail uses up to 3,999 square feet per use and up to at least 25,000 square feet per lot are principally permitted by the Innovative Industries SUD (Section 249.37(c)(2)). Enclosed with this request is a check for $577 for a Letter of Determination under Planning Code Section 307, a conceptual floor plan of the winery and tasting room operations, and a specifications sheet of the type of bottling and labeling equipment proposed to be used at the winery. We are requesting written confirmation that:

Scott F. Sanchez March 16, 2011 Page 2 The use of the premises by WineWorks as a state-licensed winery with wholesale sales and accessory office use is a principally permitted "light manufacturing" use under Sections 226(b) and a wholesale establishment under Section 225(b); 2. A small bottling and labeling machine proposed to be installed in the winery and used about 5 days per year is a permitted accessory use to the light manufacturing use, rather than a separate conditionally permitted "bottling plant" as defined by Section 226(h)(2). 3. Occasional public assembly events in the winery are either accessory to the principal light manufacturing use or are principally permitted assembly uses under Sections 221 (a), (b), (c) or (e). 4. The proposed retail tasting and wine sales room is a principally permitted retail use under Planning Code Section 249.32. Description of Operations. WineWorks principal business will be the production of small-batch, vineyard-specific wines pursuant to individual winemaking plans that are put in place by retail customers. The retail customers (typically in groups of three to five consumers) will arrange for the production of a barrel or barrels of wine for personal consumption. A barrel of wine is approximately 60 gallons (about 25 cases). The consumer groups will select the vineyard source for their grapes, the style of wine they wish to make and other details of production. Because the production plans designate specific vineyards for sourcing the grapes, fermentation will mainly take place in one-ton bins rather than the large tanks used in other wineries. WineWorks will carry out the production plan, help with label graphics and deliver the wine to its customers after labeling and bottling. In its first year (the 2011 crush), WineWorks expects that its production will be approximately 80-100 barrels (2,500 cases). Red wines are finished and bottled about 15 months after production; whites about 6-8 months after production. For California Department of Alcoholic Beverage Control purposes, a winery is licensed as a vertically integrated production, wholesale and retail operation. With a single type 02 winegrower s license (and a federal winery basic permit), a licensed winery can manufacture, export, sell at wholesale and sell at retail to consumers. 1. The proposed winery is principally permitted under Planning Code Section 226(b) as a light manufacturing use and under Section 225(b) as a wholesale use. The light manufacturing activities do not involve machines with more than 5 horsepower and the manufacturing component of the winery operations will occupy less than /2 the ground story of the premises. Planning Code Section 226(b) principally permits a light manufacturing use in the PDR- 1 -G district "which occupies not more than V2 the ground story of the building and involves or requires no machine that has more than five horsepower capacity, if conducted entirely within an

Scott F. Sanchez March 16, 2011 Page 3 enclosed building; provided, that no part of a building so occupied shall have any opening, other than fixed windows and exits required by law, within 20 feet of any R District." The area of the ground story of the premises that will be occupied by the "light manufacturing" function of the winery will be within an enclosed building and occupy approximately 1,200 sf area near the Illinois Street loading dock, where grapes will be delivered and the sorting table, destemmer and crusher will be located. This area is approximately 10% of the total square footage of the winery s premises. There are no R districts within 20 feet of the building. The machinery used in winemaking would not include an engine or gears that exceed 5 horsepower. The machinery includes (a) sorting tables to sort the grapes and grape clusters when delivered from the vineyard, (b) a destemmer to separate the clusters and remove the grapes from the stems and leaves, (c) tanks and bins into which the grapes and juice are loaded for processing and fermentation, (d) a bladder press to extract juice from grapes and skins from wine, and (e) a small bottling and labeling machine. The winemaking machines (sorting table, destemmer, bladder press and bottling machine) each have less than 5 horsepower. The balance of the ground floor space (other than the tasting room) will be occupied by oak barrels for wine aging, case-goods storage, general storage, office, and laboratory, all of which are either accessory to the light manufacturing use or are principally permitted wholesaling uses under Planning Code Section 225(b). The winery does not fall within any of the definitions of heavy industrial under Planning Code Sections 226(e) through (w), which are conditionally permitted, rather than principally permitted, in the PDR- 1 -G district. Wine production does not involve "brewing" or "malt manufacturing or processing or malt products" (Section 226(h)(2)). These activities are strictly limited to the making of beer or beer-related products. Nor will distilled liquors be produced (226(i)). Distilling involves an additional process, using fermented alcohol but subjecting it to further, equipment-intensive treatment to achieve the finished product. The winery will not be distilling alcohol. 2. The proposed small-scale bottling and labeling machine is accessory to the light manufacturing/wholesaling use, not a conditionally permitted "bottling plant." WineWorks proposes to install a small-scale wine bottling and labeling machine, as described in the attached drawing and specifications sheet (in Italian, please let us know if you need a translation). The machine has a maximum 3.5 horsepower capacity (less than the 5 horsepower limit for a light manufacturing use) and measures approximately 24 square feet in area, such that it will occupy only 0.2% of the winery s 12,400 square foot footprint. The machine will be located within the enclosed interior premises near the Illinois Street frontage. WineWorks estimates the machine will be run approximately 5 days each year during its small lot bottlings.

Scott F. Sanchez March 16, 2011 Page 4 The potential noise, vibration and other external effects of this small bottling and labeling machine would be significantly less than the impacts that would be associated with use of a mobile bottling plant. Mobile bottling plants are located in large trailors that park at a winery during bottling. In the context of another small winery, the Zoning Administrator recently determined that such use of mobile bottling did not disqualify the winery from being classified as light manufacturing (53 Bluxome Street letter of determination, dated May 17, 2010). We believe this small-scale bottling and labeling machine qualifies as an accessory use to the principally permitted light manufacturing winery use. Under Section 204, an accessory use is a "related minor use which is either (a) necessary to the operation... of a lawful principal or condition use or (b) appropriate, incidental and subordinate to any such use." Further, under Section 204.3(d), in a PDR zoning district, an accessory use may occupy up to 1/3 of the total floor area occupied by the principal use to which it is accessory. The bottling machine is a minor use related, necessary and incidental to the primary winemaking use, and at about 24 square feet will occupy far less than 1/3 of the floor area of the winery. This minor incidental use is not a separate "bottling plant" as defined by Section 226(h)(2). That section refers to plants where bottling is one of the principal activities (brewery, dairy products plant, etc.), the bottling machinery takes up a major portion of the premises and is running on a full-time basis, rendering the bottling activity a "heavy" industrial use, not a minor use accessory to a light manufacturing activity. In the event the Zoning Administrator determines the small bottling and labeling machine we propose is not accessory to the winery, but instead is a stand-alone bottling plant under Section 226(h)(2), WineWorks will not install the bottling machine at this time. Rather, some time in the future after the winery is in operation, we will seek a conditional use permit to install the bottling machine. Because the first crush for WineWorks is in 2011, it will not be bottling wine until sometime in late 2012 or 2013. 3. Occasional public assembly events in the winery are either accessory to the principal light manufacturing use or are principally permitted assembly uses under Sections 221(a), (b), (c) or (e). Like many other wineries, WineWorks proposes occasional dinners, receptions and other by invitation assembly events. Assembly uses are principally permitted in the PDR-1-G zoning district under Section 221(a), (b), (c) or (e). Alternatively, these occasional events could be deemed accessory uses to the light manufacturing and wholesaling winery operations. 4. The proposed retail tasting room is a principally permitted retail use under Planning Code Section 249.32. In the Innovative Industries SUD, retail uses are regulated as if the property were in a UMU zoning district, rather than a PDR-1-G district (Sec. 249.37). In the UMU district, up to 25,000 square feet of retail uses are permitted per lot (and more if the ratio of other permitted uses to retail uses is at least 3:1) and each retail use may be up to 3,999 square feet in size. (Sec.

Scott F. Sanchez March 16, 2011 Page 5 843.45). Here, the total existing retail uses at the American Industrial Center s north building (Block 4109, Lot 1) is approximately 2,300 square feet, comprising only Serpentine Restaurant and Jolt & Bolt cafø. With the proposed 2,000 square foot retail tasting and wine sales room, the total retail space will increase to about 4,300 square, well below the 25,000 square foot cap. In addition, the 2,000 square foot tasting room is below the per use size threshold of 3,999 square feet. Accordingly, the retail tasting and wine sales room is a principally permitted retail use. Conclusion. For the above reasons we request that you issue a Letter of Determination finding the proposed winery to be a light manufacturing and wholesaling use under Sections 226(b) and 225(b); the small scale bottling and labeling machine accessory thereto; confirm that assembly uses of the winery on occasion is permitted; and that the tasting and wine sales room is a permitted retail use. Please contact me at (415) 954-4902 or svettel@fbm.com with any questions or if we can provide you any additional information. / cc: Kevin Doucet, Dogpatch WineWorks Lynn Carmichael, Hinman & Carmichael Greg Markoulis, American Industrial Center 23216\2539432.1

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MONOBLOCCO RTS.1 200,.o.o. MONOBLOCCO RIEMPIMENTO E TAPPATURA BO1TIGIJE IN VETRO CUJNDRJCHE, TAPPO RASO E SILICONE; PRODUZIONE ORARIA FINO A 1200 BOTTIGLIE. Toscana Enologica Mori S.n.c. Via Cimabue n4-6 50028 _Tavarnelle Val di pesa (Firenze) TeL0039_055_8071 568 Fax.0039_055_8071 293 email:tem@tem.itwww.tem.it -i, TOSCANA ENOLOGICA MORI

MONOBLOCCO RTS.1 200 II monoblocco RTS 1200 Ł una macchina compatta peril riempimento e la tappatura delle bottiglie, adatto per piccole produzioni. La versione standard del monoblocco Ł costituita da una riempitrice con Otto rubinetti, una tappatrice per tappi rasi, un sistema di convogliamento per bottiglie cilindriche. La riempitrice utilizza II sistema a caduta del liquido, ideate per i liquidi alcolici; il gruppo superiore con la vasca ed I rubinetti, Ł regolabile in altezza mediante manovella. La tappatrice alimenta I tappi mediante una tramoggia e II inserisce automaticamente net collo delle bottiglie. II sistema di convogliamento permette, mediante rapida sostituzione delle attrezzature (stella ingresso e stella uscita delta riempitrice, stella centrale delta tappatrice, tinghiere e convogliatori controstelte), di ospitare le bottigile di vario formato. II basamento e tutte le parti che vengono a contatto con ii prodotto, sono realizzati in acciaio INOX. II riparo anti nfortunistico e le sicurezze presenti, rendono la macchina sicura a norme CEE. CARATTERISTICHE TECNICHE Peso Kg.900 Altezza totale: 2100-2250 mm (regolabile) Larghezza: 1260 mm (basamento); 2260 mm (totale) Profondit : 850 mm. Altezza piano di lavoro: da 850 a 1100 mm. Alimentazione generate: 380 V. Trifase+ Neutro + Terra, 50 Hz. Alimentazione aria: 5-6 Bar Consurrio dana per ciclo: 0,6 Potenza installata: 1,3 Kw. Diarnetro bottiglie: da 55 a 115 mm. Altezza bottiglie: d a 240 a 380 mm. Diametro tappi: da 24 a 30 mm. Aftezza tappi: da 30 a 50 mm. Produzione oraria: da 450 a 1200 bottigie/ora Velocit nastro: 5 rn/i Capacit vasca riempitrice: 35 Capacit tramoggia tappatnice: 300 tappi Toscana Enologica Mori S.n.c. Via Cimabue n.4-6 50028_TavarnelleVal di pesa (Firenze) Tel.0039_055_8071 568 Fax.0039_055_8071 293 emaiktem@temitwww.tem.it -,, TOSCANA ENOLOGICA MORI

kevin doucet <doucetkegmail.com > 04/27/2011 11:03 AM To Corey.Teaguesfgov.org CC bcc svettel@fbm.com Subject Re: Dogpatch WineWorks Floor Plan - 2455 Third Street That s great news Corey. best Kevin On Wed, Apr 27, 2011 at 10:53 AM, <Corey.Teague(sfgov.org > wrote: Kevin, Now I see that it says "Catering Kitchen" in the break room area. The resolution of the updated plan made that difficult to read. Thanks for all the info. I should be able to get the letter signed by the ZA within a week or so. Corey A. Teague, AICP, LEED AP City Planner Neighborhood Planning, Southeast Quadrant San Francisco Planning Department 1650 Mission Street, Suite 400 San Francisco, CA 94103 corey.teaguesfpov.orp 415.575.9081 (voice) 415.558.6409 (fax) kevin doucet cdoucetke@gmail.com > 04/27/201109:39 AM To Corey.Teaciuesfoov.orci CC svetteu fbm.com Subject Re: Dogpatch WineWorks Floor Plan - 2455 Third Street Good morning, It will be located in the area designated as "Break Room", underneath the mezzanine. Sorry about the confusion. On Wed, Apr 27, 2011 at 9:28 AM, <Corey.Teague(sfgov.org > wrote: Kevin, Thanks for the info. The catering kitchen isn t shown on the updated plans Steve sent me. Can you tell

me where the kitchen will be located and/or update the plans to show its proposed location? Thanks. Corey A. Teague, AICP, LEED AP City Planner Neighborhood Planning, Southeast Quadrant San Francisco Planning Department 1650 Mission Street, Suite 400 San Francisco, CA 94103 corey.teag ue(sfgov.org 415.575.9081 (voice) 415.558.6409 (fax) kevin doucet <doucetke @gmail.com> 04/26/2011 04:15 PM To Corey.Teapue'sfgov.orQ C svettel( fbm.com Subject Re: Dogpatch WineWorks Floor Plan - 2455 Third Street Corey, Yes - we will have a prep kitchen including a warming oven, reach-in refrigerator & prep-table. The prep kitchen will be used by outside catering companies during our events. We will not have gas ovens or ventilating hoods. Please let me know if I can answer any additional questions. Kevin 415 939 1735 On Tue, Apr 26, 2011 at 3:09 PM, <Corey.Teague(sfgov.org > wrote: Steve, The sketch plans turned in with the LoD request also label a "Downstairs Catering Kitchen." I don t see that on these plans. Is there going to be a kitchen as part of this project for food prep during events? Or will any food at these events be catered from an outside company? Corey A. Teague, AICP, LEED AP City Planner Neighborhood Planning, Southeast Quadrant San Francisco Planning Department 1650 Mission Street, Suite 400 San Francisco, CA 94103

corev.teague( sfciov.orci 415.575.9081 (voice) 415.558.6409 (fax) csvettel@fbm.com > 04/26/201102:50 PM 0 <corey.teaouesfpov.orp> cc<doucetke( pmail.com > Subject Dogpatch WineWorks Floor Plan - 2455 Third Street Corey, attached are more refined floor plans for the Dogpatch Wineworks. Kevin Doucet has confirmed that the tasting room/retail sales area will be approximately 2,000 gross square feet, as shown on the plans. He also confirmed that all assembly events will occur in the tasting room, not the production area of the winery. He estimates one to two such events a month, primarily "release parties" for friends and family of those producing wine at the facility. Please let me know if you need anything else or have any other questions. Steven L. Vettel Farella Braun + Martel LLP RUSS BUILDING 235 MONTGOMERY STREET SAN FRANCISCO I CA 94104 T 415.954.4902 F 415.954.4480 www.fbm.com Kevin Doucet

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