Last Thursday, the City’s Planning Commission held a lengthy informational hearing on SB 50 – proposed statewide legislation intended to spur housing development in transit and job-rich areas.
SB 50 was introduced by Senator Weiner on December 3, 2018. It is essentially a revised version of last year’s failed SB 827, reformulated to expand its area of impact and to address some critics’ concerns about the potential for tenant displacement.
The bill would apply to residential projects on sites zoned to allow housing and located within either a “jobs rich” area (which is not well-defined but would likely cover much of San Francisco) or in proximity to public transit (within ½ mile of an existing rail transit station or ferry terminal, or ¼ mile of a “high quality bus corridor”). Qualifying projects must also designate at least 2/3 of their total area for residential development and meet a minimum on-site inclusionary housing requirement. The inclusionary amount is not set, but Planning staff anticipates this criteria would be met through compliance with the City’s local program.
As written, SB 50 would provide the following incentives:
- Projects located within ¼ mile of a rail transit station or ferry terminal would have a minimum height limit of 55 feet; minimum Floor Area Ratio (FAR) of 3.25; and would be exempt from minimum parking requirements and residential density limits.
- Projects located between ¼ and ½ mile of a rail transit station or ferry terminal would have a minimum height limit of 45 feet; minimum FAR of 2.5; and would be exempt from minimum parking and residential density requirements.
- Projects located within ¼ mile of a “high quality bus corridor” or within a “jobs-rich” area would be able to waive minimum parking requirements up to 0.5 spaces per unit and would be exempt from residential density requirements.
Qualifying projects could also request up to three “incentives or concessions,” which are identical to those under State Density Bonus Law. This could include exceptions or reductions to local zoning standards for rear yard setback, unit exposure, open space, etc. These requests could only be denied if they would either (1) not result in an actual cost reductions for the project; or (2) result in a specific adverse impact on public health and safety, or an historic property listed on the California Register.
SB 50 would not eliminate local design standards or approval processes, so qualifying projects would still need to obtain all applicable discretionary approvals (i.e. Conditional Use Authorizations) and undergo CEQA review.
Planning staff also interprets the language of SB 50 to allow layering of its density bonus and zoning incentives with those provided under State Density Bonus Law. This could potentially allow qualifying projects to achieve an additional state density bonus of up to 35% on top of increased development capacity under SB 50, and to request up to a total of 6 concessions and incentives.
Although staff anticipates SB 50 could potentially result in some up-zoning throughout most of San Francisco, the bill includes some significant exemptions intended to minimize tenant displacement. SB 50 would not apply to any property where there has been a rental tenant in the past 7 years, or where a rental unit has been removed from the market through an Ellis Act eviction in the past 15 years. The City does not currently maintain a registry of rental properties, but that according to a 2017 American Community Survey, roughly 63% of San Francisco’s occupied housing units are occupied by renters.
The bill would also provide a temporary 5-year exemption for “sensitive communities,” which are defined as areas vulnerable to displacement pressures. These communities have not yet been identified, but staff anticipates they would include the areas identified as part of the recent Committee to House the Bay Area (CASA) process. In these areas, local governments would be given up to 5 years to adopt local re-zoning that encourages development of multi-family housing near transit and meets the same overall residential capacity and affordability standards provided by SB 50. If that is not done by January 1, 2025, SB 50 would take effect in those areas.
Planning staff also noted that the practical effect of SB 50 would be lessened by the fact that many San Francisco neighborhoods that have been rezoned in connection with Area Plans already de-control density and have height limits set above the minimum thresholds in SB 50. The properties anticipated to experience the greatest change if the bill passes as-written would be single-family and owner-occupied duplex properties in the City’s lowest-density (RH-1 and RH-2) zoning districts.
Thursday’s hearing included nearly three hours of public comment, after which Commissioners weighed-in with their initial thoughts on the legislation. Commissioner comments varied, from support for the bill as a necessary measure to correct years of housing under-production to strongly-voiced concerns that it will undermine local zoning discretion and misses the mark on providing adequate tenant protections.
SB 50 is currently winding its way through the legislative review process, and is anticipated for vote in the Senate Transportation and Housing Committee at some point in the coming weeks. Amendments and modifications to the current language are to be expected as part of the legislative review process. Additional information from Planning staff on SB 50 and its potential impacts on local development is available at: http://commissions.sfplanning.org/cpcpackets/SB%2050_Memo.pdf
Authored by Reuben, Junius & Rose, LLP Attorney Melinda Sarjapur
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.
