Although the holidays are upon us, it has been a busy few weeks at City Hall. Just Wednesday the Mayor proposed new administrative rules to address San Francisco’s housing shortage, with a particular emphasis on protecting renters and prioritizing projects with affordable units. The Board of Supervisors is also set in the near future to upzone a number of parcels south of Mission Street between 7th and 9th Streets, permitting office and removing restrictions on residential density and retail uses.
Executive Directive: Prioritize Housing, especially Affordable, and Create Additional Administrative Hearing for Projects Proposing a Loss of Housing
On Wednesday of this week, Mayor Ed Lee issued an Executive Directive that could have a significant impact on the permitting and entitlement process for most residential projects. The Executive Directive will affect residential projects twofold: giving administrative priority based on the amount of affordable housing in a project, and requiring at least one additional administrative hearing for most projects that propose to eliminate housing.
The Mayor has directed both the Planning Department and the Department of Building Inspection to prioritize projects that include housing. Residential developments will be further prioritized based on the proportion of affordable units proposed (either on-site or off-site) with 100% affordable projects given the highest priority. This provides an obvious incentive: developers who wish to see their projects come to market quickly should include more affordable housing than is currently required. It also discourages projects which propose paying a fee instead of providing units, pushing them to the end of the line and delaying the entitlement process. The details of how the Planning Department will implement this new directive are unclear at this point (it has until February 1 to come up with an approach), as is the delay facing project sponsors who elect to pay the in-lieu fee or provide only the amount of affordable housing required under the Planning Code.
Additionally, up to two new administrative hurdles would be created for projects proposing to eliminate housing or withdraw rental units from the market. First, a mandatory Discretionary Review hearing before the Planning Commission would be required for any project proposing a loss of housing. Many of these projects would appear before the Commission anyway under the existing rules for eliminating or merging units. However, units valued above $1.3 million previously exempt from the discretionary review process would now be required to appear before the Commission.
Also, a multi-agency “clearinghouse” would be created to review all projects proposing to withdraw buildings from the rental market to evaluate the project’s “code compliance.” This clearinghouse would not have any formal power to deny a permit, but would make recommendations to the Planning and Building Departments. We will have to wait until February 1st to see how this clearinghouse will fit into the existing permitting and entitlement process, as well as whether its “code compliance” review could overlap with existing Planning and Building department responsibilities, creating yet another layer of red tape in the entitlement process.
Upzoning Mission Street Parcels
On a different note, the Board of Supervisors could in the near future upzone approximately twenty five (25) parcels on the southern side of Mission Street between 7th Street and 9th Street. Office use and formula retail use would become principally permitted, as well as more residential density flexibility.
The parcels would be re-zoned from the SLR (Service/Light Industrial/Residential) District to the more development-friendly MUO (Mixed Use—Office) District. Office use on the parcels would go from not permitted to a principally permitted use. Formula retail would be allowed on the ground floor as a principally-permitted use, avoiding a mandatory Planning Commission hearing. All residential unit density restrictions would be removed, and dorm-style SRO and group housing are also permitted.
Although the properties’ 65-foot height limit would stay in place, the rezoning substantially increases the opportunities for creative mixed-use development along the two-block corridor. The legislation was unanimously approved by the San Francisco Planning Commission as part of cleanup zoning associated with the recently-adopted Western SoMa Plan, and has been assigned to the Land Use and Economic Development Committee of the Board of Supervisors for consideration and approval. We will continue to monitor its progress and, we hope, eventual approval by the Board.
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.