San Carlos Enacts Northeast Area Development Moratorium

| Matthew Visick
moratorium

Pending Specific Plan Will Streamline CEQA Review of Future Life Science Projects

On April 25th, the City of San Carlos enacted a development moratorium covering approximately 120 acres of land in the north side of the City, and east of Old County Road (see map below).  San Carlos has seen significant life science and R&D development in recent years, and the northeast area is anticipated to see an expansion of those uses.  The moratorium is broad, applying to virtually all development applications other than tenant improvements and projects with complete, filed applications.  It is expected to be in effect for two years while the City prepares a Specific Plan that will guide future development, articulate the public benefits future projects will provide, and streamline CEQA review of projects consistent with the Specific Plan.

State law allows a City Council or County Board of Supervisors to enact a development moratorium of up to two years after it makes findings that approving projects would create an immediate threat to the public health, safety, or welfare.  The moratorium is initially limited to 45 days but can be extended with another vote of the City Council or Board of Supervisors to a maximum of up to two years.  Both the vote to enact the moratorium and the vote to extend must be approved by a supermajority (i.e., 4/5ths) vote.

The San Carlos City Council found development in the northeast area would have health, safety, and welfare impacts unless the Specific Plan considered how it would affect the “supply of land and adequate sites suitable, feasible, and available for the development of housing.”  The findings anticipate that the Specific Plan will “develop policies and strategies to incorporate housing as a part of this new development.”

While not expected, it is possible the City Council will carve out additional projects when it considers whether to extend the moratorium.  Several project sponsors opposed the enactment of the moratorium at the meeting on April 25, urging the Council to exempt projects with applications pending even if those applications were not yet complete.  At least one Council member appeared sympathetic to those arguments during the May 25th meeting (as noted above, at least four of the five Council members would need to vote to extend the moratorium). Planning Department staff will hold a public meeting with stakeholders on May 11th to gather stakeholder input and that input will be shared with the Council.

Planning Department staff emphasized at the April 25th hearing that the Environmental Impact Report (EIR) the City is preparing for the Specific Plan will help streamline the approval of future projects that are consistent with the Plan.  State law provides several CEQA streamlining tools for projects consistent with a specific plan analyzed with an EIR.  Development under Redwood City’s Downtown Precise Plan (DTPP) provides a good example of the advantages of this approach for both the City and the applicable project sponsors.  Projects consistent with the DTPP required little to no additional project-specific CEQA review, allowing them to move through the approval process in a fraction of the time normally required.  In an ideal world, this strategy allows over-stretched Planning Department staff to redirect their time from project-level CEQA review to other priorities, and project sponsors to significantly reduce the often inordinate time and cost associated with CEQA review of individual projects.

 

Authored by Reuben, Junius & Rose, LLP Attorney Matthew Visick.

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.

Density Bonus Law & CEQA Tiering Upheld

| Mark Loper
DBL

This winter, two California Courts of Appeal issued decisions that reaffirm some of the positive aspects of state laws related to housing production, from both a CEQA perspective and via the State Density Bonus Law (“DBL”). In the first case, out of East Bay city Newark, the First District Court of Appeal upheld a tiered CEQA review for a 469-lot subdivision based on a program-level EIR prepared for a Specific Plan. About a week later, the Fourth Appellate District upheld San Diego’s approval of a 20-story residential tower, relying heavily on the protections afforded to mixed-income residential projects under the DBL. We discuss each below.

In Newark, the City approved a specific plan in 2010 for up to 1,260 units, as well as a golf course and related facilities, relying on an EIR. The EIR specifically noted that Newark would proceed under CEQA Guidelines Section 15168 for specific development proposals and “tier” off of the EIR to the extent applicable. In 2019, the applicants submitted a subdivision map proposing 469 residential lots, but no golf course. Other changes from the development analyzed in the EIR included filling and elevating only certain areas on the site (the project site is located next to the San Francisco Bay) and locating the filled and elevated areas directly next to wetlands, with riprap along the western banks. The City prepared an exemption checklist comparing the EIR to the subdivision’s impacts and conducted background technical studies, including an updated sea level rise analysis. The checklist found that the subdivision would be consistent with the specific plan, and that there were no changed circumstances or new information that might trigger the need for more CEQA review than what was done for the EIR. It was a classic example of CEQA “tiering.”

The Court of Appeal upheld the City’s use of the checklist. First, it rejected an argument that the project changes made tiering inappropriate. The Court helpfully pointed out that changes in and of themselves do not eliminate the ability to tier off an EIR; instead, the environmental consequences resulting from those changes must be new, greater, or substantially different than what was analyzed in the EIR. Here, they were not. The Court also rejected the appellant’s claim that the amount and rate of sea level rise was different enough to require a new EIR, finding that the EIR’s unambiguous finding of a significant impact due to sea level rise was adequate, as was some language in the EIR noting that the rate of sea level rise was uncertain and might be accelerating.

Finally, the Court determined that adaptive management plans for sea level rise do not improperly defer consideration of mitigation measures. Taking a refreshingly common-sense approach to climate change and CEQA, the Court would not fault Newark for acknowledging in the EIR that adaptive management would be required. “The City’s potential responses to environmental conditions between 50 and 80 years from now cannot be considered part of the project,” it concluded. “Because the City currently can only dimly guess what measures will be needed to respond to conditions several generations from now, the City was not required to analyze the impacts of the adaptive pathways” as part of the project.

The Court of Appeal’s opinion in San Diego generated more buzz, particularly among the pro-housing groups that have done yeoman’s work in recent years to strengthen California’s housing protections. The case was originally not certified for publication, in part because San Diego’s City Attorney was reluctant to have a published case that so clearly spelled out the limits of the City’s discretion to deny or downsize density bonus projects. Nevertheless, after receiving petitions to publish it, the Court did. It is helpful in several ways, reaffirming the City’s evidentiary burden to deny waivers or concessions; harmonizing General Plan consistency findings with the DBL; and applying the conclusion the First District Court of Appeal reached in Wollmer v. City of Berkeley that a density bonus project can be approved with residential amenities such as a courtyard.

The Project—a 20-story, 204-unit mixed use tower at 6th Avenue and Olive Street across from Balboa Park—faced pushback from neighbors, at least some of whom the Court implied would lose their view of the park. Somewhat surprisingly, instead of arguing that the project would have an unmitigable health and safety impact on the adjacent park, the neighbors argued administratively, at the trial court, and at the Court of Appeal that the project should be denied because it did not comply with several General Plan and Community Plan guidelines that call for contextual development and massing moderation of tall towers. They also argued that the City should not approve waivers that contradicted the guidelines, and that the City should have approved a shorter and squatter development that had the same number of units but a smaller courtyard.

The Court began its analysis by noting that the neighbors had “sidestepped” the implications of the DBL, not discussing it at all in its opening brief and then dismissively claiming the DBL is not a “free pass.” The Court identified the narrow grounds by which a City can shrink or deny a DBL project and pointed out that the neighbors simply failed to make any arguments about that point.

It then went on to explain that the developer specifically requested concessions under the DBL that were germane to each of the General Plan and Community Plan guidelines the neighbors claimed the project did not comply with. The City Council expressly made a finding that there was no evidence to support the denial of the requested incentive, which the Court found to be determinative—acknowledging that the burden on this issue has now shifted to cities if they attempt to deny a project, not the developer proposing an incentive. It also concluded that the project’s waivers were correctly layered on top of the project with requested concessions, meaning a project qualifies for waivers based on its form with both the density bonus and the concessions.

The Court finally rejected the neighbors’ claim that the project’s design was not dictated by the density bonus and concessions, but by a large courtyard. It pointed out that this precise argument was raised and rejected in the Wollmer v. City of Berkeley case from 2011, one of the first cases analyzing the modern DBL. The San Diego City Council could not demand the developer remove the courtyard or redesign its building to satisfy the neighbors’ subjective concerns. The Court stated: “a city cannot apply a development standard that would physically preclude construction of the project as designed, even if the building includes ‘amenities’ beyond the bare minimum of building components.” It remains to be seen what qualifies as an “amenity” that can be baked into a project other than a courtyard, as both Wollmer and the San Diego case related to open space and courtyard amenities. And the evidentiary burden and procedural posture here were also the same as Wollmer: a city defending a project approval with amenities instead of making a project shorter or smaller by eliminating them. This issue may be ripe for further litigation.

The Newark case—Citizens Committee to Complete the Refuge v. City of Newark et al. (2022) ___ Cal.App. ___ (A162045, Alameda County Superior Court No. RG19046938)—and the San Diego case—Bankers Hill 150 et al v. City of San Diego et al (2022) ___ Cal.App. ___ (D077963, Super. Ct. No. 37-2019- 00020725-CU-WM-CTL)—are reminders that well-crafted CEQA documents, entitlement applications, and approval motions can help ensure new state laws meant to protect and streamline housing projects are accurately applied to a project.

 

Authored by Reuben, Junius & Rose, LLP Attorney Mark Loper.

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.

Planning Commission Considers Changes to Group Housing

| Melinda Sarjapur
Group Housing

On February 10th, the San Francisco Planning Commission voted unanimously to recommend its approval (with modifications) of two proposed ordinances that could bring big changes for Group Housing citywide.

In mid-December 2021, Supervisor Peskin introduced two ordinances at the Board of Supervisors.  The first (Board File No. 211299, “Planning Code – Group Housing Definition”), which is co-sponsored by Supervisors Walton and Mandelman, proposes to amend the definition of Group Housing under the San Francisco Planning Code (the “Planning Code”).

Under the current Zoning provision of the Planning Code (and pursuant to a previous Zoning Administrator interpretation), Group Housing rooms can include a limited cooking facility, which is defined as having a small counter space, a small under-counter refrigerator, a small sink, a microwave, and a two-ring burner.  Further, Group Housing rooms must be rented out for a minimum of seven days, and Group Housing developments do not have minimum square footage requirements for building common spaces and amenities.  On-site below-market-rate/inclusionary Group Housing rooms can be offered as either rental or ownership tenure.

However, Supervisor Peskin’s legislation proposes the following changes to the Group Housing definition:

  • Individual and limited cooking facilities would no longer be allowed in Group Housing rooms.
  • Group Housing rooms would need to be rented out for at least 30 days, rather than 7.
  • Group Housing would require at least 0.25 square feet of common space for every square foot of private space (including bedrooms and individual bathrooms). At least half of the required common space would need to be devoted to a communal kitchen, with one kitchen for every 20 Group Housing rooms. Student housing and 100% affordable housing would have an exception to this requirement.
  • On-site inclusionary Group Housing rooms would no longer be permitted as ownership units.

The second ordinance (Board File No. 211300, “Planning Code, Zoning Map – Group Housing Special Use District”), proposes to create a new Group Housing Special Use District, generally covering the Chinatown and Tenderloin neighborhoods, within which new Group Housing rooms would be prohibited.

After three hours of hearing and deliberations, the Planning Commission voted unanimously to recommend approval of both ordinances to the Board of Supervisors, with the following proposed modifications:

To the Group Housing Definition Legislation:

  • Increase the common space requirement for Group Housing to 0.5 square feet of common space for every square foot of private space (instead of the proposed 0.25 sf);
  • Require at least 1 kitchen within 15% of the common space (instead of the proposed 50%);
  • Revise the minimum number of kitchens to be at least 1 communal kitchen for every 15 Group Housing rooms (instead of the proposed 20);
  • In addition to Student Housing and 100% Affordable Housing, also exempt units protected under Section 41.3 of the Hotel Conversion Ordinance from common space requirements;
  • Exempt organizations such as Family House from the common space requirements;
  • Allow academic institutions to provide limited cooking facilities in Group Housing rooms;
  • Define the metrics for communal kitchen requirements;
  • Exclude the single-room occupancy (“SRO”) aspect from this specific legislation with the intent to continue discussions on SRO controls in the future; and
  • For the Planning Department to consider establishing a Working Group to further discuss Group Housing intent, best practices, and future legislation.

To the Group Housing SUD Legislation:

  • Revise the proposed SUD to exempt Student Housing and 100% Affordable Housing projects; and
  • Exclude the SRO aspect from this specific legislation with the intent to continue discussions in the future.

It remains to be seen which, if any, of the Commission’s proposed modifications will be incorporated into these ordinances, which will come before the Board’s Land Use and Transportation Committee at an unknown future date.

 

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.

The Basics: Construction Logistics Agreements

| Corie A. Edwards
construction

Real estate developers often require agreements from neighboring property owners to coordinate logistical issues during construction. This is particularly true for infill projects in dense urban neighborhoods, where structures are frequently built to the property line and adjacent to existing buildings.  Developers are well-served by considering the logistical needs of their projects during the entitlement period, so that they may begin negotiations with adjacent property owners.  Doing so provides the opportunity to adjust their projects and/or budgets if it appears that obtaining necessary agreements may prove difficult or financially burdensome.

Several topics immediately come to mind when considering what kinds of agreements may be required from neighboring property owners:

Excavation

Whenever a property owner intends to undertake excavation on its property, it is required to provide notice to neighboring property owners that states (a) the depth of the planned excavation, and (b) the date when excavation will begin.  When “excavation is to be of a greater depth than are the walls or foundations of any adjoining building or other structure, and is to be so close as to endanger the building or other structure in any way,” the adjacent property owner must be provided at least 30 days’ notice to protect its property from damage, and it must be given a reasonable license to enter onto the property where excavation will occur in order to do so.  Cal. Civ. Code § 832(3).

The tables turn, however, when the “excavation is intended to be or is deeper than the standard depth of foundations, which depth is defined to be a depth of nine feet below the adjacent curb level. . . .”  Cal. Civ. Code § 832(3).  In that case, the excavating owner has the burden to protect the adjacent structure(s) without cost to the adjacent property owner, provided that the adjacent owner provides a license for the excavating owner to do so.  If damage occurs to the adjacent building during the excavation, the excavating owner may be liable for such damage, except for minor settlement cracks.

When a project requires a deep excavation, the developer’s engineering team typically prepares a shoring plan.  Tiebacks are often used to support the shoring system, as an alternative to internal bracing.  When tiebacks will be placed under the land of an adjacent property owner, the developer must obtain the adjacent property owner’s agreement to the installation.  An agreement is also required if the tiebacks will remain in place after construction.

The form of the negotiated agreement – license or recorded easement – is largely determined by what will happen to the tiebacks after the completion of construction.  If title to the tiebacks will remain with the developer, a recorded easement will be required.  If such title will pass to the adjacent owner, a license agreement may be sufficient.  In either event, the developer should consider how removal of the tiebacks will be handled in the event that below-grade construction on the adjacent property later occurs.  If the tiebacks will be removed, the developer may want to retain control over the removal process, and have an opportunity to repair any damage to waterproofing or other building systems when removal occurs.  It is advisable to consider such issues when the tieback agreement is negotiated.

Pre-Construction Inspection

Given that a developer may be liable for damage caused to an adjacent structure during excavation, it should document the pre-construction condition of the interior and exterior of the building.  Developers should request the right to conduct such an inspection during initial negotiations with the adjacent property owner.  If there is a dispute later, the pre-construction survey provides the best evidence of the condition of the adjacent building before construction activities commenced.

Settlement Monitoring

We recommend that excavating developers monitor whether settlement is occurring on adjacent properties during the course of its excavation and other construction activities.  The developer should negotiate the right to establish survey measurements on the exterior elevation of neighboring buildings, and should periodically determine if settlement has occurred.  Consultation with experts will help determine what level of settlement is acceptable, and at what threshold work should stop so that the impact of any settlement may be evaluated.

Crane Installation and Operation

A mobile crane may be sufficient to facilitate the construction of smaller projects.  In those cases, developers should consider where the mobile crane will be placed and for what period(s) of time.  It may be necessary to negotiate with an adjacent property owner to allow the crane to be temporarily placed on the adjacent property.  Developers should be mindful that some jurisdictions require a neighbor agreement for issuance of a street space permit if the mobile crane will be placed in the adjacent right of way.

Most larger projects require the use of a tower crane.  Generally speaking, an agreement from a neighboring property owner is not required if a tower crane will merely weathervane over an adjacent property, and will not carry live loads over neighboring land.  However, when other negotiations are being undertaken, it is advisable to incorporate a crane swing agreement when a tower crane will be used.

Scaffolding

When a developer’s construction will require the installation of ground-supported scaffolding over the boundary line with an adjacent property, it is necessary to secure consent from the adjacent property owner.  If cantilevered scaffolding will be installed as vertical construction progresses, or if a swing stage may be used during construction, it is recommended that an agreement be negotiated notwithstanding legal authorities concerning the use of airspace over adjacent land.

Flashing/Waterproofing

In circumstances where a new building will abut an adjacent building, the developer often wants to install flashing or other waterproofing between the buildings.  Where the installation will require access to the adjacent building or the flashing assembly will cross the boundary line between the properties, an agreement should be negotiated.  It is advisable for developers to conduct that negotiation during the pre-construction negotiations of other agreements, rather than undertaking such negotiations near the end of the construction process.

Developers should also consider post-installation maintenance when negotiating for the installation of flashing.  A complete agreement will outline whether one or both property owners has the obligation to maintain, repair and/or replace the flashing in the future, who will bear the associated costs, and what happens in the event that the flashing and/or one of the buildings is damaged by a casualty.

Post-Construction Maintenance

A project’s need for access to an adjacent property may not end when construction is complete.  That is particularly true with lot-line buildings, where it may be necessary to use a swing stage to clean and maintain the building’s exterior.  Developers should consider post-construction operational issues, and negotiate with adjacent owners about them during pre-construction negotiations.

Indemnity and Insurance

Risk allocation is a necessary part of any construction logistics agreement between adjacent property owners.  Developers should be mindful that the owner of the neighboring property will likely expect to be named as an additional insured under the developer’s liability insurance policies.  The express indemnity language in the agreement may control the scope of the insurance coverage that the neighbor receives.  One of the developer’s goals should be to avoid assuming uninsured liabilities.

When the relationship between the developer and the adjacent property owner will continue after the completion of construction – through a post-construction maintenance agreement, access agreement, or otherwise – consideration should be given to indemnity and insurance obligations, going forward.  In particular, the developer should consider whether and to what extent it may reduce the amount of liability insurance it carries after construction.  A high-limit Owner-Controlled Insurance Program (OCIP) will likely be replaced with a Commercial General Liability (CGL) policy with lower limits, in keeping with the operation of a commercial building.  The agreement should account for such reduction in coverage.

Dispute Resolution

Developers may also wish to negotiate about how construction and other disputes with an adjacent property owner will be resolved.  Mediation followed by judicial reference – a hybrid between litigation and arbitration – may provide the best opportunity for parties to reach a compromise of issues between them, while avoiding the cost and other pitfalls of litigation.

Existing Conditions on Adjacent Property

When a developer negotiates for what it requires to construct its project, it should consider how the construction activities may impact the adjacent building.  If the adjacent property has lot-line windows that must be closed, for example, the developer may benefit from offering the adjacent property owner the opportunity to perform that work.  In some cases, the adjacent owner may appreciate site access to waterproof the exterior of its building (above-grade and/or below grade).  Goodwill may be gained by offering to provide such accommodation, as long as work on the project is not materially delayed.

Every project presents its own construction challenges and logistical needs.  We recommend that developers evaluate those challenges and needs early, so that there is sufficient time to negotiate any agreements with neighbors that may be necessary for the project to proceed.  Forward-thinking developers benefit from early negotiations because they have an occasion to build goodwill with their neighbors, make adjustments to their project as may be necessary to accommodate neighbor concerns, and work around challenges when negotiations fail.  They are also able to negotiate from a position of strength and negotiate an agreement that benefits their project as well as the owner of the adjacent property.

 

 

Authored by Reuben, Junius & Rose, LLP Attorney Corie A. Edwards.

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.