Not too long ago, we were writing about the possible demise of redevelopment law in California as a land use planning and policy tool. However, since the Governor made his proposal to eliminate Redevelopment in January, the legislature has responded with tepid support and a discussion of less radical reforms to the system. While the Governor’s proposal is still alive, there is a growing belief that it may never see a vote. The California Planning & Development Report recently published a good summary of where we stand as of today. A synopsis of that is below…for more detail go directly to CP&DR’s website at http://www.cp-dr.com/node/2940. The focus of recent legislation proposals is reform, not elimination, of redevelopment.

SB 286 – A Broad Reform Proposal

SB 286 incorporates a package of redevelopment reform measures developed by the California Redevelopment Agency (CRA). The CRA reports that SB 286 would add specificity to the types of information needed for making findings of blight. The blight finding is one of the primary determinations that must be made before any redevelopment agency can begin the process of establishing a redevelopment area. The new blight finding rule reads as follows:

“This finding shall be supported by empirical and, to the greatest extent feasible, quantifiable evidence demonstrating the prevalence of specific conditions…on specific properties that are so substantial that they cause a reduction of, or lack of, proper utilization of the entire project area. Evidence shall be reasonable in nature, credible, and of solid value. Conclusions not based on documented evidence of specific conditions shall be deemed insufficient.”

The change to the blight finding requirements is very significant. Raising the bar by requiring much more detailed evidentiary showing the project area is so blighted that there is a demonstrable “reduction of, or lack of, proper utilization of the entire project area” will certainly give agencies pause when considering establishing a new project area. This is a much higher standard than the existing provision that says the legislature must simply find that the area is blighted and that it would serve the general health and general welfare of the public. One wonders if, for example, the existing Transbay Redevelopment Plan would have been able to meet this more stringent standard.

In addition, SB 286 would:

• limit the percentage of total land area of a jurisdiction which may be included in project areas (the max would be 25% of total land area of a City);

• exclude the schools’ share of property taxes in new project areas formed after January 1, 2012;prohibit uses of tax increment for specific purposes such as golf courses and never before developed parcels of land if they consist of 20 acres or more;

• prohibit uses of tax increment for the purpose of financing a professional sport stadium, unless the financial assistance is approved by a majority of voters;

• add new requirements to five-year implementation plans and require agencies to focus activities on state priorities such as job creation, cleaning up contaminated property, basic infrastructure needs, and affordable housing;

• require development of performance indicators to measure agency success; require performance audits of agencies and provide funds for those reviews; and specifically prohibit the use of tax increment for non-redevelopment, non-agency operating costs.

These other reforms further respond to the major criticisms of the current Redevelopment Law by ensuring that redevelopment funds are not put towards inappropriate uses or used for greenfield development, that tax revenue is not diverted from educational entities and that there is adequate oversight of the redevelopment process. These additional reforms will likely have a greater impact on suburban or rural cities and counties, and should have a limited impact in San Francisco.

SB 450 – Focus On Affordable Housing Money

A much less sweeping bill than SB 286, SB 450 focuses on the use of affordable housing funds generated by Redevelopment Agencies. The bill would restrict the use of the Low- and Moderate-Income Housing Funds for planning and general administrative expenses. Specifically, only 15% of monies deposited in the housing funds could be used for planning and general administrative purposes. This change would respond to the criticism that only a limited amount of affordable housing money actually gets spent on the acquisition, construction, rehabilitation or preservation of affordable housing.

The bill would also provide funding for audits of redevelopment agency housing programs by the Department of Housing and Community Development, to allow the State Controller to conduct reviews of redevelopment agency audits and recommend suspension of auditors that are not conducting audits in accordance with the applicable standards and guidelines. The bill would also recalibrate the required distribution of affordable housing funds to housing for certain levels of affordability and would also give California courts the power to temporarily prohibit a Redevelopment Agency from issuing debt if they find that an agency has failed to comply with requirements for replacement affordable housing.

An Alternative Proposal

Back in March the CRA announced an alternative to killing redevelopment. CRA still believes its alternative proposal could make it into the final agreement. CRA believes this change alone could raise more money over 10 years than Governor Brown’s plan of elimination of redevelopment altogether. The basic concept CRA is proposing, not surprisingly, keeps the general framework of the existing redevelopment law, but with some seemingly minor changes focused on getting money to schools:

• Redevelopment agencies can voluntarily suspend their housing set-aside for FY 2011-12. An equivalent amount of funds must then be contributed to local school districts in project areas. In exchange for this contribution of funds for FY 2011-12 to local schools, the agency will be allowed to extend the project area’s life by two years.

• In addition, or alternatively, agencies could voluntarily contribute up to 10 percent of their tax increment revenue stream to local school districts for 10 years.

We’re curious how schools outside of project areas will react to this proposal…

 

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

 

Time will tell whether there will be significant reform to the City’s historic preservation policies, but a public hearing on the subject this week ignited the debate. At the same time, the City’s existing preservation policies kept rolling along.

On Monday, the Board of Supervisors Land Use Committee held a more than three hour hearing in the Board’s main chamber on the City’s historic preservation policies and the potential need to rebalance those preservation policies with other City policies on affordable housing, transit-oriented development, etc. Supervisor Wiener commenced the hearing with a presentation by the Planning Department. Early on, it became clear that it would be difficult to discern the many smaller issues within the broad penumbra of “historic preservation.”

The Planning Department noted that out of 4,900 permit applications last year, only 149 triggered a full evaluation by preservation staff and only 8 focused EIRs were prepared. While that figure seemingly indicated that few projects were being caught up in historic preservation issues each year, it didn’t tell the full story and certainly isn’t this firm’s experience. Supervisor Wiener emphasized that this figure doesn’t include projects that either get withdrawn or never proposed due to historic preservation policies. In addition, the figure fails to speak to the time and cost of completing environmental review for projects that are exempt from environmental review (yes, even a project that would be considered by most people clearly not an important historic resource and therefore exempt from review – i.e. CEQA doesn’t apply at all – often has to go through many months of costly analysis and delay to be absolutely, positively, 100% sure that, yes, in fact, it is exempt). A number of homeowners who have experienced this process commented on the difficulty and cost of renovating their homes. A documentary filmmaker, who has produced documentaries on historic preservation, told his story about buying a dilapidated home in San Francisco with his wife (a schoolteacher) and in-laws, only to have spent $65,000 – a quarter of their construction budget – dealing with historic preservation review and neighborhood appeals of his building permits for historic preservation reasons.

One thing became clear from the hearing: “historic preservation” is so broad a category that each person has their own view of what the hearing was about. While no one is arguing against the importance of historic preservation and the need for landmarking important buildings, many spoke as if the ferry building was proposed for demolition. Others spoke about ethnic representation in historic surveys. One speaker said we needed more historic preservation protection immediately after a speaker told the story of being unable to seismic on his building because he had to spend $11,000 on historic preservation review. As this discussion progresses, it is clear that a more targeted debate needs to occur. No one is attacking the need for historic preservation. However, many do find problems with the way the City is currently conducting historic review on projects large and small.

In the end, there was significant discussion of CEQA-related issues with historic preservation as well as the need to re-think the historic survey process – both important areas to focus on in future discussions.

Just two days after the hearing, the Historic Preservation Commission heard a presentation from the Planning Department about the recently-completed Inner Mission North Historic Survey. The survey assessed over 2,000 properties, and resulted in at least 811 properties being designated as a historic resource and 13 potential historic districts being identified. While many were quick to point out at Monday’s hearing that a survey doesn’t automatically designate a property or district as historic, these findings will have a significant result on the CEQA review process for these properties. To see the survey results, go to http://mytinyurl.com/fxjjsy4ntp.

Supervisor Wiener’s hearing could be a turning point in the City’s development of historic preservation policies. After a decade of expansion of preservation regulation, the debate now shifts to reviewing the current state of historic preservation and identifying ways that we can maintain the City’s historic character, while improving the historic review process.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

 

This week, we highlight a handful of important meetings and events for the San Francisco land use community that are scheduled for this upcoming week:

Land Use Committee Hearing on Historic Preservation – Monday at 1 p.m.

The Board of Supervisors Land Use Committee will hold a public hearing on the current state of historic preservation policies in the City and the need to balance these with other City policies, including affordable housing production and transit-oriented development. Please attend this hearing and inform the committee that historic preservation processes in the City need reform. The hearing is on Monday at 1 p.m., in Room 263 at City Hall.

Friends of City Planning Annual Event: Wednesday at 5:30 p.m.

You’re not in the know in San Francisco land use if you’re not at the annual Friends of City Planning Annual Event. FOCP is a non-profit organization made up of developers, neighborhood groups, policymakers, and others in the land use community with the purpose of funding planning activities in San Francisco outside of the Planning Department’s budget. FOCP’s annual fundraiser always attracts a large and diverse crowd, and this year’s event, “20/20 Vision for 2020 – Seeing the Future Clearly,” will highlight important projects in the coming decade that will enhance the economic vitality of San Francisco.

The event is on Wednesday, May 4, at the Julia Morgan Room and the Daniel Burnham Bar and Lounge at 465 California Street from 5:30 p.m. to 8:30 p.m. Please contact Lisa Wong at (415) 665-1150 x1 to purchase tickets or for more information.

Housing Action Coalition Annual Housing Forum – Wednesday at 7:30 a.m.

This is the must see event of the year for anyone working in the housing industry. HAC’s annual forum always provides a great state-of-the-housing-economy update, as told by San Francisco elected officials, policymakers, and industry leaders. This year’s forum “After the Fall: Stimulating New Housing Production in San Francisco” is moderated by Dan Murphy, principal of UrbanGreen Devco LLC, and will feature the following panel:

Doug Shoemaker, Director, Mayor’s Office of Housing
John Rahaim, Director, Planning Department
Cynthia Parker, President & CEO, Bridge Housing
Oz Erickson, Chairman, Emerald Fund
Dr. Ted Egan, Chief Economist, Office of the Controller

The forum is on Wednesday, May 4, at the PG&E Ballroom at 77 Beale Street. Breakfast reception goes from 7:30 a.m. to 8:30 a.m. and the panel discussion goes from 8:30 a.m. to 10 a.m. Please contact Julia Sullivan at (415) 541-9001 to purchase tickets or for more information.

Development Fee Alert: Fee Increases Go Into Effect May 1

The Planning Department is increasing development fees across the board by 3%, which will go into effect May 1. The Jobs Housing Linkage Fee and the Affordable Housing Fee, however, will not be increased. Go to http://mytinyurl.com/s4zf66tfkb for the updated fee schedule.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

 

Back in January, as one of his first acts in office, Supervisor Scott Wiener called for a hearing on the state of historic preservation process in San Francisco. Citing the potential that overly-burdensome historic preservation regulation could pose problems for affordable housing and transit-oriented developments, Wiener’s goal is to “establish an understanding of what constitutes an appropriate balance between historic preservation and other policies, including housing, parks, libraries and pedestrian safety.” The hearing has been scheduled for Monday, May 2, at 1:00 p.m. before the Land Use Committee. The hearing will be at City Hall, in room 263 on the second floor. In addition to public comment, the committee will take testimony from the Planning Department, the Municipal Transportation Agency, the Recreation and Parks Department, the Public Library and the Mayor’s Office of Housing.

The hearing comes after a decade of increased preservation awareness that has coincided with a dramatic increase in historic preservation regulation. A zenith of sorts may have been reached with the passage of Proposition J in 2008, which created a powerful new charter-level Historic Preservation Commission. The HPC has already weighed in on controversial subjects such as the North Beach Library replacement and the proposed historic designation of the entirety of Golden Gate Park.

Some view historic preservation as simply another tool to stop new development. Historic surveys have been completed on broad swaths of the City. Any designation or recognition of a building as “historic” has significant consequences: any proposed alteration or demolition of a historic building requires heightened environmental review under the California Environmental Quality Act (CEQA), increasing the time and cost of a project, irrespective of size, and seemingly irrespective of the importance of the historic resource.

Everyone can agree that historic preservation should play a role in land use decisions in the City. The question many are asking now is should historic preservation dominate over other priorities? Take, for example, the recent “Automobile Support Structures” historic survey conducted by the Planning Department. The survey will likely result in a number of low-rise automobile garages and related buildings along Van Ness Avenue being designated as historic structures. Van Ness has long been identified in the City’s General Plan as a high-density residential district, with easy access to transit options. Designating automobile support structures as historic could make it that much more difficult for the City’s stated goals for more housing along Van Ness. Is the preservation of these increasingly-obsolete structures more important than developing the City in a way that reduces automobile traffic and provides a residential base for neighborhood-serving businesses?

Supervisor Wiener’s hearing is a sign that many would like to engage in a broader discussion about the effects of preservation policies on other important policy goals of the City. Coincidentally, at its meeting yesterday, the Planning Commission certified the EIR and approved rezoning measures that will allow the demolition of the existing North Beach Library to make way for a new, state-of-the art facility (the Board of Supervisors shot down the proposed landmarking of the building late last year).

We will of course keep you posted as this important policy debate moves forward.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

 

This week the Planning Commission may have been peering into the future when it held an informational hearing on Infrastructure Financing Districts (IFDs), a public financing tool provided by state law. With Redevelopment Agencies still on life support (although seemingly upgraded from critical condition), cities are scurrying to find new ways to fund economic development activities, infrastructure improvements and affordable housing. IFDs could be one solution to these problems.

IFDs have been around for several decades but to date have been little used in San Francisco. Once established, IFDs provide funding for new infrastructure within their boundaries, including streets, sewage and water facilities, child care facilities, libraries and parks. These improvements are funded through tax increment financing, which allows a city to divert increased property taxes collected within an IFD from the city’s general fund directly towards improvements within the IFD. Bonds can be sold backed by future expected tax increment revenue, allowing a city to get a chunk of money up front to pay for improvements, instead of waiting for new taxes to come in each year. To create an IFD, both the Board of Supervisors must approve the IFD and accompanying financing plan and two-thirds of the residents of the proposed district (or of property owners if there less than 12 residents in the district) must vote to approve it.

Tax increment financing is a tool that redevelopment agencies are able to take advantage of, and the idea currently building a head of steam in the city is that IFDs could fill the void left if and when redevelopment agencies are eliminated. Recently, an IFD was created for the Rincon Hill neighborhood. The city sees this Rincon district as a test case for future IFDs to fund infrastructure improvements. The Rincon IFD is a noncontiguous area that only includes a number of undeveloped sites that are entitled or proposed for major residential towers. The Rincon IFD is expected to fund roughly $15.5 million in infrastructure improvements, while project-specific impact fees would provide another $16.5 million. Over the 30 year life of the Rincon IFD, property values are expected to increase by $2 billion. During the first few years, 100% of the incremental property tax will be diverted from the general fund, whereas only 14% will be diverted for the final 17 or so years.

In many ways IFDs can fill many of the roles of redevelopment. Within the IFD’s borders, increased property taxes can be diverted back into the district. This is especially helpful in areas where future growth is projected and area plans have recently been adopted. IFDs can make public infrastructure improvements happen faster – through the sale of bonds – and possibly more efficiently – where a developer’s contractor can construct not only in-kind improvements, but other improvements that can be funded through tax increment and impact fees. IFDs, however, cannot be created where there was once a redevelopment project area, so they will not be able to pick up where old redevelopment areas left off.

IFDs have the potential to fill part of the void left if redevelopment agencies are eliminated, but they also benefit from the fact that no finding of “blight” is required to establish an IFD – unlike redevelopment areas. IFDs have the potential to put the “future neighborhoods” of Rincon Hill, the Eastern Neighborhoods and others on a fast track to adequately serve their residents by constructing public infrastructure much faster than would be constructed without them. As the future of state assistance for economic development becomes less and less clear, San Francisco will have to continue to think creatively to pick up the slack. Expect to hear more on IFDs in the coming months and years.

SFHAC Hosts Fifth Annual Housing Summit May 4

Just another friendly reminder that the San Francisco Housing Action Coalition is holding its annual housing summit on Wednesday, May 4 from 7:30 a.m. to 10 a.m. at the PG&E Auditorium at 77 Beale Street in San Francisco. This year’s topic: “After the Fall: Stimulating New Housing Production.” Speakers include

– Oz Erickson, Chairman, Emerald Fund
– John Rahaim, Director, San Francisco Planning Department
– Dr. Ted Egan, Chief Economist, San Francisco Controller’s Office
– Doug Shoemaker, Director, Mayor’s Office of Housing
– Cynthia Parker, President and CEO, Bridge Housing
– Moderated by Dan Murphy, principal of UrbanGreen Devco LLC

Think of this as the “State of the Bay Area Housing Market” event – it’s a great event that informs on you what’s happened in the last year and what to expect this coming year. For more information on the event, go to http://sfhac.org/events or contact Julia Sullivan at Julia@sfhac.org or (415) 541-9001.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

 

In last week’s update, Daniel Frattin described the new preliminary project application (“PPA”) process and described what many believe is a fundamental problem with the new system: it simply adds more process without solving underlying problems. There is no question that most people that deal with the Planning process on a regular basis would agree that the Planning process in San Francisco (a) is too complex; (b) takes too long; and (c) is too uncertain. And of course all these factors add to the unfortunate reality that the process is too costly. It is possible that establishing the PPA process will make things more time consuming and more costly. However, there is a chance that the process will actually help. Following last week’s update, several of our readers commented both in agreement with Mr. Frattin, as well as in support of the PPA process. Today we look at some possible benefits.

The Planning process in San Francisco is very complex. Over the past decade, the Planning Code has grown substantially as an extremely active Board of Supervisors, and well-organized neighborhood groups and constituencies have driven forward all manner of new regulations. A new Charter commission has also been created (the Historic Preservation Commission). Today, the Planning Code consists of three volumes and is more than 2,000 pages. When any land use project, large or small, comes forward, it must clear this thicket of rules prior to getting building permits. Providing answers to questions from owners and developers about how the Code is applied, and how it will be interpreted given specific facts, is what many of the Planning Department staff do on a daily basis. But up until now, there really hasn’t been a formal process for planners to bring that expertise to bear by providing reliable and early advice.

For many years the Planning Department has relied on two basic processes to review projects and answer questions posed by owners and developers: the project review meeting, and the Zoning Administrator Determination Letter.

The Project Review Meeting…Past Its Prime

The project review meeting has been a mainstay of the Department for many years. A short application is filled out, a fee is paid, and an appointment made with the planners. At the project review meeting, the property owner or developer gets about an hour of face-time from two or more planners to discuss a project, ask questions and generally try to suss-out all of the major and many of the minor questions or challenges of the project. These meetings can be helpful. However, as the complexity of the Code has grown, fewer and fewer easy or reliable answers come out of these meetings. The best an owner or developer can get these days is general buy-in on the most basic zoning provisions, and then typically ends up with a “we’ll have to get back to you” message from the planners. This is again not surprising and by no means a knock on the planners: the Code is extremely complex as are the Planning Department’s policies in implementing them. It is simply impossible for a small group of planners to sit down, take a quick look at a project and give reliable, detailed and nuanced advice. So the project review meeting can only go so far. There is also no formalized process for follow up questions; it is left to the individuals on both sides after the meeting to try and get issues resolved informally, if at all. But often, the owner/developer is left with having to file an application to get any further attention from the staff and start dealing with issues directly.

The PPA tries to do what the project review meeting can’t do: provide reliable written comments from all divisions of the Planning Department and direction on a specific project after the staff has had time to review the proposal in detail. The project review meeting by design doesn’t result in any written direction from the staff. Often owner/developers follow up meetings with “minutes” they prepare to memorialize what was discussed, but because the meetings don’t ever result in final decisions, these documents are not very valuable going forward. The PPA letter could be a significant step forward. By creating a formalized process where the Planning Department takes a longer time to mull things over (60-days is a long time in the life span of a developer and a project…), the PPA letter should be able to provide clear direction and certainty for a project’s entire entitlement process where none existed before.

The ZA Written Determination – Perfect Tool For Narrow Code Questions

Another less used but important tool of the Planning Department is the Zoning Administrator Determination Letter. Planning Code Section 307(a) provides that the “Zoning Administrator shall respond to all written requests for determination regarding the classification of uses and the interpretation and applicability of the provisions of this Code.” This can be an extremely important tool in complex situations. However, it is a bit cumbersome in that it requires the owner/developer to prepare a detailed written request posing a question to the Zoning Administrator, which the ZA ultimately answers in the form of a letter. Three important things to keep in mind about the determination letter: first, it acts as kind of a precedent, is made available to the public, and therefore requires careful consideration by the Zoning Administrator and the staff before coming to any final conclusions. This can take time. Equally as important and cumbersome is that the letters are appealable to the Board of Appeals. This can pose a serious problem for a developer of a controversial project, as he is put in a position of choosing between the need for clear answers from the Zoning Administrator, and the risk of the answers themselves becoming a controversial issue and opening up an entire new front of process and complication. The determination letters also deal primarily with code issues, not Department policy or CEQA review, so they are not used to get design feedback or other non-technical project related answers.

The PPA process should provide the staff with the opportunity to answer any unclear code questions without having to initiate an entire appeal process. This brings us back to the question raised last week by Mr. Frattin: will someone try and appeal a PPA letter they don’t like? Maybe, but there should be a clear distinction between a letter that comments on a broad variety of project related issues and gives process guidance, and a narrowly crafted ZA letter designed to answer a specific code question presented by a property owner or developer. The ZA letter will still be available to resolve any specific Code interpretation issues early in the entitlement process.

Conclusion

The project review meeting and the Zoning Administrator Determination Letter will continue to have their respective places and functions as part of the new PPA process. However, neither provides a thorough overview of the entitlements a project will need, the issues likely to come up on the way, or the procedures that will apply. The project review meeting provides general verbal advice, but is informal and typically does not result in clear answers to complex questions. On the other hand, the ZA Determination gives specific advice about narrow Code questions, but generally does not give comprehensive guidance or address questions related to environmental review. The new PPA process offers at least the hope of an owner or developer getting useful, reliable, and comprehensive advice from the Department at the front end of a project proposal. Though this will not solve every problem sponsors face, it is at least a good start.

SFHAC Hosts Fifth Annual Housing Summit May 4

Well folks, it’s that time of year again. The San Francisco Housing Action Coalition is holding its annual housing summit, on Wednesday, May 4 from 7:30 a.m. to 10 a.m. at the PG&E Auditorium at 77 Beale Street in San Francisco. This year’s topic: “After the Fall: Stimulating New Housing Production.”

For more information on the event, go to http://sfhac.org/events or contact Julia Sullivan at Julia@sfhac.org or (415) 541-9001.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

On February 1st, the Planning Department started to require a Preliminary Project Assessment (“PPA”) for most new development in the City. Over the next two weeks, we’ll consider the pros and cons of this new process, which is part of the Planning Department’s efforts to improve efficiency and promote more timely and consistent review of projects. This week, we’ll describe the PPA and air concerns about its effects on the entitlement process.

What is the PPA?

The PPA is a formal process for receiving written feedback on a project. A PPA is mandatory for any new project creating six or more dwelling units, or constructing a new building or addition of 10,000 square feet or more. It must be completed before filing any environmental review or entitlement applications. Here’s how it works:

• Application – The PPA is initiated by filing a PPA application at the Planning Information Counter. The application materials are extensive; more or less all the materials included in an environmental evaluation are required for the PPA. These include plans, site plans, and construction cost estimates, among others. The application fee of $4,427 that is credited toward future environmental review and/or entitlement fees.

• Review – Once the application is submitted, it is routed to Major Environmental Analysis, Neighborhood Planning, and Citywide Policy Planning for review and comment. During this time, a project sponsor may request a 30-minute meeting with assigned planners to present and explain the proposal.

• PPA Letter – Within 60 days of receiving a PPA application, the Planning Department will issue a PPA letter. The PPA letter is intended to be a procedural roadmap that will (a) identify the required level of environmental review and technical studies needed to complete it; (b) advise the applicant of the approvals and applications required; and (c) offer coordinated feedback from all Planning Department divisions regarding environmental, design and policy issues. PPA letters will be posted on the Planning Department’s website, and Project sponsors can schedule a project review meeting with planners once the PPA is issued. The PPA letter is valid for 18 months.

You Mean I Need a Permit to File An Application?

In a word, yes. The PPA is a permission slip to file applications. Though it is hard to find fault with the goals of the PPA – to bring greater consistency and efficiency to the City’s notoriously convoluted and unpredictable development review regime – it is easy to wonder if yet another process is the right way to achieve them. Process has a way of taking on a life of its own in San Francisco’s hyper-political land use arena. Pressure for public input and notice is ubiquitous. San Francisco’s numerous and committed opponents of development will undoubtedly want their voices heard in the PPA process. Although PPA letters are not supposed to be subject to appeal, sophisticated opponents may nonetheless petition the Board of Appeals to take jurisdiction over them. Jurisdiction requests could trigger public hearings on a project-before applications are even submitted.

A PPA letter is supposed to be issued within 60 days of application submittal, but there is no clear remedy if the Planning Department fails to respond within the time limit. Can applications be submitted if the time limit has elapsed without response or will applications be refused?

This is a key concern, since statutory time limits for reviewing applications are routinely exceeded. In the recent past, just getting an application assigned to a planner has taken longer than it should to complete the entire environmental review process. CEQA requires applications to be reviewed for completeness within 30 days of submittal. The City then has 30 days from application completion to determine whether a project is exempt from environmental review, 180 days to prepare a negative declaration, or a year to certify an EIR. Though improved management by the Planning Department and a down economy have improved review times, compliance with statutory deadlines remains the exception, not the rule.

In a sense, the PPA institutionalizes non-compliance with CEQA time limits. Though the PPA application is equivalent to an environmental application, the only thing a project sponsor comes away with is a procedural roadmap and preliminary commentary from the Planning Department. Getting this preliminary feedback and permission to file applications will take up to 60 days, about the same amount of time as it should to complete CEQA review for many small and mid-sized projects. This kind of feedback is already available quickly and more affordably through project review meetings.

Though the PPA is supposed to be “valid” for 18 months, it will not necessarily provide greater certainty about outcomes or binding design feedback, nor will it protect project sponsors from subsequent changes in law or policy. If a PPA letter gives erroneous information about legal requirements for approval, the law will supersede the contents of the PPA. In other words, the burden of errors or omissions will fall on the project sponsor. As it does now, the Planning Department will continue to reassess its position on projects based on new information presented in environmental studies, opposition from neighbors, or as the Planning Commission and Historic Preservation provide policy guidance, either formally or informally.

For many projects, there will be too many unknowns for PPA letters to provide meaningful guidance. For example, the historic status of existing buildings is often the linchpin for determining both the level of environmental review and the design the Planning Department will support. Unless a building has been previously surveyed (most have not), determining historic status requires a project sponsor to submit a detailed report by a preservation architect. The Planning Department then reviews the report and decides if a building is historic. In these cases, a PPA letter will tell project sponsors that a historic report is required, something most know already. It will not, however, be able to provide meaningful guidance about the level of CEQA review until the report is completed and evaluated as part of the environmental review process. Is this feedback really worth a 60-day wait?

We Don’t Need More Process For Planning To Give Clear Direction

The lack of coordinated internal review of projects by the Planning Department is the problem the PPA is supposed to address. But a discrete new application and a 60-day hold on applications are not a solution. They create the potential for delays and will not be formally binding on the Planning Department. Rather than creating a new hurdle for sponsors, the problem can be solved by improving internal procedures, a focus on complying with statutory deadlines, and efforts to control the explosive growth in CEQA paperwork. This was the approach recommended in a 2008 management audit of the Planning Department.

Internal coordination should happen automatically whenever projects are brought to the Planning Department. Within 30-days of filing an application, the Planning Department should (a) review applications for completeness and (b) provide a comprehensive schedule for completing environmental review and entitlements within statutory time limits; and (c) provide a coordinated response from all Planning Department divisions with high-level design and policy feedback and all other applications and approvals required.

This would give project sponsors all the benefits of the PPA without creating new opportunities for delay. While unforeseen circumstances or untimely responses by project sponsors may result in delays, the time limits for completing CEQA review are attainable for even complex projects. After many years in which multi-year reviews have become the norm, all participants need a reminder that timely performance is required by CEQA. They also need real tools to achieve it. The PPA, unfortunately, appears to be neither.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

Court Finds that a “No Waiver” Clause is Waivable

Sometimes (but admittedly rarely), the law makes you chuckle. In a recent case where it was clearly looking to find the “fair” result, the California Court of Appeal for the Second District found that a provision prohibiting a waiver of rights could itself be waived by the parties’ conduct. Since most contracts contain a “no waiver, except in writing” clause, this ruling is a reminder that parties’ conduct will always be considered.

The facts involved a lease with a termination right that could be exercised upon payment of a fee. The landlord accepted $256,000 of the total termination fee of $273,000. The tenant tried to apply the security deposit to the balance of the termination fee. The landlord refused to do so, citing a provision in the lease that prohibited the application of the security deposit to rent, and demanded full payment. However, the landlord also retained tenant’s payment and claimed that tenant and breached the lease and was also obligated to pay all of the remaining rent for the balance of the term. Landlord claimed that the lease explicitly stated that acceptance of a payment less than the amount due did not waive landlord’s right to recover the balance and enforce its legal remedies.

The court refused to follow this argument. Despite the anti-waiver language, the court found that the definition of rent did not include the termination fee. Furthermore, the court noted that the provision prohibiting a waiver of rights by acceptance of a partial payment could be waived by conduct. The court went on to state that the plaintiff’s argument defied common sense, and was essentially a “Gotcha,” to which the tenant was entitled to state “No Yadon’t.” Gould v. Corinthian Colleges, Inc., 192 Cal. App. 4th 1176 (2011).

While not breaking any new legal ground, we found the case to be a good lesson that despite the language in a contract, the courts will also look to common sense and good faith conduct. One cannot rely on strict language that is inconsistent with these concepts or that unfairly penalizes a party. This is something to keep in mind in any business transaction.

Census 2010 Numbers Arrive

The numbers are starting to pour out of the 2010 Census website and we are getting our first look at the state of San Francisco’s population and housing in 2010 compared to 2000. San Francisco’s population grew from 776,733 in 2000 to 805,235 in 2010. While a “largest cities” list has yet to be released by the Census Bureau, we do know that San Francisco population has now passed Detroit (which suffered a catastrophic drop in population of 25%, with a current population of 713,777).

In terms of housing, San Francisco has added 30,415 housing units in the past decade, for a total of 376,942 units. 31,131 of those units are currently sitting vacant for a 91.7% vacancy rate (as compared to 95.1% in 2000).

Citywide, the housing stock grew by 9%. Early numbers are showing above average gains in census tracts in the Northeast Waterfront, the Financial District, Civic Center, Hayes Valley, the Mission, Upper Market, the Central Waterfront, the Bayview, Oceanview-Merced-Ingleside, and Visitacion Valley. The area with the largest housing gains, unsurprisingly, has been South of Market and Mission Bay. Several SoMa census tracks doubled and tripled in housing units in the past decade, and one census tract covering Mission Bay and areas of SoMa and Showplace Square saw a 900% increase – going from 470 to 4,281 units.

While the City has made gains over the past decade in housing stock, there is still more to do. The Association of Bay Area Governments has estimated that San Francisco needs to build over 31,000 new housing units between 2007 and 2014 just to keep up with its share of housing for the Bay Area. The Planning Commission is set to adopt a new Housing Element of the General Plan today, which is intended to put the City on the path of meeting its regional housing demand.

Supervisor Farrell’s Legislation Easing Controls on Restaurants on Upper Fillmore Passes

On Tuesday, the Board of Supervisors passed 10-0 an amendment to the City’s Planning Code that will permit new restaurants (and new bars associated with restaurants) along Fillmore Street roughly between Bush and Jackson Streets with approval from the Planning Commission. Previously, all new bars and restaurants had been prohibited in this area. “Chain” restaurants and bars will still be prohibited. The relaxing of controls on restaurants is intended to help fill a number of vacant storefronts in the area.

Supervisor Farrell sponsored the legislation, and its passage has been hailed as an early success for the new supervisor. The legislation is also a significant success for the Board as a whole, indicating that it is moving past the ideological fights of the past decade by building consensus and reaching practical solutions for the City. The San Francisco Business Times reported this week that Farrell has also predicted success for a more significant – and controversial – measure, the Mid-Market payroll tax exemption, saying, “That [Supervisors Chiu and Kim] sponsored it pretty much guarantees it will get through.” Historians may not mark 2011 as the beginning of another Era of Good Feelings, but to many San Franciscans, the cessation of partisan tension at the Board of Supervisors has been a welcome development.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

 

Oakland Passes Major Citywide Rezoning of Residential and Commercial Areas

On Tuesday, the Oakland City Council finally passed a major rezoning of all of the city’s residential and commercial zoning districts, thus capping a 2+ year process that included over 50 community meetings since the fall of 2008 and review by four different city panels. The rezoning becomes effective on April 14, and project sponsors have the option of using the old zoning or the new zoning for projects whose applications are submitted between now and then.

Prior to the rezoning, Oakland’s General Plan and Planning Code contained numerous inconsistencies in how the city’s residential and commercial zones are regulated. This has led to an overly-confusing system of land use regulations and an inefficient entitlement process. The rezoning will resolve these issues by making the General Plan and Planning Code consistent and reducing the burdens of the entitlement process.

Every residential- and commercial-zoned property in Oakland has been rezoned. Effectively, this will not constitute a major change in the type and size of development that is permitted on most of the affected properties. In most cases, the zoning has been updated to make the development controls more clear. However, some areas of the city have been identified as “grow and change” areas, where higher densities and more uses will be permitted. These areas include San Pablo Avenue, Telegraph Avenue south of Highway 24, the MacArthur corridor, Martin Luther King Way south of Children’s Hospital, Broadway south of 51st Street, International Boulevard and East 12th Street. Height limits are being established on certain major corridors in order to better relate future growth to the surrounding neighborhood. A number of last minute changes to heights and zoning were made in these areas by the City Council.

For land use professionals working in Oakland, the rezoning will make the analysis of development potential for properties in the city much easier. The rezoning proposal that went to the City Council can be found at http://mytinyurl.com/hdxz55rdt4. Note that the City Council did make some minor changes. Contact us with any questions regarding the rezoning.

Berkeley Tries Once Again to Update Downtown Area Plan, Zoning

Moving slightly north, Berkeley this week attempted to restart (a third attempt) its process to adopt a new Downtown plan, to be followed by a rezoning of the downtown area.

The Downtown plan process has been long and complicated to date. In 2009, the City Council adopted a new Downtown plan after a four year public process. The plan was subsequently rescinded in February 2010 by the City Council once a petition containing more than 9,000 signatures was organized calling on the city to send the plan to voters for approval. One of the more controversial elements of the 2009 plan was to increase height limits generally to 85 feet, with exceptions for a handful of buildings that could have reached up to 225 feet in height.

In April of 2010, the City Council adopted a new Downtown plan, and placed an advisory measure on the November ballot regarding the more controversial aspects of the plan. In November, voters approved Measure R with 64% voting in favor. The measure called for height limits to be increased to 75 feet, with exceptions for a handful of buildings that could reach up to 180 feet in height. The measure included permit streamlining provisions for projects that provide environmental, affordable housing or local hiring concessions above that required by the City code. The measure also calls for enacting green building standards and implementing a Transportation Demand Management plan to discourage car use.

This week, Berkeley published its new draft Downtown plan which incorporates both the 2010 Downtown plan and Measure R. The Planning Commission held its first hearing on the plan on Wednesday, and will spend the next two months or so working on the plan, with an eye towards approving it and sending it to the City Council at a hearing on May 18. Planning Department staff is currently drafting underlying zoning controls to be considered by the Planning Commission this summer. The City Council is expected to take up both the Downtown plan and the zoning amendments in September. At that time, Planning Department staff may also incorporate a new Streets and Open Space Improvement plan, with accompanying new development fee, into the Council’s discussion.

The 2011 Berkeley Downtown plan can be found here: http://mytinyurl.com/jrzsy09r1f.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.

 

 

One of the biggest proposed projects in the City right now is the California Pacific Medical Center (CPMC). Informational reports will be presented by the Planning Department’s staff at three separate Planning Commission hearings. The first, being held today, will cover healthcare delivery and seismic improvement issues. The second, to be held a week or two later, will cover the design of the various proposed buildings. The third will be held in May and will provide an overview of the entitlements that are being sought for the project. The Planning Commission and the Board of Supervisors will exercise significant discretion in considering the various entitlements and approvals needed, as well as the proposed development agreement.

Project Description

The Project is comprised of four medical centers in San Francisco: the California Campus (previously known as the Children’s Hospital of San Francisco), the Pacific Campus (previously known as the Pacific Presbyterian Medical Center), the Davies Campus (previously Ralph K. Davies Hospital), and the St. Luke’s Campus. Three of CPMC’s four acute-care hospitals (California, Pacific, and St. Luke’s) must be rebuilt by 2015 in order to comply with state law concerning the seismic stability of hospitals. CPMC proposes to consolidate the acute-care services currently located at the California and Pacific Campuses, and locate them at a new medical center to be constructed at Van Ness Avenue and Geary. This new Cathedral Hill Campus would include a hospital on the west side of Van Ness Avenue and a new Medical Office Building on the east side of Van Ness Avenue. The sites are bounded by Franklin Street, Post Street, Van Ness Avenue, Cedar Street, Geary Street, and Geary Boulevard.

At St. Luke’s Campus, CPMC proposes to construct a new hospital that will be located adjacent to the existing hospital tower on Cesar Chavez Street. The existing St. Luke’s hospital tower would be demolished after the new hospital is built, operational, and patients have been transferred. In a subsequent phase, a replacement medical office building would be built. CPMC also proposes to reauthorize their previously approved Conditional Use for the Davies Neuroscience Institute (aka Noe Street Medical Office Building) located at 601 Duboce Street.

Long Range Development Plan

A draft Environmental Impact Report (EIR) was published by the Planning Department on July 21, 2010 for the CPMC Long Range Development Plan (LRDP). The LRDP is CPMC’s multi-phased construction plan to meet State seismic safety requirements for hospitals (SB 1953; California Health & Safety Code 130060 et seq.) and create a 20-year framework and Institutional Master Plan for its four existing medical campuses.

Under the LRDP, at the proposed new Cathedral Hill Campus, CPMC would demolish the existing Cathedral Hill Hotel and 1255 Post Street office building and construct the proposed new Cathedral Hill Hospital, a 15-story, 555-bed hospital at the northwest corner of Van Ness Avenue and Geary Boulevard. In addition, a nine-story medical office building would be constructed at the northeast corner of Van Ness Avenue and Geary Street, across Van Ness opposite the proposed Cathedral Hill Hospital site.

The existing Cathedral Hill site consists of seven buildings. Present uses on this site include retail, nightclubs, a restaurant, residential units, and two residential hotels, all of which would be demolished. An underground pedestrian tunnel is proposed beneath Van Ness Avenue, connecting the Cathedral Hill Hospital and the medical office building. An existing medical and general office building at 1375 Sutter Street would be converted into a medical office building and be part of the Cathedral Hill Campus.

Implementation of the LRDP at the Pacific Campus would result in the decommissioning of an existing nine-story hospital building and its renovation and conversion to an ambulatory care center, construction of a new nine-story addition and new structured parking at the existing building, and renovation of other existing buildings at this campus. New development at the Davies Campus would include the construction of a new four-story Neuroscience Institute building at the corner of Noe Street and Duboce Avenue, currently occupied by a 206-space surface parking lot. A new three-story medical office building (and related parking improvements) would also be developed at the Davies Campus after demolition of the existing on-site 290-space structured parking garage at the corner of 14th and Castro Streets. Development at St. Luke’s Campus would include construction of a new five-story, 80-bed, acute-care replacement hospital at the site of the existing 3615 Cesar Chavez Street surface parking lot, and demolition of the existing 1970’s St. Luke’s Hospital tower and construction of a five-story medical office building (and related parking improvements) on this former hospital site.

CPMC would sell the California Campus after relocating that campus’s inpatient acute-care services to the new Cathedral Hill Hospital and its other services to the Pacific Campus by 2020. Some existing medical activities would continue at the California Campus in a relatively small amount of campus space that CPMC would lease back from the new property owner.

Entitlements and Approvals

CPMC would need to obtain the following entitlements and approvals from the City for the proposed LRDP: (i) San Francisco General Plan text and map amendments; (ii) General Plan referrals; (iii) San Francisco Planning Code text changes and Zoning Map changes; (iv) height limit changes; (v) lot mergers; (vi) Planned Unit Development and Conditional Use authorizations (including changes to applicable Planning Code standards, and exceptions related to building height and bulk, parking, and permitted uses at some CPMC campuses); (vii) approval of office development under Planning Code Sections 321 and 322 in accordance with Proposition M; (viii) encroachment permits; (ix) permits with the City for subsurface right-of-way use (Van Ness Avenue Tunnel and underground storage tank (Cathedral Hill)); (x) vacation and acquisition of the portion of San Jose Avenue between Cesar Chavez and 27th Streets (St. Luke’s Campus); (xi) various permits and approvals for residential conversion, (xii) streetscape improvements; and (xiii) approval by the Board of Supervisors of a Development Agreement for the project.

Draft EIR Findings

This draft EIR found that implementation of the proposed LRDP at CPMC campuses would result in significant unavoidable environmental effects related to transportation due to traffic congestion affecting intersections and public transit (project-level and cumulative impacts); air quality due to construction and operations emissions (project-level and cumulative impacts); greenhouse gas emissions due to direct or indirect project-generated emissions (cumulative impacts), and noise related to construction activities (project-level impacts).

The Planning Department is working on preparation of comments and responses to issues raised by the public regarding the draft EIR. The Department expects to complete this process and bring the final EIR to the Planning Commission for certification this summer.

Major Issues to be Resolved

A number of issues have been raised by housing activists, neighborhood groups and the California Nurses Association. The project’s opponents are seeking a smaller Cathedral Hill campus and a larger St. Luke’s campus. In order to address the housing requirements set forth in Section 243 of the Planning Code for the Van Ness Special Use District, various housing activist groups are seeking a payment of $160 million from CPMC to the City’s affordable housing fund. The California Nurses Association is presumably seeking to increase jobs and benefits for their members.

Health Care Master Plan

Avid update readers will remember that the City passed a new ordinance late last year that requires the Department of Public Health to develop a Health Care Master Plan by early 2012. After that, any changes of use to medical use consisting of 10,000 square feet of space or additions to existing medical uses consisting of 5,000 square feet of space must obtain a determination from the Planning Department that the project is consistent with the Master Plan. Clearly, many of CPMC’s projects will be required to maintain consistency with the Master Plan. Without an approved Plan, it is difficult to tell how significant a burden this requirement will be, but it does present one more hurdle that CPMC would need to overcome to fulfill its long-range plans.

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, 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.

Copyright 2011 Reuben & Junius, LLP. All rights reserved.