MTA Considers New Fee on Residential Developments

You heard that right. Just when 2011 was giving us signs of economic renewal, major new development fees are being considered by the City. A proposal scheduled to be heard by the Municipal Transportation Agency Board of Directors this past Tuesday would expand the existing Transit Impact Development Fee (TIDF) to apply to residential projects. Currently, the TIDF applies only to non-residential uses in the City. MTA has spent the past few years studying the issue, and has made recommendations for the new fee. These recommendations include:

• Expanding the TIDF to apply to new residential developments that include units of 1,000 square feet or greater, at $4.81 per square foot for 2+ bedroom units, at $4.14 per square foot for 1 bedroom and studio units, and $2.76 for senior housing. A reduction in the fee would be provided if parking is provided at levels lower than what is called for in the Planning Code.

• Increasing the TIDF on non-residential uses, from $1 to $4 per square foot. If the TIDF is not expanded to residential developments, MTA staff recommends that the existing TIDF be increased by roughly $3 to more than $7, depending on the use.

• MTA staff has also communicated to the MTA Board that studies will be completed soon that will justify new impact fees to offset the cost of bicycle and pedestrian improvements.

The expansion of the TIDF to residential projects is expected to generate $2 million to $5 million annually. MTA staff admitted at the Tuesday hearing that they conducted very little noticing or public outreach of the fee proposal, which was evidenced by the large and angry crowd of builders, architects and developers that testified at the hearing. In response, the MTA Board sent the item back to staff to conduct public outreach. The proposal must go through an MTA subcommittee, the MTA Board, and the Board of Supervisors (at least) before the increases become the law of the City.

We will certainly keep you posted on the proposed TIDF expansion and any other fees that the MTA takes up in the future.

California Court of Appeals Strikes Down Recent Changes to San Francisco Rent Control Ordinance

In 2008, San Francisco voters approved Proposition M, which broadened tenant protections in the City’s Rent Control Ordinance. Specifically, Prop M lists more than a dozen examples of acts of harassment which are prohibited by the Rent Control Ordinance and which would justify a decrease in rent by the Rent Board. The list includes such acts as abusing the landlord’s right of access to a rental unit, attempting to coerce the tenant to vacate the unit with offers of payment accompanied by threats or intimidation, continuing to offer payments to vacate after the tenant has notified the landlord they no longer wish to receive such offers, and interfering with a tenant’s right to privacy. Prop M also provided a civil remedy for these harassments with potential damages equal to three times the actual damages suffered and also authorized attorneys’ fees for tenants who are successful in an eviction action.

Prop M was challenged after it was passed and on February 23, in Larson v. City and County of San Francisco, the California Court of Appeal for the First Appellate District struck down many of its provisions.

Most of the listed harassments, specifically those that were not easily quantifiable, were removed from the Rent Board’s jurisdiction as a violation of the judicial powers clause of the California Constitution. The Court cited the unquantifiable nature of most of the listed harassments and stated that determining the vague type of damage that comes from such harassment is a judicial function, not appropriately within the jurisdiction of the Rent Board. The Court stated, “Thus, [those listed harassments] pose[] the precise risk the Supreme Court identified…‘of producing arbitrary, disproportionate results that magnify, beyond acceptable risks, the possibility of arbitrariness inherent in any scheme of administrative adjudication.'” A tenant can only receive a decrease in rent for those unquantifiable types of harassment by bringing a successful civil action in California Superior Court.

One type of harassment, which prohibits a landlord from continuing to offer a tenant payment to vacate when a tenant has informed the landlord they no longer wish to receive such offers, was struck down in its entirety as a violation of the First Amendment’s free speech protections, and cannot be enforced even in California Superior Court.

As a result, the only types of harassment defined by Prop M that will be within the jurisdiction of the Rent Board are (1) the interruption, termination or failure to provide housing services required by contract or law, (2) the failure to perform repairs and maintenance required by contract or law, or (3) the failure to exercise due diligence in completing repairs and maintenance once undertaken or the failure to follow appropriate industry protocols to reduce exposure to noise, building materials, toxins or molds with potentially harmful health impacts. The commission of any of these harassments will now provide a basis for the Rent Board to reduce a tenant’s rent.

Prop M’s attorneys’ fees provision for successful tenants in an eviction action (also known as unlawful detainer) was also struck down by the Court, which stated that the City had no authority to amend or add to the unlawful detainer statute – which is a state law.

Please contact us if you would like a copy of Prop M or the Court of Appeals decision.

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.

SB469 Would Require Economic Impact Study For New Big Box

At a time when many Washington politicians are rallying against government regulation and pushing to relax restrictions on businesses across the board, one California bill is swimming in the other direction. California Senator Juan Vargas, District 40 (Riverside), has introduced new big box legislation in the California Senate. SB469 would require an applicant seeking permits from a local government for a “super store” to submit an “economic and community impact analysis report” along with the application. Superstore is defined in the bill as “a single tenant retail establishment that exceeds 90,000 square feet.”

Among other things, the impact analysis report must include an assessment of the extent to which the proposed super store will capture a share of retail sales in the economic and community impact area; an assessment of how the store will affect the “supply and demand for retail space in the area” and an assessment of the number of retail jobs in the area and an analysis of whether the proposed store “will result in a net increase or decrease in employment in the economic and community impact area, and a projection of the costs of public services and public facilities that would result from construction and operation of the store”.  These are expensive and time consuming studies.  Big box stores in California are becoming increasingly difficult to permit, and if passed, SB469 will not make it any easier.

And Then There Were Two (Big Bookstores in San Francisco)

Just five months after last updating you on the big bookstore industry in San Francisco, Borders Group – the owner of Borders bookstores – declared bankruptcy last week. The move will reportedly result in 200 stores closing nationwide, with 11 closing in the Bay Area. The Borders stores at Union Square and at the Westfield Centre are expected to close, leaving Stonestown as the only remaining location in town. The Borders on King Street in Mission Bay closed in October. The Borders in Alameda will close and the location in Emeryville will remain open.

Industry analysts and brokers are bullish on the soon-to-be-vacant large retail spaces throughout the country. Many of the properties are in major markets that are relatively difficult for retailers to enter (read: San Francisco). And unique uses are being proposed: bowling alleys, gyms, supermarkets and office supply stores according to one analyst. The former Borders space on King Street was temporarily used as a Giants gift store selling World Series paraphernalia. Here’s hoping the owners of these properties can continue to find innovative – and more permanent – tenants for these unique spaces.

AB 208 Offers More Help For Stalled Subdivision And Condo Projects

In furtherance of a law enacted in 2009, Assembly Bill 208, introduced on January 31, 2011, proposes to extend the life of qualifying tentative maps and related state agency approvals until economic conditions permit the completion of stalled subdivisions and condominium projects.

Tentative Map Extension. AB 208 would automatically extend for 2 years any existing unexpired tentative map or vesting tentative map that would otherwise expire prior to January 1, 2014. To be eligible for the extension, a map must have been valid on July 15, 2009, and set to expire before January 1, 2014. The 2 year extension is in addition to any other extensions provided under state law or local ordinance, and in addition to any extension provided by AB 333 in 2009. See Cal. Govt. Code Section 66452.23.

Related State Agency Approvals Also Extended. Important for those projects receiving other state agency approvals, such as a San Francisco Bay Conservation and Development Commission (BCDC) Permit or California Coastal Commission (CCC) Coastal Development Permit, the proposed law would also extend for 2 years related state agency approvals for those projects that extend their maps under AB 208.

Local City & County Approvals Not Included. AB 208 only applies to tentative maps, vesting tentative maps and related state level approvals. The proposed law does not extend local city or county approvals or permits. Conditional Use Permits, Variances, Special Use Permits, building permits and other local approvals remain subject to local regulations with respect to expiration periods and available extensions, if any.

The Trade Off. For those projects utilizing the 2 year map extension under AB 208, there are a few tradeoffs. In order to offset any potential adverse impacts on local cities or counties from multiple extensions of tentative or vesting tentative maps, AB208 modifies Cal. Govt. Code Section 65961 by (i) reducing from 5 years to 3 years the period of time after recordation of a map during which a city or county is prohibited from imposing new conditions on a building permit if such conditions could have been imposed as conditions of the previously approved tentative or vesting tentative map, and (ii) eliminating the prohibition on a city or county imposing new local fees upon the issuance of a building permit.

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.

A case decided by the Massachusetts Supreme Court could have a devastating effect on property acquired by foreclosure if followed by the California courts. In U.S. Bank, N.A. v. Ibanez (SJC-10694), decided on January 7, 2011, the court ruled against foreclosing lenders who improperly documented their assigned mortgage interests and those who purchased the foreclosed properties.

In U.S. Bank, a mortgage was assigned “in blank” (the assignment did not specify the name of the assignee) to multiple successive lenders, eventually becoming part of a mortgage-backed security asset pool. The mortgage-backed security asset pool involved a private placement memorandum (an unsigned offer of mortgage-backed securities to potential investors) which contemplated that the mortgages would ultimately be assigned into a securitization trust agreement with U.S. Bank as the trustee of the trust. U.S. Bank then foreclosed on the property by non-judicial sale as the “owner” of the mortgage. However, the mortgage was not actually assigned to U.S. Bank and recorded until more than one year after the foreclosure sale. The Massachusetts Supreme Court held that because the assignment was not executed by U.S. Bank and recorded until after the sale, U.S. Bank did not have the requisite ownership interest of the mortgage necessary to foreclose and the foreclosure was null and void. The court stated that if, prior to the sale, there had been an executed securitization trust agreement with language authorizing present assignment, and a schedule including Ibanez’ mortgage, the foreclosure would have been valid. But U.S. Bank could not produce such an executed trust agreement, only the assignment recorded after the sale. This ruling applies retroactively, thus any purchasers of foreclosed properties in Massachusetts affected by this issue technically no longer own their properties, and title automatically reverts to the previous owner upon whom the lender foreclosed.

California is a state which operates under a non-judicial foreclosure system, similar to Massachusetts. Although this decision is not binding in California, the reasoning could be followed by California courts sometime in the near future. California courts have previously held foreclosure sales invalid due to lender’s procedural oversights. For example, in Dimock v. Emerald Properties LLC (81 Cal.App.4th 868), decided in 2000, the original trustee filed a notice of default and the lender subsequently recorded a substitution of trustee. Upon the borrower’s failure to pay according to the terms of a forbearance agreement, the lender proceeded with a foreclosure sale under the original notice of default and the original trustee. The court in Dimock held that because the substitution of trustee was recorded, the original trustee had no power to convey the property, and its deed to the new buyer at the foreclosure sale was void. The court stated that if the lender had recorded another substitution of trustee reinstating the original trustee, it could have properly proceeded with the original notice of default and foreclosure sale. Although not specifically involving a lender and it’s lack of authority to foreclose due to improper assignment, Dimock shows that a foreclosure sale can be nullified in California due to a lender’s failure to properly and timely record required documentation.

If U.S. Bank is followed in California it would cause great uncertainty as to ownership of property involved in these types of foreclosures. This case is a stark reminder to lenders who acquire their mortgage interest by assignment, to execute and record their assignments in a timely manner prior to initiating a foreclosure sale. This is especially critical in a case involving mortgage-backed securities in which multiple mortgages are assigned to different lenders throughout the process. If applicable, lenders must be sure to properly execute securitization trust agreements which include language about present assignment of the specific mortgages. If lenders fail to properly document such assignments and U.S. Bank is followed in California, those who acquire their property through foreclosure and subsequently have it taken away due to an improper sale may seek recourse against these offending lenders.

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.

Changes in South of Market Parking Requirements Considered by Planning Commission, Board of Supervisors

For some time, San Francisco has been a national leader in urban planning. Over the past few years, the city has strived to maintain that role through promoting New Urbanism and “livable city” initiatives that make it a more comfortable place to work and live. City officials, planners and public policy advocates have been increasingly emphasizing the need for dense, transit-oriented development, more pedestrian- and bike-friendly streets, and reducing traffic congestion. To that end, one of the major evolutions in the city’s Planning Code has been to move away from requiring minimum levels of parking in new developments and instead setting maximum levels of parking that can be provided. This transition began with the Rincon Hill Area Plan and was vastly expanded with the Eastern Neighborhoods Area Plan. Parking maximums now also apply to C-3 (downtown) districts.

The city is now considering changing parking minimums to maximums in the South of Market area. New legislation being considered by the Planning Commission tomorrow would expand parking maximums to South of Market Mixed Use Districts, Mission Bay Districts, M-1 districts and C-M districts. The maximum parking levels would be similar to those in neighboring Eastern Neighborhood Mixed Use and C-3 districts. Street frontage design controls would also be expanded to cover these districts and parking fees intended to discourage long-term commuter parking would be required in these districts.

In the end, the real significance of these new controls may be minimal. The Eastern Neighborhoods Area Plan eliminated most of the remaining M-1 and C-M districts in the city. If the Western SoMa area plan is ever enacted, most of the remaining South of Market Mixed Use districts would be completely overwritten. However, the new legislation further cements the fact that, moving forward, parking will increasingly be controlled by maximum limits, rather than minimum requirements.

The Impacts of “Disestablishing” Redevelopment Agencies in San Francisco

It’s amazing how things can change in a month. As we signed off for 2010, Redevelopment Agencies throughout the state were able to celebrate the holidays, reflect on the past year, and plan for the year ahead without the slightest worry that California’s 65+ year-old Redevelopment Law could be erased from the books. Fast forward just one month, and Redevelopment Agencies are literally in the fight for their life, as Governor Brown as proposed to “disestablish” the agencies as of July 1, 2011.

The biggest change that would come from ending Redevelopment, beyond the loss of the Redevelopment Agencies that administer it, would be the loss of tax increment financing (TIF) to generate funds to be used for redevelopment activities, affordable housing and infrastructure improvements. Put simply, TIF allows redevelopment agencies to collect all property taxes that are generated in a redevelopment area above the baseline of existing property taxes that were collected when the area was established. Those new funds can be used directly to fund redevelopment activities or agencies can sell bonds that are repaid by future TIF funds. If Governor Brown’s proposal succeeds, these TIF funds would be redistributed to the state this year, and to local school districts and counties in future years.

Tomorrow the Planning Commission will hold a public hearing on what exactly the disestablishment of redevelopment agencies will mean to San Francisco. In a memo to the Commission, Planning Director John Rahaim outlines the likely ramifications. Rahaim states the city’s ability to carry out revitalization plans in Mission Bay, Hunters Point Shipyard, Treasure Island, and the Transbay District will be “severely affect[ed]” by the loss of TIF funds. As a regulatory matter, Rahaim states that it is unknown whether the changes would mean the redevelopment-area-specific zoning controls would continue to apply, or if they would revert to underlying city Planning Code controls. Finally, Rahaim cites that the Planning Department currently receives around $500,000 annually from the San Francisco Redevelopment Agency to assist with the administration of redevelopment areas in the city – money that the Department will not be able to rely on if Governor Brown’s proposal goes through.

San Francisco Redevelopment Agency Director Fred Blackwell has also been extremely active in fighting back against Governor Brown’s proposal. A memo provided by his agency cites some very compelling figures to support redevelopment’s positive impact on San Francisco. According to the memo, in 2010, redevelopment projects created 3,079 construction jobs – consisting of over $21.7 million in gross earnings. Over 1,400 affordable housing units in 11 projects are currently in the redevelopment pipeline and an additional 6,000 more affordable units are being planned in the Mission Bay, Transbay, Treasure Island and Hunters Point Shipyard redevelopment areas. The likelihood of all of these units being constructed drops precipitously if the redevelopment agency is eliminated. Finally, the memo states that more than $50 million in infrastructure improvements are planned for 2011 using TIF funds generated in redevelopment areas.

Add to the all of this the fact that Governor Brown has yet to make public the details of his plan. But that hasn’t stopped this ball from moving forward. State Senate and Assembly committees have already been holding hearings on the proposal. One major question regarding the future of this proposal is whether a constitutional amendment is required – which would need the approval of voters. Boy, July 1 doesn’t seem too far away, does it?

More Encouraging Signs from City Hall

Last week we reported to you the efforts new Supervisors Wiener and Farrell were making towards land use reform. These aren’t the only new residents of City Hall that we are seeing positive signs from.

Admittedly, Mayor Ed Lee has been in office for just a month now, but what we see so far we like. First, Mayor Lee joined a group of Mayor’s from California’s largest cities to defend Redevelopment Agencies from Governor Brown’s proposed axing. To be expected, we guess. However, in his first major policy initiative of his administration, Mayor Lee initiated a proposal, designed to keep social-media-giant Twitter from leaving South of Market for the Peninsula, which would give tax incentives to businesses that relocate to the Mid-Market area. The Chronicle reports the area will cover Market Street from 11th to almost 5th Street, in addition to an adjacent area in the Tenderloin. The legislation was originally discussed as a complete payroll tax exemption. After consulting with Supervisors Jane Kim and David Chiu, the proposal was modified to waive the payroll tax on net new jobs created by businesses located in this area for the next six years. And who introduced this business friendly tax-incentive, Mid-Market-revitalizing legislation? New Supervisor Jane Kim. Ms. Kim is showing early on that, while in our binary political world she is considered a “progressive,” she is taking early actions to spur job growth downtown that would benefit the entire City.

Prop. J Committee: Not So Fast Commissioner Johns….

In news that reads like it’s from 2010, the Prop. J Committee has sued the city over its confirmation of Richard Johns to the Historic Preservation Commission. The committee contends that Mr. Johns does not have the qualifications required by city charter to hold the seat. The charter requires that the seat be filled by “an historian meeting the Secretary of the Interior’s Professional Qualifications Standards for history with specialized training and/or demonstrable experience in North American or Bay Area history.” Mr. Johns has already sat on the Commission for one hearing last week.

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.

Arbitration Clauses Continue to be Unenforceable in Construction Defect Cases

A recent Court of Appeal decision has continued the march against the enforceability of binding arbitration in construction defect cases involving condominium projects and other common interest developments. In Pinnacle Museum Tower Association v. Pinnacle Market Development (US) (2010) 187 Cal.App.4th 24, the Court held that even though the arbitration clause was clearly displayed on the front page of the CC&Rs and in the condominium purchase agreements, it was not enforceable against the homeowners association. This was because the homeowners association only existed through the actions of the developer, so it could not effectively “agree” to arbitration and the associated waiver of the right to jury trial. In reaching this ruling the Court relied on the decision in Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, which held that waivers of jury trial rights in contracts were not enforceable if the waiver occurred before contract execution. The Court also found that the Legislature has provided a specific set of pre-dispute procedures that must be followed before litigation, and that the Legislature allowed the parties to determine if arbitration would be binding or non-binding. (SB 800 procedures.) Finally, the Court ruled that arbitration clauses would not be enforced in individual homeowner contracts because the provisions were unconscionable, unfairly one-sided, and did not provide sufficient notice to the buyers.

The ruling in Pinnacle is consistent with a number of cases that have found arbitration clauses unenforceable against homeowners associations. Other courts have used the doctrines of unconscionability and inconsistency with California Civil Code Section 1298.7 (right of action for defect claims may not be precluded by an arbitration clause) to strike down arbitration provisions. Another case has disallowed judicial reference. Based on the many cases finding against developers and arbitration, it is difficult to imagine that any arbitration provisions would be enforceable without legislative or Supreme Court intervention.

One interesting point is that the Court seemed to leave developers with an opening to create an enforceable arbitration provision. The Court stated that because the CC&Rs could be amended by the homeowners association (in this case, the arbitration provision was not allowed to be amended) and if the language in the CC&Rs stated that the homeowners association would be deemed to accept the arbitration provision unless it was rescinded by the homeowners association, then perhaps this would be enough to show meaningful consent by the homeowners association.

The good news is that perhaps developers will receive some guidance and reconciliation of the different Court of Appeal opinions. The California Supreme Court granted review of Pinnacle on November 10, 2010. The two issues to be decided are (1) whether a homeowners association is bound by an arbitration provision in CC&Rs recorded before the association came into existence, and (2) did the Court of Appeal err by applying the unconscionability provision only to the arbitration clause, despite the requirements of the Federal Arbitration Act (favoring arbitration). Hopefully, the Supreme Court will give developers clear rules on whether CC&Rs can require arbitration of construction defect cases, since the Legislature has not done so. We will be tracking this decision.

SF Assessor’s Office Accepting Informal Review Applications

The San Francisco Assessor’s office will take applications for an “informal review” of homeowners’ requests for a property tax reduction. Owners of single family homes, residential condominiums, townhomes, or live-work units may submit an application to the Assessor prior to March 31, 2011. The Assessor will then perform an informal review to determine if the property value has declined. Taxpayers will be notified of the Assessor’s decision, and will retain the right to a formal appeal. Appeals may be filed from July 5, 2011 until September 5, 2011. Go to sfassessor.org for more information and forms.

Update on Backlog of Real Estate Tax Appeals

As we have talked about in prior updates, there is an extensive backlog of real estate tax appeals. There were approximately 6600 appeals filed for the 2010-2011 tax year. It is taking about 12-18 months for an appeal to be heard. The 2009 tax appeals are estimated to be completed around July of 2011. Once the 2009 appeals are completed, the Appeals Board will begin hearing the 2010 appeals. We understand that the Assessor’s office may be looking to help reduce this backlog by working on informal settlements of residential property appeals, which make up about 65% of all the appeals. If you would like to learn more about how these informal settlements work, or have other questions about tax appeals, please call Kevin Rose.

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.

New Supervisor Wiener To Set Public Hearing On Historic Preservation Process

Citing recent efforts by local preservationists to landmark the North Beach Library and to place an Article 10 designation on the entirety of Golden Gate Park, new Supervisor Scott Wiener called for a public hearing on the historic preservation process in San Francisco. As reported by the Chronicle, Wiener expressed to the Board “We…need to embrace historic preservation while also recognizing that historic preservation is not the only policy goal for our city.”

While historic preservation clearly has a place in a city with the size and rich history of San Francisco, historic preservation is increasingly being used by community activists and disgruntled neighbors as another tool to stop projects they simply don’t like. The attempted landmarking of the North Beach Library has been the starkest example of this trend to date. That building (considered by most to be a undistinguished, underutilized building) is proposed to be demolished to pave way for a new, state of the art library. Unfortunately for library supporters, the old building was subject to a months-long landmarking process that, if successful, would have effectively halted any new project at the site. The landmarking ordinance made it all the way to the Board of Supervisors, before being defeated by a 10-1 vote. Currently, the Historic Preservation Commission is considering a measure that would designate all of Golden Gate Park as a historic resource under Article 10 of the Planning Code. Such a designation would erect a substantial roadblock to new uses or improvements in the park.

Supervisor Wiener’s hearing will be held at the Land Use Committee at some future date. We will report back when the hearing is scheduled.

Independent Restaurants On Decline? Maybe Not In The Bay Area.

The International Council of Shopping Centers (citing data from the NPD Group) reports in their January 28, 2011 newsletter that nationwide the recession has hit independently owned restaurants hard. The overall number of restaurants in the U.S. dropped 1 percent in 2010, with a loss of 5,551 establishments. But independent restaurants drove the decline, dropping by 2 percent during the same period. The number of chain restaurants remained unchanged. Restaurant traffic has been off as well during this period, slipping 1 percent versus the comparable period the year before. But that was better than the year-over-year decline of 3 percent for the year ending in November 2009.

This may not be the case in San Francisco. Last May, Ayako Mie of the Mission Local wrote that the recession was actually spurring some restaurant innovation, especially in San Francisco’s Mission District where a number of new and interesting restaurant concepts were springing up. Check out his excellent article at http://missionlocal.org/2009/05/a-recession-time-to-open-a-restaurant-say-mission-district-entrepreneurs/. Oakland has also been a hotbed of new restaurant openings despite the recession.

That said, restaurants, especially formula retail uses (i.e. chains), face a long and expensive permitting process in San Francisco. Virtually all formula retailers (restaurants, clothing shops, coffee shops, etc.) choosing to locate outside the city’s downtown core must seek a conditional use (CU) authorization. The CU requires a time consuming public meeting, application, and public hearing process that can take many months to complete. These requirements are triggered even if one restaurant is replacing another restaurant.

Independents and mom and pop shops may also trigger a difficult CU process because of other neighborhood-specific controls, or because of neighborhood opposition (Discretionary Review, or DR). At these hearings, neighbors or other retailers on the street may object simply because they don’t like the restaurant being proposed (recall the Ike’s sandwich shop battle last year). City regulations make the tough slog for new restaurants even tougher.

Is the City getting the message? Maybe. Also-freshman-Supervisor Mark Farrell introduced legislation this week that would lift the ban on restaurants in the Upper Fillmore district. If passed, the ordinance would allow new restaurants with a CU.

So far it looks like the new faces at the Board have indeed brought some new ideas.

Richard Johns Confirmed As New Historic Preservation Commissioner

Over the objections of some in the preservation community, and with a close vote, Richard Johns was confirmed as a member of the Historic Preservation Commission by the Board of Supervisors Tuesday. Members of the preservation community had objected to Mr. Johns due to their conclusion that he did not have the requisite experience required by the City Charter. By a 6 to 5 vote, with Supervisors Chu, Cohen, Elsbernd, Farrell, Kim and Wiener in favor, the Board confirmed Mr. Johns, who will be a sitting member of the Commission at its hearing next Wednesday.

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.

The Planning Department has just announced a new pre-application process that would result in a three phase development review process for moderate- to large-sized projects. Starting February 1, all projects that propose the creation of 6 or more dwelling units or the construction of a new building or addition of 10,000 square feet or more of non-residential space must file a “Preliminary Project Assessment” application with the Planning Department and receive a response from the Department before an environmental evaluation or other development application is filed. The purpose of the PPA response letter is to provide project sponsors with up-front information on what approvals must be sought and feedback on design and other issues.

The PPA application requires much of the same information provided in an environmental evaluation application, including building plans. The PPA application and a $4,427 fee must be submitted at the Planning Information Counter at 1660 Mission Street. The fee is credited toward the fee for the first project application filed. The Planning Department will issue a PPA letter to the project sponsor within 60 days of filing the application. Only then can a project sponsor file an environmental evaluation, entitlement or building permit application. The Planning Department states that the letter is “valid for a period of 18 months.” It is unclear what has to happen within this time: a project application is filed, environmental review is complete, or an entitlement is granted.

The Planning Department’s guidance on the new three-phase development review process also states that a project description must be finalized during the environmental review phase. Further “[o]nce the project description is finalized, the applicant must file an entitlement application so that entitlement review can be coordinated with the environmental review.” The guidance goes on to say that an entitlement application must be filed prior to completion of the environmental review process.

Again, the Planning Department states its purpose in reconfiguring the development review process is to provide project sponsors with important information up-front while allowing planning staff to coordinate early in the process. One possible outcome, however, is that the new PPA application is just going to add up to 60 days to the front end of the entitlement process. Our hope is that this new PPA application in fact does make the rest of the process more efficient.

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.

With the swearing in of four new Supervisors and the re-election of David Chiu as Board president comes the re-shuffling and appointments to the important Board Committees. For those that track land use and development issues in the City, the make-up of the powerful Land Use Committee is of interest. Supervisor Eric Mar has been named chair of the Committee, and new Supervisors Malia Cohen and Scott Weiner have been named to the remaining seats.

The Land Use Committee of the Board of Supervisors is a critically important part of the land use process in San Francisco. The Committee is the “last stop” for virtually all land use and development-related ordinances that are considered by the Board of Supervisors. The Planning Commission typically holds public hearings on proposed land use ordinances after they have been introduced at the Board. After the Planning Commission hearing and recommendation, the ordinance is then sent to the Land Use Committee for at least one public hearing. Once a land use ordinance is passed out of the Committee and presented to the Full Board, the public comment process is essentially over. Matters are then voted on at the Board of Supervisors by the Full Board without further public testimony. The Committee represents the last opportunity for the public to comment on land use ordinances, and really the only opportunity for the public to comment directly to members of the Board of Supervisors during an open public hearing.

The makeup of the new Committee should allow for some interesting debates going forward. The chair of the Committee will be Eric Mar, the supervisor from District 1 who is considered a progressive. The remaining two seats on the Committee go to two of the freshmen supervisors, Malia Cohen and Scott Wiener. Malia is the supervisor for District 10, the district with by far the most developable land and includes massive projects such as Hunters Point Shipyard and Pier 70. Scott Wiener, the new supervisor in District 8, rounds out the three-member Committee. While Scott’s district certainly doesn’t have the massive development potential of District 10, it is an area with a significant number of small and moderate size infill projects, like the recently-approved mixed-use project at 2001 Market Street (housing with a Whole Foods grocery store). So while Supervisor Cohen’s district will be home to some of the largest projects in the City, Supervisor Wiener’s district will be more representative of other infill battles more typical across the City.

While both new Supervisors have been active in their respective communities (which by definition means having some involvement in land use matters), neither have significant planning or technical land use experience or backgrounds.

Malia has a background in public policy. She earned a Bachelor’s in Political Science with honors from Fisk University, and was awarded a Coro Fellowship in 2001. She earned a Master of Science in Public Policy and Management from Carnegie Mellon University. She served as Assistant Executive Director of the Hunters Point Youth Park Foundation. She serves on the Board of Directors for Emerge CA, New Leaders Council, SF Conservation Corp and The Community Leadership Academy & Emergency Response Project.

Scott has been a Deputy City Attorney in the San Francisco City Attorney’s Office where he was a litigator and represents San Francisco in court. He served as President of the Eureka Valley Promotion Association, the neighborhood association for the Castro/Upper Market. He co-founded Castro Community on Patrol, a neighborhood walking patrol comprised of volunteers dedicated to making the Castro and Duboce Triangle a safer place. Scott was a member of Mayor Newsom’s citywide Community Policing Advisory Committee. He served as treasurer and then co-chair of the board of directors of the San Francisco LGBT Community Center.

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 2010 Reuben & Junius, LLP. All rights reserved.

Governor Brown Proposes Shuttering of “Hundreds” of Redevelopment Agencies

Well our new Governor is already out of the gate, hinting this week at his plans to reshape state government. According to the Sacramento Bee, Brown’s basic plan would be to shift many state government responsibilities to local authorities. Included in the still-vague proposal is a potential move to eliminate “hundreds” of local redevelopment agencies, and shifting the tax revenue they receive to counties and schools. Considering that there are around 397 active redevelopment agencies in the state, this potential move could vastly reshape California’s planning and development landscape. This is definitely one issue to watch.

You can find the Sacramento Bee’s report here:

http://www.sacbee.com/2011/01/05/3299751/jerry-brown-pitches-a-shift-to.html

New Historic Preservation Commissioner Nominated

Richard Johns, a San Francisco attorney, was recently nominated by the Mayor to Seat 4 on the Historic Preservation Commission. If confirmed by the Board of Supervisors, Mr. Johns would replace James Buckley on the Commission.

Proposition J, the measure that created the Historic Preservation Commission, requires that the commissioner filling Seat 4 on the commission must be a historian with specialized training or experience in North American or Bay Area history. Mr. Johns has had a long and diverse career, obtaining his bachelor’s degree in English from UC Santa Barbara in 1968 and his law degree from Hastings College of Law in 1971. His recent involvement in public and community service includes serving as president of the San Francisco Museum and Historical Society and the Mayor’s Task Force on the San Francisco Mint. Mr. Johns’ legal career has included providing legal services to Bay Area businesses and restaurants and representing developers and property owners in their real estate matters. Currently, Mr. Johns is serving as Chairman of the Liquidation Oversight Committee in the bankruptcy proceedings of Coudert Brothers, the oldest international law firm in America.

Mr. Johns’ nomination was before the Board of Supervisors Rules Committee last Monday, but was delayed after being caught up in the brouhaha over the interim Mayor pick this week. If recommended for approval by the Rules Committee, the full Board of Supervisors would need to confirm his appointment.

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 2010 Reuben & Junius, LLP. All rights reserved.

Major Oakland Rezoning Passes the Planning Commission

Last night, the Oakland Planning Commission voted to recommend a major overhaul of the City’s residential and commercial zoning districts to the City Council. The Planning Commission’s action brings the 2+ year rezoning process to its final stage. The City Council’s Community and Economic Development Committee will hear the proposal at its February 8th meeting and the rezoning could be approved by the full Council by March.

As currently written, Oakland’s General Plan and Planning Code contain 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. The rezoning comes at just the right time, when the city is looking to attract new development and retailers, and to build on the momentum of new arts activities and restaurants that have set up shop in the city in recent years.

While much of the rezoning consists of “cleaning up” the existing zoning, several areas of the city’s zoning are slated for substantive changes. Identified “grow and change” areas will benefit from increased density and an expansion of permitted uses. 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. New design standards will also apply to future development.

There are too many specifics of the new rezoning to include in an email update. Please contact us if you have any questions. We’ll keep you posted as the rezoning approaches the finish line.

Oakland Keeps A’s Ballpark Hopes Alive

Within weeks after her surprise election as Mayor of Oakland, Jean Quan kept the city in the game to retain its beloved Athletics. Quan quickly signaled her support for a city-funded EIR for a new 39,000-seat ballpark at the Victory Court site, adjacent to the Oakland estuary. On Tuesday, a City Council subcommittee voted to fund the EIR, and the full City Council is expected to approve the move next Tuesday.

Odds-makers may be betting on San Jose, but if constructed on the Victory Court site, the ballpark would be the centerpiece of redeveloping the waterfront area south of downtown. The revitalized Jack London Square is adjacent to the site’s west, and the major mixed-use Oak to Ninth project is just to the east of the site. The site will also benefit from the planned improvement to the Lake Merritt channel, which connects the lake with the estuary. The improvements will create boat and fish access through the channel and upgrade paths so that walkers and bikers will be able to follow the same route on land.

Momentum may be building behind Oakland’s bid for the ballpark. San Jose has missed a recent deadline to put a measure on the March ballot to approve the use of downtown land for a ballpark. Recent reports have also indicated that Oakland’s Redevelopment Agency is in much better financial shape than San Jose’s.

It’s been a year since Bud Selig predicted the highly anticipated report on Major League Baseball’s decision on the ballpark was to become public. Those interested in the outcome have learned not to hold their breath at this point. But City officials express confidence that Oakland is still in the running. And, according to the East Bay Express, it would take three-fourth’s of MLB owners to overcome the Giants objections over the potential move to San Jose.

Kudos, Oakland, for staying in the game.

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 2010 Reuben & Junius, LLP. All rights reserved.