The neighborhood known as “the Hub” has long been a target for development by the Planning Department. Initially included in the Market and Octavia Area Plan in 2008, the area defined by Market Street and Van Ness Avenue was envisioned as a vibrant mixed-use neighborhood. For various reasons, the redevelopment of the neighborhood never came to fruition. Now, 10 years later, the Planning Department is reevaluating its vision for the Hub and is proposing to modify its existing zoning controls.

Specifically, the Planning Department is proposing to modify the piecemealed zoning within the Hub area by creating one cohesive zoning district with consistent land use controls. The changes will be centered on flexibility for non-residential uses, more community-serving uses, lower parking requirements, and increased affordable housing.

Currently, the Hub includes two zoning districts: (1) the Downtown General Commercial District where all parcels are also within the Van Ness & Market Downtown Residential Special Use District; and (2) the Neighborhood Commercial District. Planning proposes replacing the current scheme with one zoning district comprised of consistent land use controls.

The Hub’s key land use changes would include:

• Providing flexibility for non-residential uses by exempting institutions, arts uses, public uses, and replacement of existing commercial uses from the required ratio of residential and non-residential uses; and allowing non-residential uses above the 4^th floor
• Supporting local, affordable, community-serving retail by having certain micro retail unit requirements
• Supporting arts uses by requiring public art for projects involving new buildings or the addition of 25,000 square feet; allowing projects to waive the public art fee and instead provide reduced rent for arts uses with a development agreement; and allowing FAR exemptions for developments that provide reduced rent for arts uses with development agreements
• Providing consistent and lower parking requirements
• Increasing production of affordable housing by raising height limits

In addition to modifying land use controls, the Hub’s proposed changes affect urban form and the public realm requirements.

As noted, a proposed goal is to increase the amount of affordable housing. To address this, the City is exploring raising heights on select parcels to increase their development potential. Overall, the proposed height limits will allow an addition of approximately 1,750 new units, of which about 550 are affordable, to the housing stock. In doing so, the City hopes to highlight the Hub as a center of activity and transit. The skyline heights will then be tapered to meet smaller-scaled adjacent neighborhoods.

The Hub is the high-density core of the current Market and Octavia Area Plan. Because of this, Planning has built on its initial ideas laid out in the Market and Octavia Area Plan with improvements in the Hub on select streets, alleys, and open spaces. With the recommended changes, the number of people crossing Market at Van Ness is expected to be increased by 50% at peak hour. Around 8,800 people are expected to enter and exit the Van Ness Station at peak hour.

Currently, the Hub is undergoing environmental review and the EIR draft is expected to be released in spring 2019, with final adoption anticipated for fall 2019. The Notice of Preparation is expected to be released in early May 2018.

More finalized details of the Hub will be confirmed then. Stay tuned.

 

Authored by Reuben, Junius & Rose, LLP  Attorney, Antonia Toomey

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.

This Thursday, March 22^nd, the Planning Commission will hear an informational presentation on an economic feasibility study regarding the potential for increasing the on-site inclusionary housing requirement in the Divisadero Street and Fillmore Street Neighborhood Commercial Transit Districts (NCTs).  The report on the study concludes that in the Fillmore NCT the new inclusionary housing program’s affordability levels coupled with construction costs make a typical development project infeasible.  And on the flip side, minor increases could be possible in Divisadero NCT, but not up to the total “ramping up” required by the Planning Code.  The study may pave the way for the City to ultimately adjust the affordable housing requirements in these two districts.  It provides an interesting case study.

By way of background, the City rezoned the Divisadero Street and Fillmore Street Neighborhood Commercial Districts (NCDs) to the Divisadero Street and Fillmore Street NCTs in 2015, which eliminated density limits.  The rezoning legislation pointed to an unprecedented demand for housing and rising housing costs as the catalyst for getting rid of residential density.  The goal was to find new ways to accommodate more housing units into the existing urban fabric to meet current and future demand without negatively impacting neighborhood character.  Removing density limits while keeping other development standards intact allows more housing to be put into the same size buildings, and thus enables the City to increase the potential number of units permitted without increasing the scale of the district.

As part of the inclusionary housing overhaul in July 2017, the Board of Supervisors included a provision in Section 415.6(a)(8) that requires the Planning Department and Office of the Controller to study whether a higher on-site inclusionary housing requirement is feasible in rezoned areas that meet certain criteria.  Of all the rezoning activities since January 1, 2015, only the rezoning of the Divisadero and Fillmore NCTs met the criteria for the mandatory feasibility study.

The economic feasibility study for the two districts estimated the maximum potential on-site inclusionary housing requirement that would be “economically feasible” for a typical development under current economic conditions.  The “maximum” was calculated based on the assumption that any increase in property value attributable to the rezoning would be absorbed by the on-site inclusionary requirement.  In calculating this value, the study found that there has been a significant increase in costs, and only a limited increase in prices and rents, if at all, since 2016 – an unexpected acknowledgment by the City that increased costs are making it harder to capture value from rezoning.

The study assumed that under the prior density limits, only projects under 25 units would be feasible in most cases, thus a 12% inclusionary housing requirement was applied.  Based on the study’s prototypical development projects, the number of units in the Divisadero NCT was projected to rise from 16 to 47 units for condo projects, and 53 units for apartment projects.  The Fillmore NCT was projected to grow from 21 units to 37 unit for condos and 43 units for apartments.  This would bump each of the prototypical projects into the higher inclusionary housing requirement for 25 or more units.

The study ultimately found that the Divisadero NCT could support a maximum on-site inclusionary housing requirement of 23% for ownership units and 20% to 22% for rentals, slightly higher than the current citywide inclusionary requirements of 21% for ownership units and 19% for rentals.  But most importantly, these maximums are still lower than the final citywide inclusionary housing percentages, which will ramp up annually until reaching 26% for ownership units and 24% for rentals in 2027.  The study assumed an AMI breakdown of 50% low-income, 25% moderate-income, and 25% middle-income for ownership units and 56% low-income, 22% moderate-income, and 22% middle-income for rentals.  This assumption was based on the pre-2018 AMI breakdown, which has since changed and will continue to shift annually until 2027.

Interestingly, the study concluded that the Fillmore NCT could not support additional inclusionary housing requirements.  In fact, under current market conditions, the prototypical development project in the Fillmore NCT would not be feasible even with the current citywide inclusionary requirements for projects over 25 units.

The report is clear that the study was done solely for “illustrative purposes” and that the results are only applicable to the specific prototypes and projected unit counts.  Nevertheless, the City may ultimately use the study’s findings to raise the affordable housing requirements in the Divisadero NCT District.  The report also sheds light on the fact that the study’s typical development project would not be feasible in the Fillmore NCT under current inclusionary requirements.  The practical implications of these findings are still up in the air. Stay tuned to see how this all shakes out.

 

Authored by Reuben, Junius & Rose, LLP  Attorney, Sabrina Eshaghi

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.

California’s recent passage of sweeping housing legislation has been widely reported.  Yet before the development community and public agencies have the opportunity to fully appreciate the impact of the fifteen housing measures that took effect on January 1, 2018, a second wave of legislation is already in the works.

In early January 2018, Senator Scott Wiener introduced Senate Bill No. 827 (“SB 827”).  On March 1, 2018, a revised – largely re-written – version of SB 827 was referred to the Committee on Transportation and Housing.  In its current form, SB 827 would entitle a project sponsor to a “Transit-Rich Housing Bonus” if the proposed project is within a ½ mile radius of a major transit stop or within ¼ mile of a stop on a high-quality transit corridor (i.e., a fixed-route bus service with service intervals of no more than fifteen minutes during peak commute hours), provided that it also complies with “objective” zoning standards and local inclusionary housing/unit mix requirements, among other requirements.  The Transit-Rich Housing Bonus would exempt projects from local land use controls that include:

• residential density limits;
• floor area ratios that are lower than the legislation specifies;
• parking minimums;
• height limitations that are less than those provided by SB 827; and
• zoning and design standards that limit additions onto existing structures.

The project sponsor would be required to demonstrate its entitlement to the Transit-Rich Housing Bonus by submitting a relocation assistance plan for approval by the local jurisdiction and agreeing to provide certain benefits to displaced individuals.

The most controversial aspect of SB 827 is its proposal to increase maximum height limits around transit corridors.  Parcels within ¼ mile of a qualified transit stop or transit corridor would have a height limit of not less than 85 feet unless the street width – measured from property line-to-property line – is less than 70 feet.  In that case, the height limits would be not less than 55 feet.  Where the project is within ½ mile of a qualified transit stop or corridor, the maximum height limit would be not less than 55 feet, reduced to 45 feet if the 70-foot minimum street width is not met. Projects would continue to be eligible for a density bonus, increasing potential project heights up to 105 feet.

As originally proposed, SB 827 created quite a stir.  A February 5, 2018 analysis by the San Francisco Planning Department commented that SB 827 would increase the height limits for “virtually the entire city,” because approximately 96% of parcels in the City are within ½ mile of a major transit stop or within ¼ mile of a transit corridor, as defined in SB 827 (see the Metropolitan Transportation Commission’s map of Transit Priority Project Eligible Areas (2017)).   Although most of Planning Staff’s concerns appear to have been addressed by the amendments to SB 827, the current iteration of SB 827 leaves unresolved concerns that the legislation will introduce uncertainty into zoning requirements, as changes are made – over time – to public transit routes and schedules.

We will continue to follow SB 827, as it makes its way through the legislative process.  And we will monitor other housing-related legislation that is on the horizon, including one proposal to bring back Redevelopment.

Stay tuned.

 

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

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.

A few weeks back, RJR’s Melinda Sarjapur wrote about the pending decision in the lawsuit between the State Lands Commission and the City of San Francisco over Prop. B, which requires voter approval for any waterfront project that would exceed the applicable height limit. You can read her update here.

Since then, State Lands and the City have reached a settlement. The State Lands Commission approved the settlement agreement in closed session on February 27 and published a draft of the agreement, which has yet to be formally approved by the Port Commission or the Board of Supervisors.

Under the agreement, the State Lands Commission will allow Prop. B to stand—mandating that developers win voter approval in order to exceed waterfront height limits. In exchange, the City must ensure that waterfront projects comply with the public trust doctrine.

By way of background, the common law public trust stems from ancient Roman doctrine that was adopted by the United States in its early years as a nation. The foundational premise of the doctrine is that navigable waterways and their shorelines are held in trust by a state for the people of that state. Historically, the people’s basic right to the shoreline and waterways was limited to the use of waterways for commerce, navigation, and fisheries, but it has expanded to include recreation and the preservation of lands in their natural state.

In San Francisco, trust lands from the Hyde Street Pier in the north to India Basin in the south were transferred from the State to the City in 1968 through the Burton Act, and are now held in trust by the Port Commission. Together with the Port, the Bay Conservation and Development Commission (BCDC) and the State Lands Commission ensure that use of and development upon these lands is consistent with the public trust doctrine. Practically, the public trust serves to ensure that the public is not excluded from its waterfront—meaning that any new development along the water must facilitate waterfront commerce, navigation, and/or public enjoyment and recreation.

That said, the courts have found that the public trust is flexible enough to accommodate changing public needs, and ultimately “the use of public lands for non-traditional trust purposes that are ancillary or incidental to trust uses that directly promote, do not interfere with, and are necessary for a trust use to be feasible, are generally permitted (e.g., hotels, restaurants, parking lots, and restrooms).”[1] The State Legislature and the State Lands Commission have sometimes authorized the use of public trust lands for uses not traditionally considered trust uses, “if the project taken as a whole contains major elements that are found to be consistent with trust purposes.”[2]

All that said, the settlement agreement between State Lands and the City works to prevent the public trust doctrine from getting lost in the Prop. B ballot measure process. To that end, the agreement requires that before the Board of Supervisors or the Port Commission approve any development project or substantial land use or zoning change on or affecting trust lands, such approval must include findings that the approval is consistent with the public trust.

The agreement also requires the City to propose an ordinance amending the Elections Code to require that the ballot pamphlet for a measure to approve a waterfront project, or a land use or zoning change, include the following language: the measure “involves the San Francisco waterfront, which includes sovereign lands that the state of California has legislatively granted to the City. These waterfront lands and their resources are protected by the common law public trust doctrine and the City holds them in trust on behalf of all the People of California.”

That ordinance and the settlement agreement are pending introduction and approval by the Board of Supervisors, which we expect to occur in the coming weeks.

 

Authored by Reuben, Junius & Rose, LLP  Attorney, Chloe Angelis

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

[1] BCDC Staff Recommendation on AB 1273, pg. 2.

[2] Id.

This week’s update continues our series on Central SOMA and focuses on a long-awaited milestone.  Legislation implementing the Central SOMA Plan has finally released to the public two weeks ago, and the “initiation” hearing for the legislative package is set for tomorrow at the Planning Commission.  This is the first formal step to San Francisco adopting the plan.  Planning Department staff and the City Attorney’s office have been hard at work crafting the General Plan, Planning Code, and Administrative Code amendments up for consideration, which clocks in at 491 pages—demonstrating the scope and ambition of the plan.

Instead of attempting to comprehensively summarize all legislative changes, this update highlights some key aspects of how the Central SOMA plan’s broad policy goals and the City’s long-term vision for this part of the City will be implemented.

Height increases, and new base zoning, overlay, and bulk district.

As everyone is aware, Central SOMA will increase height and loosen use restrictions on a number of parcels in the city in exchange for increased community benefits, and the legislation does just that.  As far as we can tell, the legislation maintains height increases on the parcels identified in earlier plan documents.  The legislation will also change the zoning of most of the Plan area to a new base zoning district:  Central Soma Mixed Use – Office, sure to be referred to by its acronym CMUO.  It adds an overly special use district and a new bulk district with the famous “skyplane controls” that applies to most sites upzoned to 130 feet or higher.

This approach allows the City to apply broad use controls throughout the Plan Area via the base CMUO district while locating more specific development limitations and design restrictions in the special use district and the bulk controls sections.  Municipal Code and land use regulations should be understandable to experts and laypeople alike.  Rezoning in this way should help streamline understanding of overarching use controls while segmenting the tricky and complicated bulk and special use district regulations to stand-alone sections, minimizing the need to sprinkle new rules throughout existing sections of the Planning Code where they can be hard to identify.

POPOS requirement for most large non-residential projects.

Projects proposing more than 50,000 square feet of most non-residential uses—including retail and office but not PDR—will need to provide privately owned public open space, commonly referred to as POPOS (or pay an in-lieu fee).  Although outdoor POPOS is preferred, it can be indoors also, providing welcome relief for some project sites where outdoor open space causes design headaches.  Among other design restrictions, it must be at street grade for at least 15% of the project site’s lot area, lined with “active” uses such as retail for outdoor POPOS, and feature amenities complimentary to nearby open spaces.

PDR and micro-retailers locked into medium and large projects.

Projects proposing at least 50,000 square feet of new office use are required to include PDR in the project.  The on-site amount is either 40% of the total lot area of the project (i.e. 0.4 FAR) or the replacement space required under Prop. X—whichever is greater.  Alternatively, sponsors can provide 1.5 times the required amount of PDR space off-site or preserve twice as much existing PDR space than what is required on-site.  Similarly, projects on very large development sites are required to have at least one 1,000 square foot or smaller “micro-retail” unit on the ground floor that’s directly accessible from a public right of way or POPOS.

Eating and drinking retailers with over 10 stores locked out.

The Central SOMA plan is not great news for established businesses looking to take advantage of increased retail opportunities, particularly eating and drinking retailers.  San Francisco classifies most retailers with over 10 stores worldwide as “formula retailers.”  New bars, restaurants, and cafes that also happen to be formula retailers would be prohibited in the new CMUO zoning district. All other formula retail users will need to get a Conditional Use authorization like they do now in most parts of San Francisco outside of downtown.  Formula retailers are also not allowed to occupy the 1,000 square foot or smaller “micro-retail” spaces on the larger Central SOMA project sites.

Central SOMA’s own Transferable Development Rights (“TDR”) program.

Property owners of historically significant buildings and developers of large sites within Central SOMA will need to brush up on their knowledge of San Francisco’s historic building air rights program.  The TDR program—long a staple of large-scale development and a way to preserve historic buildings in San Francisco’s downtown core—will be extended into Central SOMA.

Projects proposing over 50,000 square feet of non-residential use that received an upzoning of over 85 feet, or were rezoned from SALI or SLI with a new height limit over 85 feet, will need to purchase some TDR.  But the amount is relatively low compared to the TDR program in C-3:  only for the floor area between 3.0-to-1 and 4.25-to-1 FAR.  Sponsors can acquire TDR from either C-3 zoning districts or Central SOMA, which should open up the market somewhat and not make development over 3.0-to-1 FAR cost prohibitive. Owners of buildings in Central SOMA that are landmarked, significant, or contribute to a historic district under Articles 10 or 11, are eligible to create and sell TDR, so long as the historic building itself doesn’t exceed allowable existing floor-area ratio controls.

Impact fees and an expected Community Facilities District.

The legislation also includes two new impact fees specific to sites in Central SOMA that were upzoned by 15 or more feet or rezoned from SALI or SLI to CMUO.  One of these fees will fund cultural facilities, health clinics, and job centers, and the other will fund public transit, recreation, and open spaces.  Also, the Planning Department’s staff report notes that although this version of the legislation did not include a Central SOMA-specific Community Facilities District (aka a Mello-Roos district), it is still in the works and “expected” to be part of the final legislative package.  The impact fees and CFD will be in addition to existing fees and exactions for new development.  Considering skyrocketing construction costs, the City will need to be careful to make sure the exactions it imposes on new projects don’t inadvertently make the development it envisions too costly to build.

We will continue to track the package as it makes its way through the legislative process.

 

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

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.

With the mayoral election in June, many in the real estate industry are busy sizing up the candidates. Supervisors Breed and Kim currently serve in City Hall, so their priorities and recent legislative efforts in the development arena are well known. This week, we take a look at some of candidate Mark Leno’s positions during his lengthy service as an elected official on the Board of Supervisors (1998-2002), in the state Assembly (2002-2008), and in the Senate (2008-2016).

Though Mr. Leno’s legislative efforts are far-reaching – he sponsored bills to raise the minimum wage, promote LGBT rights, and expand tenant protections – our focus here is primarily on issues related to real estate development during Mr. Leno’s tenure as a supervisor. This is not intended to be an endorsement of any particular candidate, or, for that matter, a comprehensive review of Mr. Leno’s position on every development issue that came before him. Instead, we hope this high-level summary of his positions or votes will provide some insight into the values and priorities Mr. Leno would bring to Room 200 if elected.

Increasing Residential Density in Commercial and Manufacturing Districts.

Mr. Leno sponsored legislation to exempt residential units downtown and along the northeastern waterfront (C-3 and C-2 Districts) from FAR limits and to increase residential density limits in the same area and large areas of SoMa, Potrero Hill, and other formerly industrial parts of the City. By some estimates, this would have allowed up to 9,000 new units downtown. Ultimately, the legislation was not passed but was subsumed into area plans for Market-Octavia, Rincon Hill, Transbay, and the Eastern Neighborhoods.

Inclusionary Housing Requirements.

In 2002, then-Supervisor Leno sponsored San Francisco’s Inclusionary Housing Ordinance, which established a uniform set-aside policy for affordable housing in market-rate developments. Prior to the ordinance, the Planning Commission had the option of mandating affordable housing in residential projects requiring a conditional use, which lead to uneven results for similar projects and uncertainty in the development process. At the time, Mr. Leno’s efforts were hailed as a consensus-oriented approach, with support from SPUR, the SF Housing Action Coalition, along with some developers and affordable housing advocates. More recently, Mr. Leno supported the more divisive Proposition C in 2016, which doubled inclusionary housing requirements for most residential developments. Mr. Leno also supported Assemblymember Ting’s failed AB 915, which would have extended inclusionary requirements to bonus units under the state density bonus law. This would have effectively increased inclusionary requirements for density bonus projects.

Sustainable Transportation Infrastructure.

As a Supervisor, Mr. Leno advocated the tear-down of the Central Freeway in a series of competing ballot initiatives over a years-long period in the late 1990s. Leno also introduced the resolution to establish bike lanes on Valencia Street, which served as a model for the subsequent expansion of San Francisco’s bike network. Mr. Leno also passed legislation mandating bike parking in new commercial buildings and was an early supporter of City Car Share.

Notification Requirements for Neighborhood Commercial Districts.

Mr. Leno sponsored legislation that expanded public notice requirements for new construction, expansions to buildings, and changes of use in Neighborhood Commercial Districts. The upshot of this legislation was to put a 30-day hold on permits prior to Planning approval and expand opportunities for members of the public to appeal permits to the Planning Commission for discretionary review.

Limits on Office Development.

In 2000, San Francisco faced a situation similar to today: the amount of office space proposed exceeded what was likely to be available under its annual office cap. Competing ballot measures were proposed. Proposition K was sponsored by developers and would have loosened controls on office development by exempting certain areas from the cap, notably Mission Bay, the Port, the Presidio, and the Bayview Hunters Point Shipyard. It would have also increased impact fees and established a temporary moratorium on large office developments in the Mission and Potrero Hill. Proposition L was championed by slow-growth advocates and was supported by then Supervisor Leno. It would have exempted from the office cap a subset of the areas exempted under Proposition K, extended the moratorium on new offices to cover much of South of Market in addition to the Mission and Potrero Hill, and provided CEQA protections for industrial uses. Ultimately, both measures failed.

 

Authored by Reuben, Junius & Rose, LLP  Attorney, Daniel Frattin

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.

The deadline for San Francisco business tenants and property owners to submit either a pre-screening or compliance checklist in accordance with the Accessible Business Entrance Program is fast approaching. This Ordinance (San Francisco Ordinance No. 51-16 – Mandatory Disability Access Improvements), enacted May of 2016, amended the San Francisco Building Code to require any existing building with a public accommodation to either have all primary entries and path of travel into the building accessible by persons with disabilities or to receive from the City a determination of an equivalent facilitation, technical infeasibility or unreasonable hardship.

In response to the Ordinance, the San Francisco Department of  Building Inspection (DBI) issued Information Sheet DA-17 which has full details and steps to compliance; however as only approximately 70 properties in these two categories have responded to date, DBI is spearheading an effort to remind Property Owners and Business Tenants to identify which Category they fall into and follow through within the compliance deadlines.

It is important for Property Owners to take note that compliance requires a checklist completed by a Certified Access Specialist (CASp) or California Licensed Design Professional. In this busy development climate, this evaluation should be scheduled several months in advance of the May 2018 deadline.  If the site is found to not be in full compliance, the improvements cannot be rolled into an already existing tenant improvement permit.  DBI is requiring a separate standalone permit. Perhaps most importantly is to understand that the “path of travel into the building” includes the accessible route from public transportation and parking spaces/facilities.  Full compliance with the ordinance requires an evaluation of the sidewalk and curb.  Specifically cracks with changes in level > ½”, grates and other openings > ½”, cross slopes greater than 1:48 or slope landings exceeded 8.33% will need to be addressed.  These requirements fall under Site Arrival and involve review by the Department of Public Works (DPW).  While some exceptions may be granted for historic properties after design evaluation by the Planning Department, the path of travel to the primary entrance will not be exempted.  For Business Tenants and Property Owners engaged in lease negotiations, this is especially prescient.

Compliance Responsibility – How and When

Newly constructed buildings with a permit application (Form 1/2) dated on or after January 1, 2002, need only to submit a Pre-Screening Form.  This is a bit of a relief for the development community and all those people in new buildings that should all be ADA compliant in any case.  What we are seeing is the continued evolution of the difficult situation of trying to balance the needs of the ADA community with the practical realities presented by older buildings.

For all other buildings with public accommodation, the San Francisco Department of Building Inspection requires that the pre-screening form or compliance checklist be completed and submitted by the category deadline. When there are multiple Business Tenants with public accommodation in one building, each Tenant must submit a separate compliance checklist as well as the Property Owner.  In some circumstances, a Tenant may qualify for a waiver based on unreasonable hardship while a Property Owner may not.

As generally defined, a place of public accommodation is a business where the public will enter the building to obtain goods, and services, including but not limited to: banks, day care centers, health clubs, hotels, offices, repair shops, restaurants, retail stores, theaters, private schools, etc.  If you have questions about your fiduciary responsibilities in relation to an existing lease, please contact our firm’s transactional team.  For permit history research to identify existing compliance our permitting division can assist, as well as provide referrals to a CASp Inspector or a licensed design professional to complete and submit the official checklist:  Mandatory Disability Access Improvement Program – CATEGORY CHECKLIST COMPLIANCE FORM

Timeline for Compliance

DBI has developed four categories for compliance based on the existing conditions of a primary entrance. Category 1 and 2 properties must submit a Compliance Checklist by May 23, 2018.

Category 1:  Properties that are in full compliance with the checklist.  Additionally, many owners may be able to document compliance with the following three case examples list within DBI’s DA-17.  Our Team can assist with permit history analysis to establish if any of the following apply:

“Case A: All Primary Entries and Accessible Entrance Routes are in compliance with the requirements of the 1998 CBC, and the building or portion thereof was constructed or altered under a permit application filed prior to July 1, 1992.”

“Case B: All Primary Entries and Accessible Entrance Routes are in compliance with the requirements of the 1998 CBC or a later SFBC in effect at the time of any permit application for a Tenant improvement or other alternation, the building or portion thereof was constructed or altered under a permit application filed on or after July 1, 1992, and prior to January 1, 2002, and DBI gave final approval of the accessible entry work under the construction permit or any alternation permits.”

“Case C: All Primary Entries and Accessible Entrance Routes are in compliance with California Historic Building Code (CHBC) in effect at the time of the permit application, the building is eligible to use the CHBC, a permit application was filed on or after January 1, 1995, and DBI gave final approval of the accessible entry work under the construction permit or any alternation permits.”

Category 2:  Properties that have no steps but other barriers as identified during the compliance inspection (i.e.  non-compliant hardware, lack of maneuvering space, door opening clear width). These properties will have to submit a Building Permit Application by August 23, 2018 for review by DBI, Planning and DPW or request an extension through DBI and the Access Appeals Commission. Our team can work with your design professional or CASp Inspector to finalize many of the additional steps for submittal:

• As with Category 1, DA-17 offers case examples where an analysis of permit history may result in the identification of partial compliance or full compliance with the application of the CHBC.
• Category 2, 3, and 4 buildings must also fill out the Planning Department’s Checklist for Commercial Storefronts for Accessibility. This checklist needs to be approved at the Planning Information Counter and submitted with the Compliance Checklist.
• If the scope of work will include curb or sidewalk improvements then consultation with DPW for the required sidewalk repair and other permits prior to submittal is necessary.

Category 3:   Properties that have one step with other barriers. Checklists for this category must be on file by May 23, 2019.

Category 4:  Properties with two or more steps and other barriers. Checklists for this category must be on file by November 23, 2019.

EXEMPTIONS:

Technical Infeasibility, Unreasonable Hardship, Alternate Methods

Once a site has been evaluated and the Tenant or Property Owner can prove that the necessary barrier removal is infeasible or unreasonable, the Ordinance requires the owners provide an alternate method of ensuring that persons with disabilities can access the goods and services offered. Technical infeasibilities may be approved through DBI; Unreasonable hardship may also be approved by DBI but must also be ratified by the Access Appeals Commission.

For more information on how your property or business is affected by this ordinance, do not hesitate to contact Gillian Allen gallen@reubenlaw.com

 

Authored by Reuben, Junius & Rose, LLP  Permit Consulting Manager, Gillian Allen

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.

Closing arguments were made last Wednesday in a trial over the validity of a San Francisco ballot initiative requiring voter approval for waterfront development height increases.

In June 2014, San Francisco voters passed Prop B, requiring voter approval for any construction project on the waterfront that would exceed height limits in effect at the time.  It concerns an area encompassing about 7 ½ miles of the San Francisco waterfront along the Bay, including most of the property between Fisherman’s Wharf and India Basin, which the San Francisco Ports Commission controls in a public trust for the benefit of the people of California.

Prop B followed on the heels of the successful November 2013 “No Wall on the Waterfront” initiative that blocked the proposed 8 Washington Street development.

To date, Prop B has delayed and impacted construction of three high-visibility projects along the shoreline, including the originally-proposed Golden State Warriors’ complex on Piers 30-32 (ultimately relocated to Mission Bay); the SF Giants Mission Rock development (approved by voters in November 2015); and the Pier 70 Redevelopment Initiative (approved by voters in November 2014).

Barely one month after Prop B took effect, the State Lands Commission filed suit, claiming that the San Francisco electorate lacked legal authority to pass the initiative, and that Prop B improperly advances local land use interests over statewide concerns.  The lawsuit asserts that a 1968 law vests the autonomous Port Commission (and not City voters), with exclusive planning and management authority over the waterfront.  The Lands Commission argues that Prop B subjugates statewide interests by giving San Francisco voters the power to permanently block development at a size and scale that would maximize revenue to the Port, which is needed to maintain and preserve the waterfront – a matter of statewide interest.

The City disagrees, arguing that state law doesn’t prohibit voters from exercising the right of initiative over waterfront lands, and that Prop B advances statewide interests by, among other things, protecting views of and public access to the waterfront. The City also claims that Prop B hasn’t impeded development of projects beneficial to the public trust.

This isn’t the first challenge Prop B has seen – Tim Colen, former executive director of the Housing Action Coalition, also sued the City in a pre-election effort to invalidate Prop B.  However, that lawsuit was later dismissed by the courts.

In June 2017, Judge Suzanne Bolanos of the San Francisco Superior Court denied the City’s request to throw out the suit and allowed it to move to trial, but noted that the Commission had failed to explain how or whether Prop B’s stated intent conflicts with statewide interests.

The trial in this matter began Wednesday, January 10, and concluded last Wednesday.   No decision has yet been issued, but the court has requested proposed statements of decision be submitted by both parties by February 9^th.

 

Authored by Reuben, Junius & Rose, LLP  Attorney, Melinda Sarjapur

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.

This week’s update discusses recent legislative activity at the state level affecting housing.

Rent Control

Sacramento has been abuzz recently with machinations among California legislative leaders and housing interest groups seeking to expand rent control.  Currently, the 1995 Costa-Hawkins Rental Housing Act exempts newly constructed housing (after 1979 in San Francisco) from rent control laws and prevents cities from limiting a landlord’s ability to raise rents on a unit after a tenant moves out.

AB 1506, introduced in early 2017 and co-authored by San Francisco Assemblymember David Chiu, proposed to repeal Costa-Hawkins.  Late last week, the bill was killed in Committee.  This means that any repeal of Costa-Hawkins likely will not happen in the Legislature, and instead appears headed to the voters as a statewide ballot measure in November 2018.

Besides concerns that the expansion of rent control will suppress the construction of new housing, other unintended consequences could result.  For example, in San Francisco, the expansion of rent control could make the already-arduous process of dwelling unit merger or demolition (even if the units will be replaced) even more difficult.  When the City has approved mergers and demolitions, an important criterion is that the unit is not rent-controlled.  If rent control is expanded, the pool of units allowed to be merged or demolished could be reduced significantly.

High Density Near Transit

Policy-makers in recent years have become increasingly enamored of higher densities near public transit.  The City’s pending Central SoMa Plan is a prime example of this.  The City is seeking to increase densities along the new 4^th Street Muni extension South of Market.

Under SB 827, parcels within a half-mile of a high-connectivity transit hub — like Muni, BART, or Caltrain — will be required to have no density maximums, no parking minimums, and a minimum height limit of between 45 and 85 feet, depending on various factors, such as whether the parcel is on a larger corridor and whether it is immediately adjacent to the station. (Developers can, of course, decide to build below that height.) A local ordinance can increase that height but not go below it. SB 827 allows for many more, smaller apartment buildings, described as the “missing middle” between high-rise steel construction and single-family homes.

Projecting Housing Needs

The Regional Housing Needs Assessment (RHNA) is how California determines how much housing each local community should build.  Although it is rarely enforced, California cities and counties that do not meet their RHNA housing production requirements are in violation of state law.  Some jurisdictions have manipulated the RHNA process to lower their required housing production.

Policy-makers have become critical of the RHNA methodology, arguing that it underestimates population growth and how much housing will be needed.  Another criticism is that the RHNA allocation process needs to be standardized, is insufficiently connected to reliable data, and is highly politicized, thus giving some communities advantages when determining their required housing allocation.

SB 828 attempts to address these issues.  Its intent is to require a more data-focused, objective process and to reduce the ability of local jurisdictions to affect their RHNA allocations.  SB 828 also requires communities to begin making up for past RHNA deficits.  The hope is that these measures will help address California’s considerable housing deficit.

 

Authored by Reuben, Junius & Rose, LLP  Attorney, Thomas Tunny

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.

Reuben, Junius & Rose, LLP hopes everyone had a great holiday and New Year.  2018 looks to be another banner year with land use issues, as we look forward to the Central SoMa Plan moving forward, a new Planning Commissioner assignment, and of course many Planning Code amendments.  As usual, Reuben, Junius & Rose will continue to monitor the latest planning and development news throughout the year.  We open our 2018 newsletter series with a “Preservation Potpourri.”

Internal Revenue Code Changes to the 20% Historic Tax Credit

On December 22, 2017, President Trump signed into law the landmark $1.5 trillion tax package, titled the “Tax Cuts and Jobs Act”.  One tax credit that was amended was the federal Historic Tax Credit (“HTC”) (26 USC 47).  Enacted in 1981 during the Reagan Administration, the HTC encourages the preservation and adaptive reuse of historic and older buildings and is widely utilized by developers.  The HTC consists of two separate tax credits: 1) a 20 percent credit for the rehabilitation costs of buildings listed on or eligible for the National Register of Historic Places; and 2) a 10 percent credit for the rehabilitation of non-historic, non-residential buildings built before 1936.

The House’s version of the Tax Cuts and Jobs Act eliminated the HTC altogether.  However, the Senate, after pressure from the real estate and preservation communities, reinstated the HTC but made several amendments to it, which became law.  Originally the 20 percent tax credit could be claimed all at once in the first year the building “came into service”, i.e., once the rehabilitation was completed.  Starting in 2018, the 20 percent tax credit is spread out over five years.  In addition, the 10 percent tax was eliminated in its entirety.

This may impact developers in several ways, as many depend upon these credits to fund projects.  It could affect the ability to get financing to start construction projects with larger rehabilitation costs, as some banks provide equity financing for rehabilitation projects by taking ownership interests in entities that hold an interest in the properties or even receive the HTCs themselves.  Some developers sell the credits to larger companies, thus getting a cash infusion into the project during construction.  By spreading out the tax credit over five years, the Tax Cuts and Jobs Act has diminished the value of the tax credit by up to 17 percent.

The HTC is a popular program and has been attributed to over $131 billion in private investment, created more than 2.4 million jobs, and preserved 42,000 buildings.  Developers who utilize this credit should consult with their accountants and tax advisors to see how the modifications in the Tax Cuts and Jobs Act may impact their projects.

Updated Guidelines to the Secretary of the Interior’s Standards for the Treatment of Historic Properties issued

The Secretary of the Interior (“SOI”) has updated the Standards for the Treatment of Historic Properties with a new document that contains Illustrated Guidelines for each of the four treatments (Preservation, Rehabilitation, Restoration, and Reconstruction).  The Guidelines have not been updated in nearly 25 years and replace the last version from 1995.

The SOI’s Guidelines help inform the Planning Department when evaluating alterations to historic buildings in San Francisco.  This includes buildings regulated under Articles 10 (Individual Landmarks and Historic Districts) and Article 11 (Downtown Buildings and Conservation Districts), as well as any property reviewed under the California Environmental Quality Act (“CEQA”).  The updated Guidelines have expanded topics and address issues pertinent to San Francisco such as mid-20^th century architecture and adapting industrial interiors for office uses.  These Guidelines may be helpful when beginning a project to a historic building.   Later this year, we will look at these new standards more closely.

The updated Guidelines can be found here: https://www.nps.gov/tps/standards/treatment-guidelines-2017.pdf  

Proposed Legislation Establishing Cultural Districts in San Francisco

Finally, we close with a local ordinance that was proposed by the Board of Supervisors in late October 2017.  Supervisors Ronen, Cohen, Kim, Fewer, Sheehy, Yee and Farrell have proposed a new chapter to the Administrative Code that would create a process for establishing cultural districts throughout San Francisco (BOS File No. 17-1140).   The stated goals of the legislation are to promote the unique neighborhoods, businesses, and communities in San Francisco while protecting them from displacement.

Cultural Districts are defined as a “geographic area or location [within San Francisco] that embodies a unique cultural heritage because it contains a concentration of cultural and historic assets or culturally significant enterprise, arts, services, or businesses, or because a significant portion of its residents or people who spend time in the area or location are members of a specific cultural, community, or ethnic group.”  Five initial cultural districts are proposed: Japantown, Calle 24, SoMa Filipino, Compton Transgender, and the LGBTQ Leather Districts.  Other districts may be adopted and approved by the Board in the future.

The legislation outlines a process for proposal and adoption of cultural districts and requires reports regarding certain characteristics of the district as well as recommendations and strategies to preserve and support the culture of the district from various city agencies/commissions: the Historic Preservation Commission, Office of Economic and Workforce Development, Arts Commission, Office of Housing and Community Development, Department of Public works, Planning Department, and Human Rights Commission.   Strategies can include new zoning controls, historic districts, funding for businesses, economic development, and affordable housing, as well as new public amenities.

Since this legislation has been introduced, it is currently under review by each Department or Agency listed above, and is awaiting Committee action at the Rules Committee.  The impact of this legislation is unclear and Reuben, Junius and Rose, LLP will continue to monitor it and inform our readers when new action is taken.

 

Authored by Reuben, Junius & Rose, LLP  Attorney, Tara Sullivan

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.