Central SoMa Plan Proposes New Ministerial Approvals for Qualified Residential Projects

On May 1st, Mayor Farrell and Supervisor Kim introduced San Francisco’s first “Housing Sustainability District”.  This legislation was made possible by California State Assembly Bill (“AB”) 73, which was sponsored by Assemblymember David Chiu and signed into law in September 2017.  The new “Central South of Market Housing Sustainability District” (“Central SoMa HSD”) will allow residential projects that meet certain standards and requirements to take advantage of a 120-day streamlined review and approval process.

Housing Sustainability Districts (“HSD”) are meant to facilitate the construction of housing in areas that are served by existing infrastructure.  They function as an overlay zoning district and provide additional controls and standardized processes for qualifying residential projects.  The intent of the HSDs are to allow project sponsors of residential projects to receive ministerial permits in return for including at least 10% of dwelling units on-site as affordable to lower income households and to pay prevailing wages or use skilled labor for the construction of the project.  In return for creating HSDs, municipalities are entitled to receive a ‘zoning incentive payment’ from the California Department of Housing and Community Development.

The new Central SoMa HSD includes all parcels within the Central SoMa Special Use District and does not change any of the height, bulk, land use, or density controls in the proposed Central SoMa Plan.  Instead, it will allow a streamlined ministerial approval.  This approval would be issued by the Planning Department within 120 days from receipt of a complete application for qualifying housing projects.  Individual projects must meet all of the following eligibility requirements below in order to qualify for entitlement under the Central SoMa HSD:

1. Projects with a height of 160 feet or less (note that 100% affordable projects qualify regardless of height);

2. The project is located in a zoning district that principally permits residential uses and does not propose less than 50 units/acre or more than 750 units/acre;

3. A majority of the project’s gross square footage must be designated for residential uses.  A project is not deemed to be for residential uses if it is infeasible for actual use as a single or multifamily residences;

4. The project must provide no less than 10% of its affordable dwelling units on-site and designate them as affordable to very low or low-income families, as defined in Section 415. Projects not subject to Section 415 must enter into a regulatory agreement with the City agreeing to provide the units on-site and restricted to very low or low-income families for at least 55 years;

5. All nonresidential uses must be principally permitted in the underlying zoning district. Therefore, if a nonresidential use requires a Conditional Use Authorization then the project is not eligible;

6. Projects that propose more than 24,999 gross square feet of office use are not eligible;

7. Projects containing a building that is designated under Article 10 or Article 11 of the Planning Code are not eligible;

8. No existing residential units can be removed, demolished, or converted to another use;

9. If the project is seeking a density bonus pursuant to California Government Code Section 65915 et. seq., it must demonstrate that it will not result in a significant shadow impact;

10. The project must comply with all Mitigation Measures in the Central SoMa Environmental Impact Report; and

11. The project must comply with all applicable zoning and adopted design review standards, including the San Francisco Urban Design Guidelines and Central SoMa Plan’s Guide to Urban Design.

In addition, if a project is proposing 75 units or more, then it must use a skilled and trained workforce to construct the project.  This threshold drops to projects of 50 or more on January 1, 2022.  If the project proposes less than 75 units, it must pay prevailing wages to all workers involved in the construction project.  This threshold drops to 49 or few units on January 1, 2022.

Projects meeting all of the above criteria are eligible for ministerial approval by the Planning Department within 120 days from receipt of a complete application.  No hearings are required for approval.  If a project would normally trigger a Large Project Authorization under Section 329 (in the Central SoMa Special Use District, those projects greater than 85 feet or involving a net addition/new construction of more than 50,000 gross square feet), those processes do not apply (i.e., no Planning Commission hearing).  Further, no requests for Discretionary Review can be accepted or heard by the Planning Commission or Board of Appeals.

The Central SoMa HSD does require that eligible projects file a Preliminary Project Assessment (“PPA”) before an application will be accepted (which is not included in the 120-day review and approval timeframe).  The purpose of the PPA process is for applicants to provide detailed evidence of eligibility compliance and to provide feedback on compliance with applicable design guidelines.  Further, all eligible projects must have an “informational hearing” before the Planning Commission within 100 days of receipt of a complete application.   Once the project is found to comply with the Central SoMa HSD requirements, the Planning Department approves the permit(s).

The Planning Department may deny a project within the Central SoMa HSD if it finds that it does not fully comply with all adopted design review standards, or that, based on substantial evidence in the record, that the project will have a specific adverse impact on the public health or safety and there is no feasible method to mitigate or avoid the impact.  Failure to meet all of the requirements of the Central SoMa HSD are also grounds for denial.  Decisions made pursuant to the Central SoMa HSD are appealable directly to the Board of Appeals within 10 days, which must decide the issue no later than 30 days after filing.  There are no opportunities for rehearings of the Board of Appeal decisions.

Projects that receive approval under the Central SoMa HSD must obtain the first site or building permit within 36 months of the Department’s issuance of a written decision.  The Planning Director must hold a hearing on the project’s status if a permit is not obtained within 36 months.  Finally, the Central SoMa SHD is effective for seven years, unless renewed by the Board of Supervisors for a term not to exceed 10 years.

How will the Central SoMa HSD impact housing development in the Central SoMa Plan Area?  Projects that meet the eligibility criteria will benefit from the 120-day streamlined review.  However, questions remain about when that time period begins, as the legislation does not define when an application is determined to be complete.  Further, projects must meet all applicable design guidelines, which are inherently subjective and could be used to stall projects.  Overall, the proposed Central SoMa HSD is a step forward that furthers the goals of former Mayor Lee: to improve and streamline the regulatory review and approval processes for housing projects.

Link to AB 73: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180AB73

Link to 18-0453: https://sfgov.legistar.com/View.ashx?M=F&ID=6229757&GUID=1B5E5740-752A-4688-8BA3-47ECFA9B7659


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.