This week saw the introduction of two significant new housing policy measures designed to address an increasing call in the City for more housing of all types, particularly rental and affordable units. With San Francisco’s robust economic turnaround now in full swing, a major question for policy-makers has become: how do we grow not just jobs, but the housing stock, so that all these new workers have a place to live?
The first of the two proposals is from Supervisor Scott Wiener. On Tuesday at the Board of Supervisors’ weekly meeting, Supervisor Wiener introduced an aggressive measure designed to increase density generally, and encourage affordable units. The main components of the measure are as follows:
- In all zoning districts other than low-density single-family and two-unit districts, no affordable units will be counted in the density calculation for a project that proposes 20 percent affordable units on-site or as part of a tax credit project. The net effect of this measure is a 20-percent increase in density, as long as the project provides 20 percent of the units as affordable on-site units or as part of a tax credit project.
- Under current law, when a project’s density calculation results in a fractional number, the calculation is adjusted downward for purposes of determining the allowed number of units. Supervisor Wiener’s legislation would change this so the calculation is adjusted upward when the remaining fraction is one-half or greater.
- In Neighborhood Commercial zoning districts, density can be increased to the density of the nearest Residential or Residential-Commercial zoning district if that district’s density is greater than the Neighborhood Commercial district’s density.
Supervisor Wiener’s legislation follows closely on the heels of his pointed opinion piece in the San Francisco Chronicle this week, in which he strongly criticized the all-too-common reality of residential projects being slowed, downsized, or disapproved as a project goes through our contentious entitlement process. Supervisor Wiener highlighted the 1050 Valencia Street project, where the developer proposed a fully-complying project that included two affordable units on-site. During a six-year review process, the developer agreed to reduce the number of units from 16 to 12 and to add car sharing. The Planning Commission approved the project over objections by some neighbors and the adjacent Marsh Theater, and the Board of Supervisors rejected an environmental appeal.
Project opponents then appealed to the Board of Appeals, which eliminated the top story of the building. That decision reduced the number of units from 12 to 9 and thus eliminated the 2 affordable units, because 10 units is the threshold triggering affordable-unit requirements. On Wednesday night of this week, the Board of Appeals continued its issuance of a final decision to February 26, 2014.
TIC’s Under Fire
The second proposal is from Supervisor Eric Mar, concerning tenancies-in-common (TIC’s). TIC’s are a type of property ownership where two or more people have an ownership interest in a single property together, but each owner has certain exclusive rights with respect to the other. For example, two people could own a single building with two dwelling units, and each person has an exclusive right to one of the units.
TIC’s have generated some controversy in the City. Proponents argue that TIC’s benefit the City because they are a less expensive homeownership option, thereby creating greater ownership opportunities for first-time buyers. Opponents of TIC’s point out that TIC’s take rental units off the market.
Supervisor Mar’s proposal is designed to address the loss of rental units. Under his legislation, all proposals to convert rental units to TIC’s would be subject to Planning Department approval. The Planning Department would ensure that the building complies with all applicable building codes, and would track the number of conversions. While Mar says that TIC conversions are an unregulated market that needs oversight, others counter that the additional red tape may reduce the number of conversions and homeownership opportunities. In addition, it is still unclear whether Mar’s proposal is even legal. At some point, legitimate land use regulation ends, and interference with private contracts begins. A TIC is a 100% private agreement between parties, and the City must tread carefully if they want to regulate in this area. As of this writing, the ordinance language had not been released for public review.
We will continue to monitor these and other housing policy measures as they develop, and will keep readers informed of their progress.
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.