Legislation Implementing the Central SOMA Plan Released

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.