Lit(igation) Happens: The Long Journey Of A Small Project

While most project sponsors breathe a sigh of relief after obtaining Planning Commission approval for their project and surviving any appeals, a recent project we entitled reminds us that such approval may be just one milestone in a longer fight. Recently a small historic renovation project on Russian Hill designed to rehabilitate and restore four small landmark cottages survived a challenge in Superior Court. The case was Friends of the Landmark Filbert Street Cottages, et al vs. City and County of San Francisco (Case No. CPF-11-511263). The case upheld several important legal determinations that many projects rely on every day in the City: that building permits issued pursuant to a Conditional Use authorization are not subject to appeal to the Board of Appeals and that categorical exemptions under the California Environmental Quality Act (“CEQA”) are legally sufficient and appropriate for many preservation cases.

The project site, on Filbert Street between Polk and Larkin, contains four historic cottages that were built in 1907 and designated in 2001 as a San Francisco Landmark. The cottages have sat vacant for almost a decade and were in serious disrepair when the project sponsor purchased them and began what turned out to be a long and rigorous entitlement process. Over the next four years, the project sponsor and team worked through a myriad of complex preservation, environmental and planning issues in order to obtain entitlements in early 2010. These entitlements consisted of a Certificate of Appropriateness granted by the Historic Preservation Commission, a conditional use (“CU”) authorization granted by the Planning Commission, and a variance granted by the Zoning Administrator. There was virtually unanimous support for the project in the neighborhood (with of course one exception). As it seems with too many preservation projects, the adage “no good deed goes unpunished” certainly applies here. While the project was strongly supported by the community, including the Russian Hill Neighbors, all it takes is one holdout to cause significant delay and run up project costs. Even though none of the entitlements were ever challenged at the local level, a single project opponent hired an attorney a filed a lawsuit well after all the appeal periods and statutes of limitations had run.

One of the more interesting elements of the challenge was an attempt by the opponent to appeal the building permits which had been issued by the Department of Building Inspection (“DBI”) after the Planning Commission, HPC and ZA had all approved the project. These permits, pursuant to San Francisco Charter Section 4.106 are not appealable to the Board of Appeals because the project had received a CU. For CU projects, opponents must appeal the CU; they cannot appeal the building permits.

This seemingly clear rule was challenged and debated at length over two hearings at the Board of Appeals. The project opponent claimed that the CU did not consider the geotechnical and CEQA issues that were raised by the technical details of the building permits. The project opponent even had a geotechnical engineer produce a letter questioning the validity of the geotechnical report that was produced for the project (even though the project of course had a geotech report prepared that was never commented on during the process). Ultimately, the Board did find that the building permits issued by DBI did “match” the plans that were approved by the Planning Commission under the CU. The Superior Court agreed.

The lawsuit also focused on a related CEQA issue: were there any changes in the project following the CU approval that were reflected in the building permits that would trigger new CEQA review? First, if there was a significant enough change between the CU authorization and the building permits, the building permits would not have been issued in the first place. The same logic holds true with CEQA: if there is a significant change in the project after it is approved, new CEQA review may be required. That is a well understood CEQA rule, and the determination by the local agency or the judge becomes a factual one.

That was certainly not the case here. After comparing the plans approved by the Planning Commission with those approved by DBI, both the Board of Appeals and the Superior Court found that no changes had occurred that would trigger additional CEQA review.

We were very pleased to have had the opportunity to represent the owners and project team of 1338 Filbert Street through this long and arduous process. This case is a good example of the fact that project sponsors facing any opposition need to be prepared for an entitlement process that includes a challenge in Superior Court. Even if the challenge is frivolous, this requires careful preparation of the case and attention to the administrative record to make sure that, in the event of a lawsuit, the project not only gets approved but can survive a legal challenge.

The Update will be taking a holdiday break and will return the first week of January.  Happy Holidays.


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.

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