More Office Conversion Red-Tape in SoMa Proposed

​Earlier this month, Supervisor Jane Kim introduced an interim resolution that would add at least one more layer of red tape to the office conversion process in SoMa.  The proposed resolution, which directs the Planning Department to review all office conversion applications to determine if there is existing legal or illegal residential use in the premises, will likely slow down the approval process to some degree for all office development projects in SoMa.

Proposed Interim Controls

The legislation is thought to have been prompted by the much-publicized attempt by a Market Street building owner to “convert” illegal residential and live-work units to the building’s original office use.  The legislation’s stated purpose is to address situations in which a building zoned for office use is currently being used as a residential or live-work space, and the owner seeks to reintroduce office use. However, it would likely delay all proposed office conversions in SoMa—not just those with current residential or live-work tenants.       

The resolution would prevent the Department of Building Inspection from issuing building permits for a commercial building “pending the Planning Department’s determination” that the proposed office space was not previously converted into ongoing residential use.  If the proposed office space was zoned office but is currently used as residential, the project sponsor would be required to appear in front of the Planning Commission at a public hearing and secure either Proposition M or conditional use authorization to convert to office.  Finally, the Planning Department and the Department of Building Inspection are required to conduct a study identifying all buildings in SoMa that have converted space from commercial to ongoing residential use.

Unanswered Questions Create Uncertainty for Building Owners

For building owners currently in the process of seeking Proposition M approval, or who have already secured entitlements but have not pulled building permits, the interim controls could delay the issuance of a building permit while the Planning Department confirms that the building does not have any residential use.  How long of a delay remains to be seen.  

The resolution does not direct the Planning Department to follow any single procedure to determine if a building’s office space has been converted into residential use.  Potential options include a costly and time-consuming inspection of each premises in SoMa by City employees; a building permit application search which is unlikely to identify illegal residential use; and a questionnaire submitted to building owners.  

The legislation has honorable intentions: preserving existing residential units during a housing shortage is important.  Its actual effects are more muddled though.  Building owners seeking to eliminate legal dwelling units are already subject to the Planning Code restrictions on dwelling unit removal, typically requiring approval from the Planning Commission – so the legislation would be duplicative in these situations.  The added effect of the legislation would be to require Planning Commission approval to remove illegal dwelling units.  How the Planning Commission could deny the removal of an illegal dwelling unit is anyone’s guess.  Of course, it may become clear in the coming weeks that the legislation’s sole intent is to stop or delay evictions of tenants at the Market Street building.

If the resolution is passed, the new rules would be in effect for one year only.  The proposed legislation will be heard at the Board of Supervisors’ Land Use and Economic Development Committee on Monday, November 25 at 1:30 p.m.  The hearing should provide some insight as to whether these interim controls have a chance of being adopted by the full Board of Supervisors.  We will continue to track this legislation.

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.