New Rules on Residential Demolitions and Mergers In The Works

​Demolition of dwelling units is strictly regulated by the San Francisco Planning Code.

Current Demolition Rules

In general, residential demolition will be approved only if:

(1) A recent appraisal shows the value of the dwelling unit to be in excess of 1.3 million dollars, for a single family home, 1.9 million for a two family home, or 2.5 million for a three family home. These values are adjusted annually. If the value of the existing structure and land is equal to or greater than these amounts, the demolition is not required to undergo a Discretionary Review Hearing at the Planning Commission, unless a member of the public requests a hearing; or

(2)   the applicant provides to the Planning Department a soundness report prepared by a licensed architect, engineer, or contractor which demonstrates, according to strict Planning Department criteria, that the cost to upgrade construction deficiencies exceeds 50% of the replacement cost of the building. Replacement of foundations and certain other improvements are excluded. Structures of one or two units proposed for demolition may be approved administratively by the Planning Department staff, without a Planning Commission hearing, if the staff accepts a soundness report demonstrating that the building is not sound, according to the Planning Department criteria.   This potential avenue to demolition is very difficult to satisfy.

The Planning Department will require submittal of “Historic Resource Evaluation” for buildings built more than 50 years ago.  If a structure is deemed to be of “Historic Significance”, approval of demolition is highly unlikely.

In theory, it is possible to demolish a sound dwelling unit if the Planning Commission finds that the proposed demolition complies with sixteen criteria set forth in the Planning Code. Both the Planning Department and the Planning Commission are predisposed to disapprove demolition applications, in accordance with policies set forth in the City’s General Plan that are intended to preserve the existing stock of housing, and in particular affordable housing. An example of an applicable General Plan policy is “to conserve existing housing, to preserve cultural and economic neighborhood diversity.”

Current Merger Rules

A merger occurs when two or more legal residential units are combined into one unit, whether by installing a connecting doorway, removing a demising wall, or otherwise. As with demolitions, mergers of residential units are disfavored by the Planning Department and Planning Commission. Merger applications are decided by the Planning Commission at a Discretionary Review Hearing, in most cases. Residential units proposed for merger that exceed the values set forth above are exempt from mandatory Planning Commission Discretionary Review hearings, and can be approved administratively by Planning Department staff.

Projects that meet four out of the five criteria listed below may also be approved administratively by the Planning Department staff: (1) Removal of the unit (by merger with another unit) would eliminate only owner-occupied housing; (2) Removal of the unit and the merger of another is intended for owner occupancy;  (3) Removal of the unit will bring the building closer into conformance with the prevailing density in its immediate area and in the same zoning district; (4) Removal of the unit will bring the building closer into conformance with applicable zoning restrictions; and (5) Removal of the unit is necessary to correct design or functional deficiencies that cannot be corrected through interior alterations.

As with demolitions, the City’s General Plan policies and Planning Code restrictions strongly discourage mergers of residential units. Approval of applications for residential mergers is uncommon.

New Proposal

On July 30, 2013, Supervisor Avalos proposed legislation to amend the Planning Code to revise the criteria for residential demolitions and mergers and to standardize those criteria across zoning districts and to enhance the already strong presumption in favor of preserving existing housing.  The proposed rules would make it even harder to demolish or merge residential units:

Additional criteria for “Residential Demolition” would include:

“Whether the project increases the number of family-sized units on-site”

“Whether the project is of superb architectural and urban design, meeting all relevant design guidelines to enhance existing neighborhood character”

Additional criteria for “Residential Merger” would include:

“Whether the removal of the unit(s) will remove an affordable housing unit as defined in Section 415 of this Code or housing subject to the Rent Stabilization and Arbitration Ordinance”.

“If removal of the unit(s) removes Affordable Housing or units subject to the rent Stabilization and Arbitration Ordinance, whether replacement housing will be provided which is equal or greater in size, number of bedrooms, affordability, and suitability with children to the units being removed”.

“Whether the number of bedrooms provided in the merged unit will be equal to or greater than the number of bedrooms in the separate units” .

An application for a permit that would result in the loss of one or more dwelling units through merger or demolition is required to obtain a Conditional Use Authorization in the RTO,RTO-N, NCT, and Upper Market NCD zoning districts, as well as the loss of any residential unit above the ground floor in the C-3 (downtown) zoning district. The application for the proposed replacement building is also subject to obtaining conditional use authorization.

The proposed legislation adds “affordability” of the replacement unit to the criteria for removal of dwelling units. The legislation would establish a strong presumption in favor of preserving existing dwelling units that occupy non-conforming structures or lots.

In sum, the proposed legislation will tighten up the already stringent Planning Code restrictions on residential demolitions and mergers.  

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.