Last week, the Planning Department issued policy papers on four aspects of the Central SoMa Plan, clarifying the direction it is headed on these issues. As surely all readers of the Update know by now, the Central SoMa Plan is an area of South of Market bounded by Mission Street, Townsend Street 2nd Street and 6th Street that has been studied over the past 2+ years for an eventual up-zoning in 2015 with a focus on growing the job sector close to downtown (i.e., office is encouraged over housing). The Draft Central SoMa Plan was published in April 2013, with detailed information about potential rezoning and height increases.
At this point, the Draft Central SoMa Plan should be seen as a best case scenario. Or more accurately, it should be seen as a document that presents the most positive vision of a rezoning that promotes growth, with the expectation that it will be pulled in, cut back, watered down when it gets to its final passage. It should be no surprise that the political environment in San Francisco is very different now than what it was in 2013. Prop K was just passed by the votes, enshrining in policy the goal of 33% affordable housing for low and moderate income homes in all new development. The Pintrest deal blew up to such a degree that Supervisor Jane Kim has introduced emergency legislation prohibiting the conversion of industrial buildings to office, and the Planning Commission and Planning Department are both saying they want to see preservation of industrial space in projects that propose to demolish existing PDR uses.
In short, the Central SoMa Plan of 2015 won’t just differ from the Central Corridor Plan of 2013 in name only. Beyond these high-profile issues, we haven’t seen the new impact fee structure, whether TDRs will be incorporated into the plan, and the potential for a new Mello-Roos-type infrastructure financing district. And these four policy papers are the beginning of a more realistic version of what the Plan will ultimately look like. You can find the papers at http://sf-planning.org/index.aspx?page=2557. (Scroll down to Draft Policy Papers). Keep in mind that these document Planning’s thinking on these issues currently, they are not guaranteed to be in the final Plan. Here is the takeaway from each paper:
As discussed above, recently-passed Prop K establishes as city policy that at least 33% of the 30,000 new housing units Mayor Lee has called for by 2020 should be affordable to low and middle income households. To that end, the Central SoMa Plan could include increased affordable housing rates above the citywide 12% on-site/20% off-site or in-lieu fee. This would be similar to the increased rates in the UMU zoning district, where the amount of required affordable housing units is based upon the amount of the height increase granted by the 2009 Eastern Neighborhoods Plan. These rates ranged from 14.4% to 17.6% for on-site units or 23% to 27% for off-site units or the in-lieu fee. It should come as no surprise if these identical rates are proposed in Central SoMa, or possibly higher rates are proposed.
The policy paper also indicates the potential for creating an Infrastructure Financing District, whereby newly-developed properties would be subject to an increased property tax rate. The state legislature just amended the IFD statute this summer to allow the additional tax revenue to be put towards affordable housing.
In recent months, protection of existing PDR (industrial) space has become a major issue in the City. Supervisor Kim has enacted a moratorium on most conversions of existing PDR buildings in Central SoMa until the Plan passes. Several Planning Commissioners, as well as Planning Department staff, have indicated that some amount of PDR protection measures should be incorporated in the Central SoMa Plan. The policy paper suggests limiting the amount of space in existing PDR buildings must be maintained (or replaced in a new project if the existing building is to be demolished). Protection percentages have been recommended based on the current zoning. In sites rezoned from SALI, 0% conversion would be allowed. In the SLI district, only 50% could be converted. In Eastern Neighborhoods Mixed Use Districts, 75% could be converted. Finally, no restrictions would be placed on downtown C-3 districts.
The other proposal for PDR protection goes to the heart of what the Central SoMa Plan will ultimately be. The policy paper suggests that SALI-zoned properties located within Harrison, Bryant, 4th and 6th Streets could be left with SALI zoning. This was something that was discussed when the Western SoMa Plan first rezoned these properties to SALI (basically an industrial protection zone). However, there was no talk for several years about the potential to not rezone some SALI sites. The inclusion of this in the policy paper may mean that the Central SoMa Plan does not ultimately impact some blocks west of 4th Street.
Privately-Owned Public Open Space
Local community groups, and in particular TODCO, have been fighting to provide more public open space in the South of Market area for some time, due to the dearth of space currently available. One major component of this push is to turn the PUC-owned site in the center of the block bounded by Brannan, Bryant, 4th and 5th Streets into a new public park. The policy paper also indicates that there could be a requirement that new office developments provide some amount of publicly-accessible open space. The paper does not suggest increasing the open space requirement for office above the current 1 square foot per 50 square feet of office space. It does suggest that some amount of the required open space be made open to the public, and at an easily accessible location (which does not include a roof deck).
Community facilities include child care centers, recreation centers, job training centers, cultural and arts facilities, community health care clinics, social welfare organizations, and business support organizations. These are not currently required by the Planning Code to be provided in new projects. However, understanding the need for these types of services in a South of Market area that does not currently provide them, the Planning Department intends to encourage the production of these types of spaces. This could be done through a new impact fee or providing density bonuses to new developments in exchange for new community facility space.
One major takeaway from these policies is that those eyeing new development in the Central SoMa Plan area should assume that there will be some public benefit required above and beyond what currently exists in the Planning Code. This could be increased affordable housing, increased impact fees, requirements that PDR or non-profit space be provided or a combination of these and other benefits.
It should be noted here that San Francisco is blazing new trails once again with the previous Eastern Neighborhoods Plan and the Central SoMa Plan. A recent white paper, prepared with a grant from the Association of Bay Area Governments (ABAG), has conducted an analysis of what it calls “Public Benefit Zoning,” which can be understood as the public and private sectors capturing part of the value of an upzoning. The paper can be found here: http://ebho.org/images/Research_and_Reports/LVR-White-Paper-Full_141113.pdf. The goal over the next months and year is to ensure a balance in the Central SoMa Plan rezoning that continues to incentivize new development that will allow the public to capture some of the value created by the rezoning, and maximize the benefits to all. Stay tuned, as there will certainly be many more steps in the process before we have a final rezoning plan that everyone can rely on.
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.