Thousands of homes throughout San Francisco contain a secondary studio unit or small 1-bedroom unit, which is typically rented out to the general public. Most of these units, commonly referred to as “in-law units”, violate Planning Code restrictions on residential density, as well as requirements for rear yard, open space, and off-street parking. Many in-law units also are in violation of Building Code standards for residential units. The existence of in-law units has been common knowledge for decades. However, in the absence of complaints about specific units, the City has wisely chosen to devote its limited enforcement resources to more pressing issues.
The City is now considering permitting the construction of new in-law units within the existing envelope of a residential building or auxiliary structure on the same lot in certain areas of the City. Legislation proposed by Supervisor Scott Wiener would allow construction of new in-law units in the Castro Street Neighborhood Commercial District and within 1,750 feet of the district boundaries.
The proposed legislation would authorize the Zoning Administrator to waive existing density, rear yard, open space, and off-street parking requirements in order to create new in-law units. In-law units constructed with a waiver of Planning Code requirements will be subject to the rent and other restrictions provided by the San Francisco Residential Rent Stabilization and Arbitration Ordinance if the existing building, or any existing dwelling unit in the building, is already subject to the Rent Ordinance. As required by state law, the draft ordinance has also been submitted to the California Department of Housing and Community Development. The proposed ordinance is presently pending before the Board of Supervisors Land Use and Economic Development Committee.
The proposed legislation is long overdue and stands a good chance of approval. Homeowners will support the added flexibility and potential for rental income. Tenant’s rights organizations will be supportive of a new, legal source of affordable housing. Some opposition from neighborhood groups is expected, owing to increased density and on-street parking issues.
If Supervisor Wiener’s legislation is approved, new construction of in-law units is likely to spread to other districts throughout the City.
The current draft legislation will restrict the number of in-law units to one unit per building that has no more than 10 existing units, and two in-law units per buildings that have more than 10 existing dwelling units. New in-law units will be limited to 750 sq. ft. of space. In-law units shall not be permitted to be constructed using space from an existing dwelling unit, i.e. the in-law unit must be constructed in a storage space, garage, or outbuilding.
The legislation, in its current form, does not address legalization of existing in-law housing units. Legalization could be added as the legislation proceeds through the public hearing process.
State planning and zoning laws set forth in the California Government Code have encouraged the creation of in-law units since 1983. A number of California Court of Appeals decisions from the 1990s provide broad support for property owners seeking approval of in-law units under local ordinances.
Governor Brown Vetoes AB 1229
On October 13, 2013, Governor Brown vetoed AB 1229, the bill that would have superseded the holding of Palmer v . City of Los Angeles, 175 Cal.App.4th 1396 (Second District, 2009) and allowed cities to require affordable rental housing as a condition of development. Palmer struck down such requirements as a violation of State law restrictions on rent control. San Francisco will likely retain its current fee-based form of Inclusionary Affordable Housing. A project’s eligibility to provide on-site rental units at below market rate rents will continue to be governed by Costa Hawkins Agreements, which are currently in use by the San Francisco Planning Department. Costa Hawkins Agreements with developers provide an avenue for the City to grant permission for below market rate rental units in new developments on a case by case basis, in exchange for conditional use authorization and/or variances from provisions of the Planning Code relative to rear yards, off-street parking, dwelling unit exposure, density, and the like, or where public financing is utilized for a project.
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.
