At this November’s general election, the San Francisco electorate will vote on a variety of issues that concern housing, short-term rentals, development along the waterfront, and public disclosure of lobbying activities. In addition to the Mission Housing Ballot Initiative (discussed in last week’s article – July 16, Mission Housing Ballot Initiative) the following notable measures will appear on the ballot.
Expenditure Lobbyists Ordinance. The Ethics Commission placed this measure on the ballot to expand the definition of lobbyists to include “expenditure lobbyists” and reinstate the reporting of all spending aimed at influencing local legislative or administrative action. If passed, this ordinance will require individuals and businesses to register and report as “expenditure lobbyists” if they make payments totaling $2,500 per month to solicit, request or urge other persons to communicate directly with a City officer in order to influence local legislative or administrative action. Labor unions, prospective City contractors, and non-profit organizations are not exempt from these requirements.
The threshold can be met by paying for various activities, including public relations, media relations, advertising, public outreach and research to the extent used to further efforts to urge persons to communicate directly with a City officer about the drafting, enactment, defeat, approval, granting or denial of any resolution, motion, appeal, application, petition, nomination, ordinance, permit, license, entitlement to use, or contract. However, “expenditure lobbying” will not include payments made to a registered lobbyist for lobbyist services; payments made to an organization for membership dues; and payments made by a client to a representative to appear in an adjudicatory proceeding.
Expenditure lobbyists will be required to register as a lobbyist, pay a $500 registration fee, and file monthly reports disclosing, among other things, the action that the lobbyist sought to influence, the amount of payments made to influence the action, each payment of $1,000 or more, including who received the payment and a description of the consideration for which the payment was made, and campaign contributions of $100 or more.
Although this measure seeks to encourage public disclosure of lobbyists and efforts to influence local decision-making, these new regulations could impose considerable burdens on land use practitioners and non-contact lobbyists.
If passed, this measure would become operative on February 1, 2016.
Short-Term Residential Rentals. This measure, sponsored by the housing activist group Share Better SF, seeks to restrict short-term rentals in San Francisco. The regulation of short-term rentals has been a contentious topic over the past few months. On July 14, 2015, rather than supporting Supervisor Campos’s ordinance to effectively restrict short-term rentals to 60 days per year, the Board of Supervisors voted to uphold existing law and restrict “unhosted” short-term rentals to 90 days per year and allow for unlimited “hosted” short-term rentals. “Hosted” rentals are where hosts stay in the units while guests are visiting. “Unhosted” rentals are where hosts are not present in the units while guests are visiting.
If approved, this measure will cap all short-term rentals at 75 nights per year, regardless of whether the rental unit is hosted or unhosted. Conditional use approval from the Planning Commission would be required to rent a unit on a short-term basis for more than 75 days per year. If granted, the unit would have to operate as a bed and breakfast establishment. Hosting platforms like AirBnB will be required to stop listing a unit for short-term rental if the unit has been rented on a short-term basis for 75 days per year. Hosting platforms will be subject to severe penalties of up to $1,000 per day for violating these rules. Further, homeowners will be prohibited from renting their in-law units on a short-term basis.
This initiative also expands the definition of “interested parties” who can sue to enforce the City’s law. Currently, only persons who live in the same building as a short-term rental unit are deemed “interested parties” with legal standing to sue violators of the law. If passed, this measure will expand the definition of “interested party” to any person who lives within 100 feet of a unit used for short-term rental, or any housing-related non-profit organization.
San Franciscans are clearly divided over how to regulate short-term rentals. Sharing sites claim that home sharing allows homeowners to make additional income by renting units on a short-term basis. They also claim that the City benefits from increased tax revenue by way of hotel taxes paid by hosting platforms to the City. On the other hand, proponents of the measure argue that unregulated home sharing exacerbates the current “housing crisis” by removing dwelling units from the market.
If passed, this measure would become operative on January 1, 2016.
Mission Rock Development Initiative. This initiative, sponsored by the San Francisco Giants, is intended to comply with Prop B, adopted in June 2014, which prevents the City from allowing development along the San Francisco waterfront to exceed height limits that were in effect as of January 1, 2014, unless voters approve the height limit increase.
If approved, this initiative will authorize height limit increases at the 28-acre Mission Rock site, which includes Pier 48 and Seawall Lot 337, mostly used as a surface parking lot. As of January 1, 2014, and currently, the Pier 48 building height limit is 40 feet and the remainder of Mission Rock is open space with building height limits of one-story high. This measure would retain the Pier 48 height limit and Pier 48 apron as open space and limit buildings to one-story high on open space elsewhere at Mission Rock. In fact, there will be no height limit in excess of 40 feet within 100 feet of the shoreline and building heights will step down as they approach the shoreline. The measure, however, proposes height limit increases elsewhere at Mission Rock with heights ranging from 90 feet to 190 feet for office and retail uses, and 120 and 240 feet for housing.
This initiative will effectively allow the Giant’s Mission Rock development project to move forward, thereby creating new mostly rental housing, 33% of which will be affordable, eight acres of parks and open spaces, and space for a variety of uses, including restaurants, retail, commercial, production, manufacturing, artist studio, small business and non-profit uses. The project will also rehabilitate and renovate Pier 48 to historic standards.
If you recall, the San Francisco electorate voted last November to allow height limits at Forest City’s Pier 70 development to increase from 40 feet to 90 feet on some portions of the site. This is some indication that San Franciscans are receptive to development of the waterfront. However, the passage of Prop B, the withdrawn original Warriors’ arena proposal, and the voter-defeated 8 Washington project make clear that development along the waterfront is a contentious issue and the outcome rests solely in the hands of voters.
If passed, this ordinance would go into effect 10 days after the official vote count is declared by the Board of Supervisors
Legacy Business Historic Preservation Fund. As of the date of this article, this measure sponsored by Supervisors Campos, Avalos, Kim and Mar has not been officially submitted to the Department of Elections. If submitted by the deadline on July 31, 2015 and, if passed in November, this ordinance will modify the definition of “Legacy Business” and establish a Legacy Business Historic Preservation Fund which will fund grants for Legacy Businesses, and for landlords who extend leases to Legacy Businesses for terms of at least 10 years. The intent of this measure is to offer incentives for longstanding community-serving businesses to stay in San Francisco, and incentives for landlords to enter into long-term leases with such businesses.
Each year, the Small Business Commission can nominate up to 300 Legacy Businesses to receive grants. There would be no limit on the number of nominations made by the Mayor or any member of the Board of Supervisors. To qualify for a nomination, a business would have to meet three criteria:
The business has operated in San Francisco for at least 30 years with no break in operations exceeding two years or for 20 to 30 years if the Small Business Commission finds that the business significantly contributed to the history or identity of a neighborhood and it would face a significant risk of displacement;
The Historic Preservation Commission finds that the business has contributed to a neighborhood’s history or identity; and
The business is committed to maintaining the physical features or traditions that define the business, including craft, culinary, or art forms.
If nominated, the Legacy Business could receive an annual grant from the Legacy Fund equal to $500 per full-time equivalent employee, up to 100 employees. Also, any landlord who, on or after January 1, 2016, enters into a lease with a Legacy Business for a term of at least 10 years, or extends an existing lease for a term of a least 10 years, could receive a grant from the Legacy Fund for each year of the lease or each year that was added to an existing lease, equal to $4.50 per square foot, up to a maximum of 5,000 square feet.
To reflect increases in the Consumer Price Index, the grant amounts for both Legacy Businesses and landlords are intended to increase in fiscal year 2017-2018 and each second succeeding fiscal year thereafter.
If passed, this ordinance would become 10 days after the official vote count is declared by the Board of Supervisors.
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.
