housing Archives

Appellate Court Clarifies Permit Streamlining Act’s Noticing Requirements

July 21, 2021 | Mark Loper

On the heels of the Berkeley Shellmound SB 35 decision in favor of streamlined housing, another recent Court of Appeal decision rejected a public agency’s attempts to delay a housing project under the Permit Streamlining Act (“PSA”), and clarified that a jurisdiction with permitting authority must take action within the PSA’s time limits even if the project’s public hearing notice did not specifically discuss the PSA’s “deemed approved” provision.

Overturning a 2006 decision about the level of detail necessary to trigger the PSA’s “deemed approved” requirement when a City fails to render a decision on a project within a specified time period, the Court of Appeal in late June determined that a public agency’s hearing notice did not need to specifically include a reference to the deemed approved outcome (Linovitz Capo Shores LLC et al v. California Coastal Commission, No. G058331 (Cal. Ct. App. June 25, 2021)). Instead, the Court found that the California Coastal Commission (“Coastal Commission”) failed to properly make a decision on the merits of a mobilehome housing project within the PSA’s time limits, and under the PSA the project was approved. While the fact pattern for the case is somewhat unique, it provides a lesson for local and state permitting agencies, and project sponsors dealing with jurisdictions hostile to new housing.

Owners of beachfront mobilehomes in San Clemente, Orange County, filed permits with the Coastal Commission and other permitting agencies to renovate their mobilehome park. After several years, the Coastal Commission issued individual public hearing notices for each application. The notice included a project description, the date, time, and location of the hearing, hearing procedures, and ways the public could participate. Notably, the hearing notice did not specify the deadline for the Coastal Commission to render a decision on the permits under the PSA. However, the staff report provided in bold lettering that the Coastal Commission was required to make a decision at the hearing in order to comply with the PSA, and the Commission’s legal counsel discussed the “deemed approved” deadline at the hearing itself.

At the project hearing, the sponsors agreed in principle to withdraw and re-file their applications with an amended scope, but asked the Coastal Commission to waive resubmittal fees and a resubmittal waiting period. The Commission waived the waiting period, but not the resubmittal fees, and the meeting recessed without any further comment from the project sponsors. The Commission did not take any formal action on the pending applications. The sponsors then sued the Commission, claiming in part that the projects had been deemed approved under the PSA.

Unsurprisingly, the Coastal Commission claimed that the projects were not approved for several reasons. Relevant to the PSA, according to the Commission, the requisite public notice under the PSA was never given. It claimed the hearing notice needed to include a statement that the projects would be “deemed approved” if the Commission did not act within 60 days. The Court of Appeal disagreed, interpreting the PSA to require such a statement only when an applicant itself is providing notice of a hearing under the PSA. When the permitting agency provides notice, the PSA’s time limitations can apply even if the notice does not discuss the PSA.

The Court of Appeal’s decision overturns a 2006 decision reaching the opposite conclusion. The Court did not promulgate a list of information that must be included in a public notice to trigger the PSA’s deemed approved deadlines, instead reaching a narrower conclusion that the notice provided in this case—as discussed above—complied with statutory law and constitutional due process principles.

Interestingly, the Court noted that even though the Coastal Commission did not have a legal obligation to notify the public of the upcoming PSA deadline, it did just that, both through the project’s staff report and its legal counsel’s advice to the Commission that the PSA deadline was approaching. The Court also went out of its way to note near-unanimous public support for the project, which arguably made its decision easier. Implied in the Court’s opinion is that the Commission made a simple mistake of parliamentary procedure by not taking an official action on the pending applications in front of it.

The Court did not opine on whether the Commission could legally keep the hearing open and continue it to a future date past the PSA deadline date, or adopt a motion of intent to disapprove and continue it. Both are common actions taken by permitting authorities that pro-housing activists have long claimed circumvent the intent of the PSA and cause delay to housing projects.

Increasingly, California courts are being asked to enforce the pro-housing laws passed in Sacramento in recent years, such as SB 330, the PSA, and SB 35. For example, two trial courts recently rejected anti-housing voter initiatives on the grounds they violated SB 330, either one of which could be appealed and become binding case law. We will continue to keep you up to date on major housing-related legal developments.

Authored by Reuben, Junius & Rose, LLP Attorney Mark Loper.

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.

San Francisco Housing Element Update

May 20, 2021May 20, 2021 | Jody Knight

While the Bay Area works to recover from the impacts of COVID-19 on retail and hospitality, and digital nomads slowly return to the office, the pandemic has done nothing to slow escalating home prices. The California Association of Realtors reported this week that the Bay Area’s median single-family home price exceeded $1.3 million in April, with a median price of $1.8 million in San Francisco. The City saw an increase of 5.9% from last year and 2.6% from March.

As single-family homes become increasingly out of reach for many families, the City also continues to experience a shortfall in all housing types, resulting in ongoing debate about uneven development throughout the City and the introduction of legislation at the State and local level that takes aim at single-family zoning.

On March 18, 2021, Reuben, Junius and Rose’s Tuija Catalano updated you about the upcoming RHNA (Regional Housing Needs Assessment) cycle. The update explained how the draft allocation would significantly increase the identified need for housing units in the Bay Area compared with the last RHNA cycle. Under the draft, San Francisco would see an increase from 28,869 to 82,069 units.

San Francisco has begun the process of planning for those housing units. The City’s Housing Element 2022 Update began in May 2020. The Housing Element is a component of the General Plan that is updated every eight years.

The current update focuses on social and racial equity, while it looks at how to accommodate the creation of 82,000 housing units by 2031. The plan focuses on building in State identified High Opportunity Areas, which are mainly in the western part of the City. The Planning Department has a page dedicated to the process which provides information and allows for public input.

The first draft of the Goals, Policies and Actions of the Housing Element have been identified as follows:

recognize the right to housing as a foundation for health and social and economic stability;
repair the harms of historic racial, ethnic, and social discrimination for American Indian, Black, and other People of Color;
foster racially and socially inclusive neighborhoods through distinct community strategies;
increase housing production to improve affordability for the City’s current and future residents;
increase housing choices for the City’s diverse cultural lifestyles, abilities, family structures, and income; and
promote neighborhoods that are well-connected, healthy, and rich with community culture.

On April 22, 2021, the Planning Commission conducted an informational hearing on the Draft Housing Element. Planning Staff will be engaging in outreach to further refine the policies in the plan, with a second draft anticipated by Fall 2021. The Draft Environment Impact Report is anticipated in early 2022.

At the April 22, 2021 hearing, the Planning Commission also heard the 2020 Housing Inventory and Housing Balance Reports. The City saw a 1% increase in housing stock in 2020, with most new development in SoMa, the Mission and Downtown. While 2020 was a difficult year for development because of the pandemic, the Reports illustrate how far the City has to go to meet its RHNA target, particularly on housing affordable to lower income residents.

Given the already contentious environment surrounding housing equity and the geographic distribution of new units in the City, we expect this Housing Element update to generate significant debate. However, the Plan does not change allowable land uses, heights, or density, so meeting the City’s housing needs will depend on legislative changes. We will follow and report on both as the housing debate continues.

Authored by Reuben, Junius & Rose, LLP Attorney Jody Knight.

Two Legislators Take Aim at Statewide Planning Laws

April 7, 2021April 7, 2021 | Sabrina Eshaghi

In an apparent backlash against recent housing bills, two California state legislators have introduced a constitutional amendment that would essentially revoke the state’s ability to regulate land use. If approved, this amendment would allow cities to avoid compliance with state laws aimed at increasing housing production, making it more difficult to meet the housing needs of the growing California population.

The measure was introduced by Assemblymember Muratsuchi (D-Torrance) on March 16, 2021 and co-authored by Senator Glazer (D-Contra Costa). This comes after an attempt to get a similar citizen-initiated measure on the ballot, which has not reported any required signatures to the state as of this writing. In order to qualify for the ballot, two-thirds of each legislative chamber will need to approve the constitutional amendment. That amounts to a minimum of 54 votes in the Assembly and 27 in the Senate, assuming no vacancies. The governor’s approval is not required.

The constitutional amendment itself is fairly simple. It states that city or county regulations regarding “zoning or the use of land” prevail over conflicting state laws. Limited exceptions include conflicts with state statutes involving (1) the California Coastal Act, (2) the siting of certain power generating facilities, and (3) water or transportation infrastructure projects. Transportation infrastructure projects do not include transit-oriented development projects. This amendment would apply to both charter cities and general law cities. However, in charter cities, courts would determine whether a local ordinance that conflicts with one of the subject areas listed above addresses a matter of statewide concern or a municipal affair.

The measure states that the amendment will provide local control over land use decisions in order to balance development with the economic, environmental, and social needs of the community. The measure notes that the impacts of land use decisions vary depending on the municipality and specifically points to impacts on the infrastructure needed to maintain adequate public services.

While these are valid concerns, they need to be evaluated in light of the current housing crisis, which has been decades in the making. The state sets housing production goals, also known as the Regional Housing Needs Assessment (RHNA), that cities and counties are required to plan for in their Housing Elements. However, planning for housing does not always translate into actual housing production. According to the HCD’s latest data, only about 6% of California’s cities and counties are on track to meet the state’s current RHNA goals in all income categories. And, as we noted in a prior e-update, many cities and counties are looking at significant increases in RHNA goals next cycle. In order to incentivize housing production, the legislature has stepped in to streamline approvals, allow density bonuses, and limit municipalities’ ability to deny certain housing projects.

The amendment’s broad applicability to regulations regarding “zoning or the use of land” leaves significant room for interpretation and will result in far-reaching consequences that will ultimately exacerbate the state’s worsening housing crisis. For example, the amendment would allow cities to disregard the following state laws:

Density Bonus Law. Under the Density Bonus Law, developers are entitled to up to a 50% density bonus if certain on-site affordability requirements are met. The law also allows waivers and concessions from development standards that would physically preclude the density permitted or result in identifiable and actual cost reductions.

SB 35. This legislation requires ministerial approval of housing projects that meet certain affordability requirements in cities and counties that are not meeting their RHNA goals.

Permit Streamlining Act. This Act allows certain development projects to be deemed approved if the local agency does not approve the project within specified time limits.

SB 330. Among other things, SB 330 (1) provides a mechanism to vest the ordinances, policies, and standards in effect at the date a complete Preliminary Housing Development Application is submitted, (2) limits the ability of municipalities to downzone certain properties, impose moratoria, or apply new subjective design standards to housing developments, (3) further streamlines approvals, and (4) limits the number of hearings that can be conducted prior to approval of a housing project.

Housing Accountability Act. This Act limits a local government’s ability to deny, make infeasible, or reduce the density of housing development projects that are consistent with objective local development standards.

ADU Law. In recent years, there has been a significant amount of legislation making ADUs easier to build by streamlining the approval process, limiting applicability of impact fees, and relaxing zoning requirements.

The broad language of the amendment may also have the effect of reversing state rent control regulations and General Plan requirements, including the need to update the Housing Element to accommodate RHNA goals. In addition, a number of land-use related bills have been introduced this session that could be impacted by this constitutional amendment.

It remains to be seen whether two-thirds of the legislature, which recently passed landmark housing bills, would vote to put this constitutional amendment on the ballot. We will continue to monitor this measure and keep you updated.

Authored by Reuben, Junius & Rose, LLP Attorney Sabrina Eshaghi.

Cities’ Upcoming Need to Identify Housing Opportunity Sites

March 18, 2021 | Tuija Catalano

The next RHNA (Regional Housing Needs Assessment) cycle is quickly approaching, which means that all Bay Area cities will be taking a closer look at their Housing Elements and determining whether they have enough land zoned to accommodate more housing.

In June 2020, the California Housing and Community Development (“HCD”) provided the Bay Area its Regional Housing Needs Determination for the next RHNA cycle (2023-2031), identifying a need for 441,176 new housing units. The overall figure is further categorized into very low (26%), low (15%), moderate (16%), and above moderate (43%) housing and income levels. This figure represents a significant increase when compared to the prior RHNA cycle (2015-2023) when the Bay Area was allocated 187,990 units. In the Bay Area, the Association of Bay Area Governments (“ABAG”) is responsible for allocating the overall figure among cities and counties, and its Housing Methodology Committee spent much of 2020 in meetings to discuss and decide on different methodology options. Regardless of which allocation methodology was going to be chosen, most Bay Area cities and counties are seeing a significant increase in their RHNA allocations.

ABAG’s Executive Board approved the Draft RHNA Methodology and Final RHNA Subregional Shares (“Draft Allocation”) for the Bay Area on January 21, 2021. The Draft Allocation is subject to HCD approval on or before April 11, 2021, and thereafter an appeal opportunity by individual cities and counties during Summer/Fall 2021. Historically, very few appeals by individual cities or counties have been successful, and thus most of the Draft Allocation figures are anticipated to be adopted as final allocations by late 2021.

Once the allocations have been finalized, individual cities and counties will need to amend their Housing Elements and identify sufficient number of vacant or underdeveloped sites that can accommodate the RHNA figure allocated to each city. Many cities are currently starting the process by engaging consultants to work on their next Housing Element update. The updated housing elements must be submitted to the State by each city and county no later than January 2023, and if applicable, cities and counties will thereafter need to rezone properties consistent with the updated Housing Elements and site identifications.

To understand the magnitude of the increases cities and counties are facing for the next RHNA cycle, it is helpful to look at some of the Draft Allocation figures. The following represents a sampling of Bay Area cities, comparing their final 2015-2023 RHNA figure to those proposed in the Draft Allocation for the next, 2023-2031 cycle. For a complete list of cities/counties, see the Draft Allocation.

City	2015-2023 cycle	2023-2031 cycle
San Francisco	28,869	82,069
Oakland	14,765	26,251
San Jose	35,080	62,200
Berkeley	2,959	8,934
Fremont	5,455	12,897
Concord	3,478	5,073
Lafayette	400	2,114
Walnut Creek	2,235	5,805
Novato	415	2,090
Tiburon	78	639
Daly City	1,350	4,838
Menlo Park	655	2,946
San Bruno	1,155	3,165
Cupertino	1,064	4,588
Los Gatos	619	1,993
Sunnyvale	5,452	11,966

Cities and counties are not required to build new housing, but they are required to plan for it and specifically plan for enough housing that satisfies their assigned RHNA figure. Since most Bay Area cities and counties are subject to significant increases, local city councils and board of supervisors, along with their Planning Departments, will be taking a comprehensive look at zoning and development in their jurisdictions over the next year and a half. This may also represent opportunities in the near-term for property owners of currently vacant or underutilized properties and/or those that lack the zoning necessary for residential development.

Authored by Reuben, Junius & Rose, LLP Attorney Tuija Catalano.

Housing Production Legislation to Watch

December 16, 2020December 18, 2020 | Justin A. Zucker

The start of another legislative session is upon us. Last week at the outset of the 2021-2022 legislative session, several bills impacting housing production were introduced. Some are similar to bills that weren’t passed last year. Below are four bills to watch as they wind through the Legislature.

SB9 (Atkins, Caballero, Rubio, Wiener)

SB9 is a refresh of SB1120 from last session that would allow duplexes on most lots. SB9 requires cities to ministerially permit, i.e., without CEQA review or other discretionary reviews or hearings, two-unit development projects in single-family zoning districts. It would also allow single-family parcels to be subdivided into two lots if the parcel is located within an urbanized area or urbanized cluster and is: (i) not located within a historic district, (ii) not included in the State Historic Resources Inventory, or (iii) not within a site that is designated or listed as a city or county landmark/historic property/district.

SB1120 cleared the Assembly with only minutes left in the session, leaving too little time for it to return to the Senate for passage, which makes this year’s SB9 a bill to closely watch.

SB10 (Wiener)

Senator Wiener’s SB10 is a refresh of SB902 from last session that would allow—but not require—local governments to upzone qualified parcels for up to ten-unit apartment buildings. The allowance for streamlined upzoning would only apply in urbanized locations close to job-rich areas, which are defined as areas rich with jobs or would enable shorter commute distances, and/or transit rich areas, which are defined as areas within half a mile of a major transit stop. While SB10 creates a shortcut for upzoning, it does not provide for streamlined project approvals, i.e., projects within upzoned areas would remain subject to CEQA and other local approval processes. SB10 requires the Department of Housing and Community Development, in consultation with the Office of Planning and Research, to determine jobs-rich areas and publish a map of those areas by January 1, 2022.

SB30 (Cortese)

Senator Cortese’s SB30 would prohibit after January 1, 2022, the construction of a state building connected to the natural gas grid and prohibit state funding or other support for construction of residential and nonresidential buildings that are connected to the natural gas grid.

SB6 (Caballero, Eggman, Rubio)

SB6 is a second attempt to pass the Neighborhoods Homes Act that would override local prohibitions on residential uses on properties (no size limit) within any commercial zone, except where office uses and retail uses are not permitted or only permitted as an accessory use, that is not adjacent to an industrial use. Densities allowed fall into the range from 15 dwelling units/acre in rural areas to 30 dwelling units/acre in highly urbanized areas, with suburban areas allowing at least 20 dwelling units/acre. Housing development projects would still be subject to local zoning and parking controls, objective design review and permitting processes, and CEQA would be applicable. Projects taking advantage of the Neighborhoods Homes Act would be required to pay prevailing wages or use skilled and trained labor.

Authored by Reuben, Junius & Rose, LLP Attorney Justin A. Zucker.

Oakland Entitlement Extensions, Is California Next?

August 12, 2020 | Justin A. Zucker

On July 27, 2020, Oakland City Administrator, Edward D. Reiskin executed Emergency Order No. 6 extending planning entitlements that have not expired as of March 9, 2020 (when Oakland’s COVID-19 Local Emergency was first declared), but are set to expire on or before August 1, 2022, by two (2) years. A project sponsor must submit a ministerial application and payment of the Administrative Extension Fee for an entitlement extension. Upon satisfaction of those requirements, the entitlement’s expiration date will automatically be extended by two (2) years. Emergency Order No. 6 does not cover entitlements eligible for extension under the city’s impact fee programs for Jobs/Housing, Affordable Housing, and Transportation and Capital Improvements.

If this sounds familiar to you, it is. In the wake of the nation’s last recession, Oakland enacted an extension of all non-expired entitlements. At that time, Oakland was grappling with a continuing weak housing and credit market.

Even prior to the pandemic, California was in the midst of a housing crisis. For years, demand has outpaced supply at all income levels. The economic fallout from the ongoing COVID-19 pandemic is ripping through the country. The extent of its lasting impacts are yet to be determined. To alleviate pressure in the housing sector exacerbated by the pandemic, State Senator Scott Wiener has introduced Senate Bill 281 (“SB 281”). SB 281 would automatically extend the period for expiration of a housing entitlement issued before and in effect on March 4, 2020, and expiring before December 31, 2021, by eighteen (18) months. A housing entitlement is defined as, among other things, a “legislative, adjudicative, administrative, or any other kind of approval, permit, or other entitlement necessary for, or pertaining to, a housing development project issued by a state agency” and “[a]n approval, permit, or other entitlement by a local agency for a housing development project.”

In a nod to the ever-present threat of litigation and the weaponization of CEQA often employed to stymie housing projects, the bill’s authors include a tolling provision. If passed, the 18-month entitlement extension would be tolled during any time that the housing entitlement is the subject of legal challenge.

The authors of SB 281 seek a statewide entitlement extension to avoid the significant cost and allocation of local government staff resources associated with addressing individual permit extensions on a case-by-case basis. This makes sense. Under Oakland’s entitlement extension, a project sponsor must submit an application that, while ministerial, still requires administrative resources to process. Having an automatic entitlement extension would reduce cities’ administrative burdens at a time when their limited funds are drying up and tax bases are shrinking.

We will continue to monitor SB 281, and will update readers accordingly.

Authored by Reuben, Junius & Rose, LLP Attorney Justin A. Zucker.

SB 1085 Emerges from Crucial Committee Vote

August 5, 2020August 5, 2020 | Matthew D. Visick

SB 1085 Clarifies that Affordable Housing Fees Do Not Apply to Affordable or Density Bonus Units

When Senator Nancy Skinner introduced Senate Bill 1085 (SB 1085) in February, the bill proposed numerous revisions to the state Density Bonus Law. Many were geared toward incentivizing the development of moderate-income rental housing, including a 35% density bonus for projects that provide at least 20% of the units affordable to moderate-income families, concessions, and reduced parking requirements. The bill also limited cities’ ability to deny requested concessions, limited parking ratios for certain senior housing projects, and allowed concessions for student housing projects. Of particular interest to developers with projects in San Francisco, SB 1085 clarified that “[a]ffordable housing impact fees, including inclusionary zoning fees, in-lieu fees, and public benefit fees, shall not be imposed on a housing development’s affordable units or bonus units.”

SB 1085 was passed by the full Senate in late June, after which it moved to the Assembly.

On July 30, the Assembly Committee on Housing and Community Development approved SB 1085 conditioned on Senator Skinner amending the bill to remove the incentives for development of moderate-income rental units. These amendments were encouraged by affordable housing advocacy groups that argued the incentives would cause a reduction in the supply of low-income and very-low income units. The prohibition on imposing Affordable Housing fees on affordable or Density Bonus units remains in the bill.

The City of San Francisco imposes an Affordable Housing Fee on Density Bonus units. Many practitioners believe that the imposition of these fees on Density Bonus units is fundamentally incompatible with the Density Bonus Law. In April 2019, Attorney General Xavier Becerra issued an Opinion that bolstered this view, concluding that the imposition of a “public benefit fee” on Density Bonus units reduced the benefits that the Density Bonus Law is intended to promote, and was therefore invalid. While the Attorney General’s Opinion addressed fees imposed only on the Density Bonus units, most practitioners understood its reasoning would also preclude generally-applicable Affordable Housing fees that were being applied to Density Bonus units. SB 1085 would make it explicit that Affordable Housing fees cannot be applied to Density Bonus or affordable units.

The Committee’s approval of SB 1085 with the language limiting fees could be interpreted as a promising sign, given that Assembly Member David Chiu, a former San Francisco Supervisor, chairs the Committee. The bill must be approved by the full Assembly and the full Senate by August 31 to make it to the Governor’s desk in 2020. The San Francisco Board of Supervisors remains opposed to the bill.

Authored by Reuben, Junius & Rose, LLP Attorney Matthew D. Visick.

Pending State Bills Seek To Boost Housing

July 29, 2020 | Thomas P. Tunny

This week’s update focuses on five pending bills in the State Legislature, all of which are intended to encourage housing development. These bills, if passed into law, could have a significant impact on housing production and real estate development in San Francisco. A typical mechanism in these bills for expediting housing production is to make the particular approvals ministerial, and therefore not subject to CEQA review.

Lawmakers were expected to return from summer recess on July 13th. Due to at least one Assembly member testing positive for coronavirus, the resumption of the summer session has been delayed until the end of this month. This year’s legislative session is slated to end on August 31, 2020.

AB 2580: Conversion of Motels and Hotels: Streamlining

California Assembly Bill 2580 would allow a ministerial, streamlined conversion of non-residential hotels and motels into multifamily housing. Among its provisions, this bill would establish a process for use by cities and counties, including charter cities and counties, for the complete conversion of a non-residential hotel or motel into multifamily housing units that is streamlined, ministerial and not subject to a conditional use authorization. Because conversion of non-residential hotels and motels into multifamily housing would be a ministerial approval, such conversions would not require CEQA review.

San Francisco has approximately 34,000 hotel rooms in more than 200 hotels. In the short-term, the conversion of hotel rooms to residential could bolster the stock of smaller, affordable units. However, as the economy recovers, the loss of hotel space could dilute or erode convention/tourist facilities in key locations near regional transit. Tenant protections may limit the ability to covert back to hotel to meet future needs.

AB 2345 (Gonzales and Chiu): Density Bonus Expansion

California Assembly Bill 2345 would amend the State Density Bonus Law to provide additional options to qualify for State Density Bonus. Currently, a project may receive one, two or three incentives or concessions, depending on the amount and levels of on-site affordable housing. Projects providing 100% affordable housing may receive four incentives or concessions, but are not eligible for waivers given that density limits are waived. This bill would provide an option to receive four or five incentives and concessions for projects in which greater percentages of the total units are provided for lower income households, very low income households, or for persons and families of moderate income in a common interest development. In addition, when providing the additional affordability specified above, the project is entitled up to a 50% bonus. The bill would also authorize an applicant to receive six incentives or concessions for projects in which 100% of the total units are for lower income units, as specified. The bill would also provide one incentive for Student Housing Projects that are 20% affordable.

Due to San Francisco’s high inclusionary requirements, projects that provide onsite inclusionary housing may qualify for a larger bonus than 35%. A typical rental project would qualify for a 37.5% bonus and if located in a carve out area (North of Market Residential Special Use District, the Mission Area Plan, or the SOMA Neighborhood Commercial Transit District) may receive a 50% bonus.

AB 3040 (Chiu): Allow Cities to Permit up to Four Units on Single-Family Home Parcels

California Assembly Bill 3040 would allow jurisdictions to rezone parcels currently occupied by single-family homes for ministerial approval of up to four housing units, and to count these sites toward up to 25% of the housing units the jurisdiction must accommodate for its share of the Regional Housing Needs Assessment (RHNA). Because projects on these parcels would be designated for ministerial approval, CEQA review would not be required. The projects would still be subject to design review; however, local development standards applicable to the site cannot impede the development of four dwelling units. Covenants or other private provisions that prohibit or restrict the number of units would also be void. Single-family home sites counted toward the RHNA site inventory as potential four-unit sites must have been certified for occupancy at least 15 years ago.

In San Francisco, over 40% of the city’s residential land is zoned for single-family homes (RH-1 zoning) and single-family homes occupy lots in additional areas of the city. Under this bill, San Francisco would choose where to allow four-unit buildings on single-family home parcels and likely would consider factors like access to transportation, neighborhood services, parks, and schools as well as historic status.

SB 1120 (Atkins, Caballero, Rubio, and Wiener): Subdivisions

California Senate Bill 1120 would authorize ministerial approvals of either or both (i) a housing development of two units and/or (ii) subdivision of a parcel into two equal parcels. To use this bill, the subject parcel would need to be zoned for residential uses and in a single-family zoning district. Certain hazardous, protected parcels or currently occupied parcels could not take advantage of this bill. Projects could not result in the demolition of 25% or more of existing exterior walls, a parcel smaller than 1,200 square feet, nor provide short-term rentals. CEQA would not be required. Objective requirements may be applied, provided the requirements do not prohibit the project.

In San Francisco, approval processes for subdivisions and for new housing are discretionary and as such, require CEQA review. By making these projects ministerial, CEQA would not be required and the projects would be approved upon meeting the objective requirements. This would speed the entitlement process and limit the Department’s ability to apply design guidelines.

SB 902 (Wiener, Atkins): Allow Cities to Permit up to 10 Units on Infill Sites in Transit-Rich or Job-Rich Areas

We have previously updated readers on Senator Weiner’s Senate Bill 902, or ‘SB 50 Lite’. This bill would facilitate the passage of local ordinances to allow multifamily buildings with up to 10 units on qualifying parcels. The bill would not require any changes to existing zoning but could allow for faster passage of ordinances by removing the need for potentially time-consuming and costly CEQA review. A large portion of the city’s parcels would likely qualify for rezonings under this bill should the city’s elected officials choose to pass them. SB 902 was passed out of the Senate in late June, and is now being considered in the Assembly.

We will continue to monitor these bills, and will update readers accordingly.

Authored by Reuben, Junius & Rose, LLP Attorney Thomas P. Tunny.

Updates to the Proposed Intermediate Length Rental Regulations

February 6, 2020February 7, 2020 | Jody Knight

Medium-term, furnished rentals have been a part of San Francisco’s housing stock for many years. According to the Corporate Housing Providers Association, roughly 3,000 dwelling units in San Francisco – less than one percent of the City’s total housing – are used as intermediate length rentals. These types of rentals serve workers in higher education, healthcare, theater, and other industries, who are in town too long to stay in a traditional hotel but don’t need a full one-year lease. They also provide housing for long-term family visitors – grandparents helping with a newborn or relatives caring for a sick family member.

However, many affordable housing advocates, who view these rentals as competing with long-term housing for San Francisco residents, lined up at the Planning Commission last fall to protest them. Shortly after, Supervisor Aaron Peskin introduced legislation targeted at rental properties that require tenants to stay for at least 30 days in order to avoid short term rental regulations (See our prior coverage, New Legislation Aims to Limit “Intermediate Length” Rentals).

The legislation would amend the Planning Code to create a new Intermediate Length Occupancy (“ILO”) Residential Use Characteristic for dwelling units offered for occupancy of greater than 30 days but less than one year. It would also add a new Planning Code Section 202.10 to regulate those units. On January 14, 2020, substitute legislation was introduced which makes several changes to the original proposal. The substitute ordinance is available here.

While the original legislation allowed ILO units only in new construction of projects with at least 10 dwelling units, the substitute legislation would allow existing units to be eligible to be classified as ILO units unless the units are below market rate units built under the City’s Inclusionary Housing regulations or are subject to the Rent Control Ordinance. For buildings with nine or fewer units, requests to establish ILO use would be principally permitted so long as no more than 25% of the units in the building are classified as ILO. For buildings with 10 or more dwelling units, ILO units would require conditional use authorization, and no more than 20% of the units could be classified as ILO.

The substitute legislation further clarified that while ILO units could be offered for occupancy of one year or greater without losing the ILO use characteristic, ILO status would be considered abandoned if otherwise defined as abandoned under the Planning Code.

Finally, the revised legislation provides owners and operators of ILO units 24 months from the effective date of the ordinance to submit a complete application to establish the ILO use. The total number of ILO units Citywide would be capped at 1,000 – an increase above the 500-unit cap in the earlier legislation. While not labeled as interim controls, the intent of the legislation is to put in place a policy to regulate corporate housing while the data to be collected under the program is evaluated by the Controller’s Office. The legislation does not address grandfathering of existing ILO units, of which there are approximately 2,000 more than would be permitted by the 1,000 unit cap, but the 24 month compliance period established by the Ordinance indicates that existing units may not be grandfathered or exempt from the new ILO controls.”.

Residential hotels and student housing would still be exempt from Section 202.10 under the substitute legislation. Furthermore, the Rent Ordinance Amendments proposed in the original legislation would remain, except that the prohibition on non-tenant use, including use for a corporate entity’s own employees or licensees, and the requirement that online listings for units disclose that they are subject to the Rent Ordinance, would be effective April 1, 2020 instead of February 1, 2020.

The Planning Commission voted to recommend adoption of the substitute ordinance on January 30, 2020. We will continue to follow the evolution of these regulations as they move towards adoption by the Board of Supervisors and implementation by the Planning Department and Planning Commission.

Authored by Reuben, Junius & Rose, LLP Attorney Jody Knight.

SB 50 Revamp: The More HOMES Act Amended

January 9, 2020January 9, 2020 | Justin A. Zucker

SB 50, The More HOMES Act introduced by San Francisco State Senator Scott Wiener in December 2018 was reintroduced with amendments earlier this week. The reintroduction comes after SB 50 was held by the Appropriations Committee last spring by State Senator Anthony Portantino.

SB 50, which we have previously reported on, seeks to address California’s housing crisis by requiring cities to allow increased density for housing projects near “high-quality” transit stops or “jobs-rich areas.” In addition, SB 50 would streamline permitting for multifamily housing developments up to 4 residential dwelling units that are code complaint per the zoning requirements in place as they existed on July 1, 2019. For such projects, the bill would establish a streamlined ministerial approval process, thereby exempting them from the California Environmental Quality Act (“CEQA”) approval process. And SB 50 would prohibit a local agency from adopting any requirement that applies to a project solely or partially on the basis that the project receives ministerial or streamlined approval. Not surprisingly, opponents of SB 50 continue to express concerns regarding its incentive program taking away local control and the likely displacement of locals through gentrification.

There is an estimated shortfall of 3.5 million units of housing in California that is the result of a decade of low housing production. SB 50 enables the production of more housing and requires larger projects to set aside 15% to 25% of homes to low-income residents. SB 50 aims to increase density in residential areas by making it legal to construct small apartments complexes, such as triplexes and fourplexes, in single-family neighborhoods and up to six-story buildings adjacent to “high-quality” transit.

In order to address the local push back, the following amendments have been added:

Gives local governments flexibility – local flexibility plans – for how they implement SB 50’s requirements;
A priority preference program for local low-income residents; and
Continues to provide a two-year implementation delay for “potentially sensitive communities” and five-year implementation delay for “sensitive communities.” These are generally defined as communities that are vulnerable to gentrification.

Local Flexibility Plans

In lieu of being subject to SB 50, local governments may submit a “local flexibility plan” that crafts their own housing plans. The local flexibility plan must create at least the same number of new units as would be allowed under SB 50.

By July 2, 2021, the Governor’s Office of Planning and Research shall publish rules, regulations, or guidelines for the submission and approval of a local flexibility plan. Local governments will have to submit their local flexibility plans to the Department of Housing and Community Development for review and approval. If the local flexibility plan is certified by the Department of Housing and Community Development, the local government would not be required to grant the incentives provided under SB 50.

To prevent a local government from concentrating new housing in certain areas, a local flexibility plan cannot result in increased vehicle miles traveled and must distribute new housing equally among both lower-income and more affluent areas. The goal being to add housing near jobs to reduce residents’ commutes, and in turn help the state reach its greenhouse gas reduction goals.

Priority Preference Program

In an effort to prevent displacement of low-income residents from their neighborhoods, individuals living within one-half mile of the housing development will receive priority for some of the project’s homes. Forty percent of a housing development’s affordable housing units are to be reserved for low income, very low income, and extremely low-income households living within one-half mile. Note, SB 50 does not include a provision for the creation of guidelines on implementation of the priority preference program.

Sensitive Communities

By July 1, 2023, “sensitive communities” in each county shall be identified by a working group comprised of residents of potentially sensitive communities within the county. The working group will develop a map of sensitive communities within the county to be adopted by the board of supervisors or council of governments, as applicable. And implementation of SB 50 would be delayed until January 1, 2026, for the identified “sensitive communities.” For “potentially sensitive communities,” implementation of SB 50 would be delayed until July 1, 2023.

Senator Wiener has indicated that housing is his top legislative priority this year. And he is likely to have a receptive ally from Governor Gavin Newsom who has pledged to have 3.5 million new homes built by 2025.

SB 50 has until January 31, 2020, to pass the State Senate otherwise the proposal officially dies in the legislature.

Authored by Reuben, Junius & Rose, LLP Attorney Justin A. Zucker

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.