Downtown Oakland Specific Plan: ZIP Update

| Justin A. Zucker
ZIP

As previously reported, the Downtown Oakland Specific Plan (“DOSP”) is working its way to the City Council for adoption, currently anticipated in late 2022. The DOSP includes Zoning Amendments (which we’ve previously reported on) and a Zoning Incentive Program (“ZIP”). Initial details for the ZIP were released earlier this summer (which we’ve previously reported on). Below are additional details regarding the ZIP based on the economic analysis reports prepared by Hausrath Economics Group, dated August 2022 and September 16, 2022, in addition to recent community meetings on September 13 (presentation slides) and on September 19 (presentation slides).

The ZIP was developed in response to community concerns to allowing development downtown without obtaining community benefits. The ZIP allows developers to voluntarily elect to provide community benefits, in one of four forms, to increase allowed development capacity, either additional market-rate dwelling units or commercial space. The four on-site community benefits options include providing (1) affordable housing, (2) below market-rate ground floor commercial space, (3) public restrooms, or (4) streetscape, open space and flood control improvements exceeding basic city requirements. Alternatively, the ZIP includes the option to provide community benefits through payment of an in-lieu fee instead of providing on-site benefits, or some combination of on-site benefits and an in-lieu fee.

The ZIP is a voluntary program that creates additional value for a development project with the City capturing a portion of the value increase. The increase in value from the additional, higher-intensity development is calculated as the difference in value of development under the maximum intensity zoning compared to the base zoning. The value is expressed in dollars per building square foot of added development for commercial and dollars per dwelling unit added for residential.

As currently analyzed, the ZIP is structured so that a third of the additional value from the more intense development is captured in the form of a community benefit. The remaining two-thirds is split with one-third to the developer to incentivize development at increased intensity and a third to the owner to account for increased resulting land value, which in turn results in increased property taxes. During recent community meetings, there has been discussion of adjusting this formula to increase the City’s value capture share.

In creating the incentive, the ZIP considers the costs and economic variables specific to development types, i.e., change from Type III or V (mid-rise/low-rise) to the more costly Type I (high-rise) construction. Properties with large increases in density supporting high-rise development over mid-rise/low-rise projects can have lower value capture per additional dwelling unit or per additional building square foot due to higher costs involved. To account for this, the ZIP establishes three Zoning Incentive Areas that reflect similar market contexts, development patterns and potentials, parcel sizes, and existing land uses. There are three areas each for residential development (map) and commercial development (map), with R-A, R-B, and R-C zones for residential and C-A, C-B, and C-C for commercial development.

The ZIP incentive areas allow additional density ranging from 11% to 800% more density with 65% of cases more than doubling density. The large density bonus accounts for increased costs associated with change in construction typology to Type I for high-rise development.

Based on location, a commercial development could obtain an additional 100,000 sf of office space with the provision of below market ground floor commercial space totaling 6,828 sf (Zone C-A), 4,655 sf (Zone C-B), or 3,724 sf (Zone C-C).

The ZIP is available to a developer in lieu of or in addition to the State Density Bonus set forth in Government Code Section 65915, et. seq. Meaning, a project could layer the State Density Bonus on top of the ZIP to increase development intensity. In instances when the ZIP and State Density Bonus are used in tandem, the project’s ZIP development intensity is the base density not the underlying base zoning density.

The DOSP and ZIP are slated to return to the Zoning Update Committee (“ZUC”) before advancing to the Planning Commission and City Council. While previously schedule to return to the ZUC on September 29, that hearing has been cancelled to allow additional public meetings. The ZUC hearing has not yet been rescheduled. We will continue to track this significant rezoning and community planning effort as it moves forward.

Reuben, Junius, & Rose LLP has experience with entitlement projects and land use diligence throughout Oakland, and we are pleased to have worked on some of the largest housing projects approved in the city over the last several years.

 

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.

Central SoMa Clean Up Legislation Moves Forward

| Melinda Sarjapur
SoMa

Last week, the San Francisco Planning Commission unanimously recommended approval of legislation that would “clean up” parts of the Administrative and Planning Code that were previously amended in connection with the Central SoMa Area Plan.

The Central SoMa Area Plan was the result of a multi-year planning effort which rezoned much of a 230-acre area adjacent to downtown and surrounding the future Central Subway extension along 4th Street, which is scheduled to begin operating in 2021.  The Plan is anticipated to generate nearly 16 million square feet of new housing and commercial space, and over $2 billion dollars in public benefits.

As described in the Planning Department’s staff report, this “clean up” legislation would correct “grammatical and syntactical errors, un-intentional cross-references and accidental additions and deletions,” associated with the original Plan legislation adopted in 2018.  However, there are also a few substantive amendments proposed, along with clean-up items that have the potential to affect pending and future development throughout the Plan area.

Among other things, the legislation would:

  • Require an operations and maintenance strategy for all required Privately Owned Public Open Spaces (POPOS) in the Plan area. This strategy would need to be approved by the Director of Planning prior to approval of a site or building permit for the associated project;
  • Provide that the Central SoMa PDR requirement applies to projects that increase a building’s square footage by 20% and result in 50,000 gsf of office space along with new construction projects that result in 50,000 gsf of office space;
  • Revise lot coverage requirements for residential uses in the Central SoMa SUD to reflect that all floor levels with residential space (including accessory residential spaces such as common rooms) would be limited to 80% lot coverage, except for floors whose only “residential” space is common lobbies and circulation. 100% lot coverage would be permitted at floors where residential units are located within 40 feet of a street-facing property line.  Further, projects with applications submitted on or prior to July 1, 2020 would be grandfathered from the proposed lot coverage amendments;
  • Clarify and correct which sides of narrow streets in Central SoMa are subject to solar plane setback and bulk reduction sky plane requirements;
  • Provide that buildings that are taller than would otherwise be allowed in a given height district are to follow the sky plane bulk reduction requirements of the height district that is most aligned with the height of the building;
  • Require that funds collected through the BMR in-lieu fee from Central SoMa projects be spent in the greater SoMa area;
  • Clarify that payment of an in-lieu fee for modifications or exceptions from open space requirements is only applicable where the exception or modification is granted to reduce the amount of open space provided, but not in cases where the exception is only related to design standards of the open space;
  • Provide that funds collected through the Central SoMa Community Facilities fee can be spent in the greater SoMa area, and not limited to the Central SoMa Special Use District;
  • Expand the types of infrastructure projects that can be funded through the Central SoMa Infrastructure Fee;
  • Allow project sponsors to meet part of their usable open space requirements off-site at a greater distance from the principal projects than initially proposed, particularly by enabling projects to build open space under and around the I-80 freeway within the Central SoMa Special Use District; and
  • Provide an exception allowing for certain retail to be provided in lieu of a portion of the PDR requirement in connection with development of a Key Site at the northeast corner of 5th and Brannan Streets.

An additional amendment was initially proposed that would have expanded application of certain development impact fees in Central SoMa.  However, that amendment was removed from the legislation at the request of the Commission.

This Central SoMa legislation will be introduced to the Board of Supervisors within the next few weeks.  It will then be held for 30 days before assignment to the Board’s Land Use and Transportation Committee for review and possible amendments, before it’s presented to the full Board for approval.

 

Authored by Reuben, Junius & Rose, LLP Attorney Melinda Sarjapur.

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.