There have been a lot of signs of the land use times in San Francisco these days. A brand new neighborhood in Rincon Hill and Transbay is being constructed in front of our eyes. There are newly-proposed projects galore in the Tenderloin. The last few remaining “holes” in the Financial District are being filled in after decades of sitting vacant (350 Bush, 500 Pine). Yes, these are flush times in San Francisco. From 2005 to 2014, San Francisco’s population has grown from 777,600 to 852,469, an almost 10% increase. Now this does not match the City’s growth in 1849 (1,000 to 25,000) or post WWII (634,000 to 775,000 from 1940 to 1950), but we can safely say this is a transformational period in the City’s history.
The word of the day is regionalism. While San Francisco is still the epicenter for development, Oakland, Berkeley and even San Jose are starting to see their own building booms. As the RJR Update rears its head for the first time in 2015, we will be sure to bring you what we think are the important land use news around the Bay Area.
Board of Supervisors Seeks to Close Group Housing-Inclusionary Housing “Loophole”
Last week, Supervisor Avalos introduced legislation that would apply the same citywide affordable housing requirements on group housing projects that currently apply to dwelling units. Group housing is typically a single room, possibly with a small kitchenette and individual or shared bathroom facilities. For years, group housing was generally used as SRO housing, student dormitories, or other shared living facilities. But now with younger folks willing to live in smaller and smaller spaces so long as they can step out onto the streets of San Francisco, group housing has seen a resurgence in proposals in recent years.
There are some zoning benefits to group housing: no rear yard, reduced open space requirements. But the most significant zoning difference is that group housing is not subject to the City’s affordable housing requirements. Supervisor Avalos’s legislation would apply the citywide 12%/20% standard requirement to group housing projects.
With the housing crisis ongoing and likely growing in San Francisco, it is likely we will continue to see the debate over affordable housing intensify. Last year, Supervisor Kim threatened to put on the ballot a measure that would have had the effect of sending almost all market-rate residential projects to the Planning Commission for conditional use approval, with the potential for disapproval if 33% of the units were not provided as affordable housing. She replaced that measure with Prop K, passed by voters last November, which sets as City policy the provision of 33% of all new housing subject to affordable restrictions. Next week, the Board may pass new legislation creating a housing balance metering program, requiring an annual hearing at the Board of Supervisors, at which the Mayor’s office would need to submit a strategy to reach the 33% affordable housing figure (the first one would be held roughly two months from now). After the voters passed a major revamping of the City’s affordable housing policies in 2012 (which reduced the on-site affordable housing requirement from 15% to 12%), we could be looking at upward pressure on the affordable housing requirement in the near future.
Another Approach to the Housing Crisis – Increased Density Incentive for Soft-Story Retrofits
Last month, legislation sponsored by Supervisor Wiener was enacted that would remove residential density limits from “soft-story” properties undergoing mandatory seismic upgrades and some that undergo voluntary upgrades. Similar to the other in-law legalization legislation the Supervisor has sponsored, any increase in dwelling units in conjunction with a retrofit project would be able to be approved administratively without public notice. This represents a completely different approach to the housing crisis.
It turns out that the City has in fact been pretty successful in providing new housing since Mayor Lee set the goal of providing 30,000 new housing units (30% affordable) between 2014 and 2020. According to the Planning Department’s tracking, 4,263 units have been created since then, 31% of which are permanently affordable. We may be able to achieve that ambitious (for San Francisco) housing goal, the question is will it do the trick?
Oakland Confidently Begins to Pick Up the Slack in Housing
Sensing the obligation (and opportunity) that comes with rising housing costs in San Francisco, Oakland, led by Mayor Libby Schaaf and Planning Director Rachel Flynn, are taking steps to entice development across the Bay. The most recent move has the city initiating a downtown specific planning process with the goal of an area-wide EIR that will expedite environmental review throughout the area. While specific plans have been enacted in Oakland in recent years on Broadway, West Oakland, Chinatown, and the Central Estuary, the vast majority of potential, significant new development is located in the city center north of I-880 and south of 27th Street. In fact, we may see a boom-let of development on Telegraph Avenue north of the Fox Theater and the Sears Building in coming years, following the re-activation of those two buildings as well as the resurgence of retail and entertainment along the strip. The downtown plan may come too late to help those projects out, but it will certainly go a ways to stimulate new development elsewhere in downtown.
But let’s of course remember Mayor’s Schaaf’s declaration that project applications should be filed now in order to avoid new impact fees that will go into effect in 2016. While she has been rather unclear as to whether projects filed now would be expressly grandfathered from the future impact fees, there is some potential for projects to slip through before they go into effect. This may come to a surprise to many developers in San Francisco, but it’s not unheard of for a project in downtown to make its way through the entitlement process in 9-12 months.
San Francisco Board of Appeals Back to Full Strength with Rick Swig
Since August of last year, the Board of Appeals has quietly been operating with a vacancy. Chris Hwang left the Board in July (replaced by Bobbie Wilson in October) only to be followed by Arcelia Hurtado’s departure in November. On the five-member Board of Appeals, this vacancy is felt more than it would be on other Commissions. Fortunately, Supervisor Breed-appointee Rick Swig sat for his first hearing at the Board of Appeals last Wednesday. Mr. Swig, a San Francisco native, has significant experience in the tourism and hospitality industry, and has previously served on the San Francisco Redevelopment Commission. We hope Mr. Swig’s appointment signals at least a few years of stability at the Board of Appeals – where each member really makes a difference!
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.