This Week: West SOMA and Prop M Office Updates

Western SoMa Rezoning Update: Fault Lines Emerge Between Planning Department and Board of Supervisors

With the final details of the Western SoMa rezoning being hammered out, differences between the Planning Department and some Board members are coming to the surface. On Monday, the Board’s Land Use Committee held a hearing on a Board resolution that would encourage the Planning Commission to include a Community Stabilization Policy in the Western SoMa community plan that it ultimately adopts.

The stabilization policy, approved by the local Western SoMa citizens planning group in 2009, would seek to maintain the existing character of the Western SoMa neighborhood, especially with regard to the ratio of market rate housing to affordable housing. First, the policy would require that at least 30% of all housing units approved by the Planning Commission in any given year be affordable housing. Applications for projects that would create a mix of greater than 70% market rate housing in any given year will be put on hold until the 30/70 ratio is met. Second, if the annual number of new neighborhood jobs compared to new housing units falls below 6.6 to 1 over the course of two years, a conditional use requirement would be applied to all new housing projects for “the maximum legally allowable time frame or until all options to restore the 6.6 to 1 net new jobs/housing mix have been exhausted by the [community advisory committee] working in conjunction with all appropriate San Francisco agencies.”

Planning Department representative AnMarie Rodgers asserted the Department’s opposition to the policy, noting that quotas of this sort have never been applied in the city. Further, since the required below market rate percentage for new housing projects is below 30%, the policy would in fact require that 100% affordable projects be constructed in order for typical housing projects to move forward. For example, if a single housing development of 30 units is approved in a given year, and the generally-applicable 15% BMR requirement is applied to the project, the 30/70 mix will already be exceeded and a new market-rate project could not be approved until the following year. The 30/70 mix could even create a de facto 30% BMR requirement, since even the first project approved would exceed the 30/70 mix. Ms. Rodgers pointed out that the Planning Department has not had the chance to review the impact of the policy on the area to determine if there are enough sites that are viable for 100% affordable projects (a basic requirement to ensure the policy doesn’t create an immediate halt to housing projects).

Supervisor Kim, the sponsor of the resolution, maintained that the neighborhood has been maintaining a 40/60 affordable housing to market rate housing mix since 2001 and that this policy would simply ensure that this appropriate level of affordable housing is minimally maintained. She also cited the fact that the City’s new housing element calls for two-thirds of all new housing units be affordable, and that the stabilization policy is modest in comparison.

The Committee ultimately sent the resolution to the full Board without recommendation, after all three members expressed concerns about the Planning Department’s opposition. If passed, the resolution would simply indicate to the Planning Commission that the Board desires to see this policy included – and would likely include it in the final plan if the Commission failed to do so. Environmental review for the Western SoMa Plan is expected to be completed late this year, with adoption hearings in early 2012.


Plenty of Space Available for Office Allocation Within the Prop M “Cap”

In 1985, the San Francisco voters approved Proposition M, which required that any creation of at least 25,000 square feet of new office space (whether through new development or a change of use) must obtain an office space allocation from an annual citywide office limit from the Planning Commission. The annual limit of office space allocation is 950,000 square feet, which accumulates over time if the limit for a particular year is not fully allocated in that year. Each year, a pool of 75,000 square feet of the office limit is reserved for smaller projects consisting of 25,000 to 49,999 square feet of office space.

In a worst case scenario, where the pool is running low, office projects compete against each other to secure the limited amount of allocable office space each year, in what was referred to as a “beauty contest.” We haven’t had a beauty contest in ten years, and it doesn’t look like one will be likely anytime soon. According to the Planning Department, which presented its annual office limit update yesterday, there is currently 1,004,460 square feet of space under the “small” office allocation cap and 2,633,442 square feet of space under the large office allocation cap. To put that in perspective, the large office allocation cap could cover the 1.4 million square-feet of office space proposed for the proposed 80-story Transbay tower, and would still leave room for a handful of major office towers.

While the office market seems to be picking up, the Prop M cap is not likely to be a factor for awhile.

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, 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.

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