SB 6

AB 2011 & SB 6: Pro-Growth or Slow Growth for Construction Workforce

| Daniel Frattin and Daniel J. Turner

AB 2011, along with SB 6 (Cabellero, Eggman and Rubio), were passed by the California Legislature this week with large majorities in both houses. The two bills will create 10-year housing programs with similar aims: increasing housing production and increasing the skill level, wages, and number of residential construction workers. However, the bills differ in important ways—their approach to density, allowances for ministerial approvals, and the degree of deference to local zoning rules. They also take markedly different approaches to growing, training, and better compensating the residential construction workforce. The bills were the product of a political compromise between the State Building & Construction Trades Council and the Carpenters Union. They effectively set up an experiment to test the relative efficacy of the SB 6 labor rules favored by the State Building & Construction Trades Council—basically requiring union labor on any SB 6 project and the rules preferred by the Carpenters Union – requiring payment of prevailing wages and benefits to all workers on an AB 2011 project. A good deal of attention has been given to improving the regulatory conditions for getting new housing approved, expanding access to sites, and requiring cities to upzone. However, less attention has been paid to the fact that—even if there were shovel-ready projects for the Governor’s declared goal of 3.5 million new homes over ten years—the current residential construction workforce could only build about a third of that number without significant increases in the number and productivity of workers, who currently build housing at a rate of one home per worker per year. By comparison, average productivity per worker was 1.4 units per year from 1990-2005. Put simply, the state cannot meet its housing targets without an increase in the number of workers and productivity. However, attracting new workers has proven difficult. Median residential construction worker pay in California ranks 46th in the country when adjusted for the high cost of living. On average, residential construction workers income is 2/3 of their commercial counterparts and they get about 1/3 the amount of fringe benefits. Less than half have insurance through employers. This is a dramatic shift since the 1970s and 1980s, when average pay in both sectors was roughly equal. AB 2011, which we discussed in greater detail last week, provides for time-limited ministerial approvals for properties on commercial corridors that meet certain criteria for affordable housing and overrides local zoning rules that conflict with its minimum standards for density and height. It also mandates payment of prevailing wage to all construction workers, or at least the prevailing apprentice wages for apprentices enrolled in state-approved apprentice programs. Family healthcare benefits are required for projects with qualified construction craft workers on projects with more than 50 units, while those without such workers can credit qualifying expenditures toward the prevailing wage requirements. Essentially, AB 2011 bets that rapid approvals under more liberal standards will entice employers to pay higher wages and create a strong, near-term incentive for developers to invest in apprenticeship programs to elevate worker productivity. A final version of SB 6 has yet to be published, but takes a less aggressive approach than AB 2011 with lower minimum density requirements, greater deference to local zoning, and no mandatory ministerial approval process unless a project otherwise qualifies under SB 35. Thus, many SB 6 projects would be subject to lengthy CEQA reviews and modified discretionary approvals. It would require lower amounts of affordable housing subsidies by than AB 2011, but would effectively require the use of union labor if two qualified bids are received from union contractors. While SB 6 expands potential building sites, most projects would not realize the cost savings associated with quick ministerial approvals or the elimination of most entitlement/CEQA risk. Without these incentives in place, it may be years before the state sees its first SB 6 project, or additional demand for workers. AB 2011 passed the Assembly 67-4 with 9 abstentions and the Senate 33-0 with 7 abstentions. While the 4 Noes in the Assembly were from rural and suburban districts leaning more conservative (3 Rs & 1 D), notably 7 of the 9 abstentions were from urban and suburban districts along the coast between Ventura and San Diego with a high number of Democratic representatives (6 Ds & 3 Rs). Conversely, SB 6 passed the Assembly 67-0 with 13 abstentions and the Senate 34-0 with 6 abstentions. Of the 4 Noes for AB 2011, 3 abstained in SB 6 and 1 voted yes (a democrat representative from District 29, encompassing Santa Cruz and the surrounding area). The Assembly abstentions followed a similar pattern as AB 2011, with those abstaining coming from both parties and primarily representing rural districts or coastal urban and suburban districts in Southern California. For both AB 2011 and SB 6, the Senate abstentions followed a similar geographic pattern as in the Assembly. While union support was split between the two bills, with both construction and other unions on either side, pro-housing and business organizations tended to support both. Most affordable housing developers supported AB 2011 and opposed SB 6, presumably because the latter would tend to increase cost and time for approval without offsetting benefits. San Francisco’s Council of Community Housing Organizations, which frequently opposes market-rate development, was a notable outlier, supporting SB 6 and opposing AB 2011 in spite of its clear benefits to affordable housing developers. Both bills still need to be signed by the governor and will not take effect until July 2023. Annual reports of projects approved under both bills are required from cities and the Department of Housing & Community Development is to provide two reports on the use of each during the ten year period prior to their sunset date.   Authored by Reuben, Junius & Rose, LLP Attorneys Daniel Frattin and Daniel J. Turner. 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

AB 2011

AB 2011 Could Unlock Mixed-Income Housing

| Mark Loper, Daniel J. Turner and Alex Klein

East Bay state representative Buffy Wicks, along with other co-sponsors including Senator Scott Wiener, proposed a compelling bill that aims to bridge a long-sought gap between pro-housing advocates’ desire for streamlining code-compliant multi-family residential projects with on-site affordability (both mixed-income and 100% affordable), and construction labor unions’ desire to ensure fair wages and future training for its members. Known as the High Road Jobs Act of 2022, AB 2011 would allow ministerial, by-right approval for certain multi-family affordable housing. A development project in a zoning district where office, retail, and parking are principally permitted would be subject to streamlined, ministerial review if it meets many of the requirements for SB 35 eligibility, as well as additional locational and affordability requirements. AB 2011 projects would not need to obtain discretionary entitlements and would not be subject to CEQA. To qualify for AB 2011 streamlining, housing development projects must either provide 100% affordability, or provide on-site affordable units, aka BMRs, in a primarily market rate project. As amended in the Senate on August 11, the on-site BMR requirement is somewhat complicated for rental units, but essentially requires between 12-15% BMRs unless a local requirement is higher, in which case the local program applies and additional AMI restrictions could be required. For condos, 30% could be offered at moderate income or 15% at lower income, and the same caveat about higher local requirements applies. These projects would be subject to objective development standards, and additional qualifying criteria. As of August 11, the criteria for mixed-income projects include, but are not limited to: proposing a multi-family housing development project; abutting a commercial corridor and having a frontage at least 50 feet in width, on a site 20 acres or less in size; not demolishing rent controlled or deed-restricted affordable units, or listed historic resources; replacing no more than four existing units; located no closer than 500 feet from a freeway; providing relocation assistance to certain commercial tenants; and vacant properties that are not zoned for multifamily residential use cannot qualify for streamlined ministerial processing. Once an AB 2011 development application is submitted, several streamlining provisions apply. The local government must determine whether the project complies with objective planning standards within 60-90 days depending on unit count. If a local government determines that a project does not comply with objective planning standards, it must provide a written explanation to the proponent within this timeframe. Further, any design review must be completed within 90-180 days. Projects using the streamlined approval process would also be eligible for density bonuses, incentives, concessions, waivers, reductions in development standards, and potentially reduced parking ratios, under California’s density bonus law. AB 2011 projects would also be required to pay construction workers at least the prevailing rate of wages and certify their compliance with this provision with the local government. As part of the developer’s obligation to pay prevailing wages, developers building 50 or more units of housing must submit monthly compliance reports to the local government. Importantly, projects utilizing AB 2011 would not be a project for the purposes of CEQA (i.e. no environmental review) and the approval procedures the municipality would be permitted to use would solely be ministerial in nature. In May of 2022, AB 2011 passed out of the California State Assembly, and is currently with the Senate, where it was voted out of committee on August 11. The bill has received several key union endorsements, including from the California Conference of Carpenters and SEIU. However, other unions, such as the State Building and Construction Trades Council of California, the San Francisco Building and Construction Trades Council, and the California Labor Federation have opposed the bill claiming it would “eliminate[] the mandate that a skilled-and-trained workforce be a part of… [project] construction crews.” Unions such as the Building Trades Council oppose the bill because the bill would not require developers to use a “skilled and trained workforce,” which has the effect of eliminating the requirement that a certain percentage of workers on a project are unionized. The bill provides instead that for developments streamlined under AB 2011 that workers be paid a “prevailing wage” with some additional benefits such as healthcare coverage. We will continue to track this potential game-changer of a bill as it makes its way through Sacramento.   Authored by Reuben, Junius & Rose, LLP Attorneys Mark Loper and Daniel J. Turner, and Law Clerk Alex Klein. 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.

legislation

Supervisors Pass New EV Charging Rules

| Chloe Angelis

Back in March, we wrote about pending legislation that would amend the Planning Code to specifically address electric vehicle (“EV”) charging uses. At the time, the legislation was headed to the Planning Commission for initial consideration. On Tuesday, the Board of Supervisors unanimously passed an amended version of that legislation on the first reading. As we explained in our March update, the Planning Code does not currently contemplate EV charging at all—leaving operators to work with the Planning Department on a case-by-case basis to determine the permissibility and approval path for any new EV charging site. In order to meet the City’s climate action targets (which include a goal of 100% registered private vehicle electrification by 2040), the legislation aims to create a Planning framework to streamline the approval of publicly accessible EV charging stations and to regulate (though not necessarily streamline) the approval of new fleet vehicle charging sites. The legislation creates two new Planning Code use categories, both under the umbrella of “Automotive Use.” The new “Electric Vehicle Charging Location” (“EV Charging Location”) use covers public-facing charging locations and “Fleet Charging” covers EV charging facilities that are dedicated to a private entity and not available to the general public. The initial draft of the legislation would have required Conditional Use (“CU”) Authorization for Fleet Charging in most zoning districts, except in PDR-1-D, PDR-1-G, and PDR-2 districts, where Fleet Charging would have been principally permitted. That draft also would have prohibited Fleet Charging in the Neighborhood Commercial Districts. The earlier version of the ordinance called for more permissibility related to EV Charging Locations, which would be permitted in most districts, and would be principally permitted wherever the existing use is already some type of Automotive Use. This provision remains in the version passed on Tuesday. The legislation was heard by the Land Use and Transportation Committee three times after it came out of the Planning Commission on April 14 with a handful of recommended changes. Several more amendments were made at those three Committee hearings—mostly to further restrict the permissibility of Fleet Charging uses—as outlined here: While the initial version of ordinance would have allowed EV Charging Locations to dedicate up to 1/3 of spaces as accessory Fleet Charging, the final version of the ordinance prohibits Fleet Charging as an accessory use to EV Charging Locations or to any other use. I.e., no accessory Fleet Charging, period. Consistent with the Planning Commission’s recommendation, the final legislation permits Fleet Charging in most of the Neighborhood Commercial Districts with approval of a CU. The Land Use and Transportation Committee opted to require a CU for Fleet Charging in all of the PDR districts, primarily based on a concern that Fleet Charging uses could displace businesses that provide blue collar jobs. However, existing Private Parking Lots and Vehicle Storage Lots in the PDR-1-D, PDR-1-G, and PDR-2 districts will be able to convert to Fleet Charging without a CU. Supervisor Peskin explained that this minor exception would cover a limited number of properties located in District 10. In addition to the above changes incorporated into the version of the legislation approved by the Board this week, the Land Use and Transportation Committee also created a duplicated version of the file in order to add a set of new CU findings that would apply to Fleet Charging projects. As drafted, a proposed Fleet Charging use would require consideration of the following criteria: The proposed Fleet Charging use will not induce demand for low occupancy vehicles in highly congested areas or in transit-rich areas. Vehicle movement on or around the Fleet Charging use will not unduly impact pedestrian spaces or movement, transit service, bicycle movement, or the overall traffic movement. If the vehicles accessing the proposed Fleet Charging use are owned by one ownership entity, that the ownership entity establishes that it has secured sufficient parking spaces for vehicles when not in operation within San Francisco or adjacent counties. The second finding essentially codifies a question that a Fleet Charging project’s environmental review would already address—i.e., would a new vehicle-oriented use significantly impact traffic in the vicinity of the project? The Planning Department is experienced with traffic circulation issues and how they should be addressed as part of the land-use process. So, we don’t anticipate a significant amount of uncertainty related to this second finding. The first and third findings, however, leave open some critical questions of interpretation. The first finding speaks to low occupancy vehicles. The Planning Code doesn’t define that term, but it is generally understood to mean a vehicle with one or two people in it. It’s not clear what this finding would mean as applied to a Fleet Charging use serving EV rideshare vehicles—which may sometimes carry only one passenger at a time. Other types of fleets, including delivery vehicles and service vehicles, will often have a driver and no passengers. Depending on how it’s applied, this finding could actually discourage the electrification of rideshare fleets—contrary to a 2021 California Air Resources Board mandate that rideshare companies reach zero GHG emissions and ensure that 90% of their vehicle miles are fully electric by 2030.[1] It’s also unclear what exactly the third proposed finding aims to accomplish. EV chargers are likely to be installed at parking facilities, such that vehicles can be parked and charged in one place. Discouraging a dual charging/parking use would seem to run contrary to vehicle miles traveled (“VMT”) reduction goals. Hopefully, these questions will get answered as the duplicated version of the ordinance makes its way through the legislative process. The duplicated legislation has been referred back to the Planning Commission, but as the Commission and Board of Supervisors head into August recess, we’ll have to wait until the fall to see how this shakes out. [1] California Air Resources Board, Resolution No. 21-10 (May 20, 2021); see also California Air Resources Board Bulletin, California requires zero-emissions vehicle use for ridesharing services, another step toward achieving the state’s climate goals (May 20, 2021), available at: https://content.govdelivery.com/accounts/CARB/bulletins/2da5a7a.

board

State Law Allows HOA Elections by Acclamation

| Jay Drake

The Davis-Stirling Common Interest Development Act (“Davis-Stirling Act”) is the primary body of law governing condominium projects and homeowners associations (“HOAs”) in California.  The Davis-Stirling Act generally provides for election of the HOA board of directors by secret ballot.  A change to the Davis-Stirling Act became effective in 2022 that authorizes the HOA board of directors to be elected by acclamation rather than through a typical balloting process. Assembly Bill 502 allows for election of directors by acclamation for uncontested elections where there are the same number of candidates running for election as there are open director seats.  This means the HOA can save the considerable time and expense of the balloting process when the election is uncontested and all nominees will be elected anyway.  The following conditions contained in Civil Code Section 5103 must be satisfied for an election by acclamation to be available. The HOA must have held a regular election for directors in the last three years. The HOA must provide individual notice to the members of the election and procedures for nominating candidates at least 90 days before the deadline for submitting nominations. The notice must include the following: The number of board positions that will be filled at the election; The deadline for submitting nominations; The manner in which nominations can be submitted; and A statement informing members that if, at the close of the time period for making nominations, there are the same number or fewer qualified candidates as there are board positions to be filled, then the board of directors may, after voting to do so, seat the qualified candidates by acclamation without balloting. For a member who submits a nomination for a director position, the HOA must acknowledge receipt of the nomination within 7 business days. The HOA must also notify the nominee within 7 business days as to whether the nominee is qualified to be a candidate and, if not, the reason for the disqualification and the procedure to appeal the decision. The HOA must then provide a reminder notice of the election and procedures between 7 and 30 days before the deadline for submitting nominations. Such notice must contain the same information as the previous notice, and a list of the names of all of the qualified candidates to fill the board positions as of the date of the reminder notice. After the above has all been completed as required, the HOA board must then vote to consider the qualified candidates elected by acclamation at a meeting for which the posted agenda item includes the name of each qualified candidate that will be seated by acclamation if the item is approved. These changes should be welcomed by many HOAs around the state.  Elections requiring a vote by secret ballot can be a significant procedural burden to HOA administration.  It is common for many associations, especially small associations, to maintain the same board members for multiple consecutive years. The changes referenced above will at least make it easier to reelect a standing board where no other owners have indicated an interest in joining the Board.   Authored by Reuben, Junius & Rose, LLP Attorney Jay Drake. 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.

Zoning

Oakland: Housing Approved & Zoning Updates

| Justin A. Zucker

Golden West Project CEQA Appeal Denied Yesterday, the Oakland City Council unanimously denied the appeal of a 222-unit State Density Bonus project, including 16 units for very low income households, on a vacant lot next to the West Oakland BART Station, aka the Golden West project (the “Project”). The City Council upheld the Planning Commission’s March 3, 2021, unanimous approval of the Project. Appellant appealed the Planning Commission’s decision approving the Project and the environmental review performed for the Project. Appellant argued the Project’s environmental review did not comply with the California Environmental Quality Act (“CEQA”), demanding that a focused or infill EIR be prepared alleging hazardous materials impacts. An EIR was prepared, however, which the Project tiered off of. The Project site is within the West Oakland Specific Plan area and was evaluated by the West Oakland Specific Plan Environmental Impact Report (“EIR”). The City’s independent environmental consultant analyzed and determined there was nothing peculiar about the Project than what was programmatically analyzed in the West Oakland Specific Plan EIR. Upon review, City staff determined that “all hazardous materials concerns were previously addressed in the [West Oakland Specific Plan] EIR” and “conclude[d] that the requirement for any supplemental and/or infill EIR would be inappropriate and not justified.” No further CEQA review was required. Tiering off the West Oakland Specific Plan EIR was found to be proper. Reuben, Junius & Rose, LLP, led by Justin A. Zucker, is happy to have successfully assisted Project sponsor in navigating this Project from concept and entitlement through appeal. Downtown Oakland Specific Plan Zoning Incentive Program Released As previously reported, the Downtown Oakland Specific Plan is working its way to the City Council for adoption. One of the main purposes of the new specific plan is to address issues with existing zoning controls. A key element of the Downtown Oakland Specific Plan is establishment of a Zoning Incentive Program (“ZIP”). On July 7, 2022, Oakland released the details of the Downtown Oakland Specific Plan ZIP. The ZIP allows developers to elect to provide one or more community benefits or pay an in-lieu fee to the City to fund such benefits, in exchange of increases in allowable building height and/or density. Projects may only participate in the ZIP if they are within one of the three ZIP areas designated in the Zoning Map. The three areas are generally located in: Jack London Square – area along the Embarcadero, including the Victory Court area; Central Downtown Oakland – area extending one to three blocks out from Broadway between 10th and 20th Streets and from 14th Street between Castro Street to Lake Merritt Boulevard; and Koreatown/Northgate – area surrounding Telegraph Avenue along 23rd, 24th, 25th, 26th, 27th and 28th Under the ZIP, a project providing one of the following will result in allowance for additional density or non-residential floor area: On-site, below market rate ground-floor commercial space – ground floor space provided at fifty percent (50%) of market rate rent for qualified retail, commercial, arts, and non-profit tenants; On-site affordable dwelling units – providing on-site affordable dwelling units allows for increases over base density but not non-residential floor area; Public restroom facility(ies) – provision of ground-floor, gender-neutral restroom facilities open to the public during work hours; Streetscape, open space, and flood control improvements – provision of public streetscape and/or open space improvements includes landscaping, tree planting, and public art installation with flood control improvements including raising public lands, construction of drainage facilities, retaining walls, and other similar improvements; In-Lieu Fees – provision of an in-lieu fee to be used by the City for the above-listed community benefits or for job training programs. The in-lieu fee per square foot of commercial development (non-residential floor area) ranges from $10 to $20 with the residential development in-lieu fee ranging from $12,000 to $22,000. On July 13, 2022, the Zoning Update Committee held a hearing on the proposed ZIP. At that hearing, no action was taken by the Zoning Update Committee. An economic analysis of the ZIP is being prepared and will be reviewed and analyzed at the next scheduled Zoning Update Committee hearing on August 24, 2022. 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. We will continue to track this significant rezoning and community planning effort as it moves forward.   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.

Appeal

Legislation Expands CUA Appeal Rights to Tenants

| Reuben, Junius & Rose, LLP

On Tuesday June 14th, Supervisor Melgar introduced a new version of legislation (“Appeal Legislation”) that will change, and effectively lower the threshold, for appeals of Conditional Use Authorizations (or denial) by the Planning Commission. A Conditional Use Authorization (“CUA”) refers to the use or development of a parcel that is not permitted as-of-right but requires additional scrutiny by the Planning Commission. These land uses have special characteristics or a unique nature that may be suitable only in certain locations or operated and arranged in a particular manner. As such, they have a higher threshold for approval. The San Francisco Planning Code states that a CUA can be approved if they are “necessary or desirable for, and compatible with, the neighborhood or the community” (Section 303(c)(1)), along with other specific findings. CUA appeals are acted upon by the Board of Supervisors. Because the standard for granting CUA’s are highly subjective, public opinion and political pressures often come into play in determining the “necessity or desirability, and compatibility” of a project. While land use justifications are given for classifying certain uses as conditional, other motives are often in play: to protect existing, local businesses from competition by formula retail or an overconcentration of similar businesses; to preserve the amenity and value of existing buildings by making height above 40 or 50 feet a conditional use, even in high-density districts where height limits allow for taller buildings and tall buildings are prevalent. With subjective standards for both approvals and appeals at the Board of Supervisors, some decisions may effectively become a popularity contest and create a great deal of uncertainty for applicants, property owners, and tenants. This is particularly true for businesses requiring a conditional use. Prior to new state laws setting stricter standards for disapproving or reducing the density of housing developments, new residential construction was downsized more frequently for compatibility with adjacent buildings. Currently, a decision by the Planning Commission on a CUA may only be appealed within 30 days by either 1) five members of the Board of Supervisors; or 2) the owners of at least 20% of the property within 300 feet of the exterior boundaries of the subject property. Where a property has joint ownership, the signature of each owner is calculated as representing the affected property in “direct proportion to the amount of total ownership of that property attributable to the owners subscribing to the notice of appeal” (Section 308.1(b)(4)). A CUA may only be overturned or modified by a 2/3 vote of the Board. The primary substantive change in the Appeal Legislation would count the signature of “Verified Tenants” as well as those of property owners toward meeting the 20% threshold for filing an appeal (currently, only owners are eligible). After receiving the signatures, the Department of Public Works (“DPW”) would have five days to verify whether the 20% requirement had been fulfilled. In a city where the vast majority of owners and businesses rent or lease, and many owners do not live or operate businesses on their property, the policy motivations of the Appeal Legislation are self-evident: to give the people living or running a business in a building who may be most affected by a CUA decision standing to file an appeal regardless of whether they own the affected property. With some narrow exceptions (e.g., property owners voting to tax themselves for community benefit districts that provide additional services), conditioning public participation or voting on property ownership is an anachronism. (North Carolina, the last state to make property ownership a prerequisite to voting in presidential elections, abolished its requirement in 1856.) With that said, the Appeal Legislation does raise several questions about the relative weight given to verification of tenant signatures, tenant votes, and the potential for double-counting votes in some instances: Verified Tenants or Honor System? Only a “Verified Tenant” may subscribe to an appeal. A Verified Tenant is a commercial or residential tenant who declares under penalty of perjury that they lease an entire property or a unit on the property with a lease term exceeding 32 days. A Verified Tenant must maintain proof of tenancy (lease or other government document showing residency/occupancy) and have occupancy longer than 32 days as of the date of signing the appeal. However, the Department of Public Works is not required to verify tenant documentation; it “may” request documentation at its discretion. It also does not specify that the signature from a business must be an authorized signatory for the business. For example, during the installation of street seating under COVID emergency orders, there were instances of unauthorized employees granting permission for structures with seating for adjacent restaurants to encroach on another store’s frontage without the business owner’s knowledge or consent. Given that DPW only has five days to determine the validity of an appeal, the verification process seems more like an honor system with a bare minimum of time for DPW to calculate the percentages based on self-reporting by signatories. Five days does not provide a reasonable amount of time for requesting and verifying even a random sample of documentation from Verified Tenants. Further, defining a Verified Tenant as one occupying a unit pursuant to a lease should require a tenant to provide a copy of the lease. Other documents (DMV records, federal income tax records, and utility bills) may demonstrate that a tenant lives somewhere, but not that they are an authorized occupant with a lease. Verifying property ownership, the current requirement for CUA appeals, is an easier process since ownership is a matter of public record. Under the Appeal Legislation, the relevant documents to prove up occupancy for Verified Tenants are not a matter of public record and an applicant has no right to demand an audit by DPW. At minimum, a random audit of a percentage of tenant signatories should be included and the overall total counted toward the appeal discounted accordingly. This could be accomplished without extending overall timelines for a 5-day preliminary acceptance of the appeal, subject to an

Housing

November Ballot Measure Seeks to Increase Affordable Housing Production

| Melinda Sarjapur and Daniel Frattin

The “Affordable Homes Now” measure submitted in March by a coalition of labor and housing advocates, has successfully collected the 52,000 signatures required to qualify for San Francisco’s November 2022 ballot. Citing a study by the Terner Center for Housing Innovation at UC Berkeley, the measure describes San Francisco’s four-year average to permit multifamily residential buildings as “one major obstacle to the goal of increasing affordable housing.” The measure attributes soaring housing costs to the difficulty many small businesses and essential service providers have with hiring and retaining workers, resulting in high turnover among public school and community college teachers. Finally, it notes that the lack of a “large, stable, and productive construction workforce” is a further constraint on housing production, driving delays, cost overruns, and safety incidents. Affordable Homes Now takes aim at these issues with a program to bolster and expedite the production of local affordable housing by providing streamlined, ministerial approval for the following types of development: “100% Affordable Housing Projects,” in which (a) all residential uses are restricted as affordable housing with a maximum overall average income of 120%, and (b) maximum sales or rental prices do not exceed 80% of median market rents or sales for the neighborhood, as determined by the Mayor’s Office of Housing and Community Development (“MOHCD”). To provide for the “missing middle” that is not served by existing affordable housing programs, households earning up to 140% of AMI would be eligible for residency, so long as they comply with the overall average affordability requirements above. Qualifying projects may include non-residential use at the ground floor, and those accessory to and supportive of on-site housing; “Increased Affordable Housing Projects,” which contain 10 or more units, and agree to provide on-site affordable units in an amount that is 15% greater than otherwise required under the City’s Inclusionary Housing Program or local HOME-SF density program. For example, a project subject to a 21.5% on-site requirement under the Inclusionary Program would be required to make 24.7% of its units affordable under the Affordable Homes Now measure. In a 100-unit project, the total number of affordable units would increase from 22 to 25; and “Educator Housing Projects,” as currently defined in Planning Code Section 206.9. Among other criteria, this includes providing all residential units as deed-restricted for the life of the project for occupancy by at least one employee of the San Francisco Unified School District (“SFUSD”) or San Francisco Community College District (“SFCCD”); providing at least 4/5ths of all units as affordable to households with income ranging from 30%-140% of AMI, with the overall average of 100% AMI across all units, and the remaining 1/5th of all units affordable up to a maximum 160% AMI. To protect historic buildings, recreational resources, prevent tenant displacement or development that would conflict with certain zoning standards or preexisting uses, the measure would not apply to Projects that: Remove or demolish historic landmarks, contributory buildings to a designated historic district, or Category I or II “significant” buildings under Article 11 of the Planning Code; Are located on Recreation and Parks Department property; Are located on sites not zoned for residential use; Demolish, remove, or convert any residential units, movie theaters, or nighttime entertainment use; or Include non-residential uses that require Conditional Use Authorization under the Planning Code. Similar to the statewide SB-35 legislation which took effect in 2018, qualifying Affordable Homes Now projects that meet objective zoning standards would receive streamlined processing and be exempt from the California Environmental Quality Act (“CEQA”). Such projects would require no discretionary approvals by City Boards, commissions, or officials, and would not be subject to Discretionary Review. Associated building permits and other city permits necessary for construction would also receive streamlined, ministerial processing. Projects qualifying under this measure could also utilize State Density Bonus Law to increase residential density, in which case any waivers, concessions or incentives would be considered consistent with objective zoning standards. However, for projects that do not utilize State Density Bonus Law, the measure would allow for administrative waivers or reductions from certain development standards including residential density; ground floor ceiling height; rear yard setback; dwelling unit exposure; loading; parking and open space. Affordable Homes Now projects would not be required to submit for a Preliminary Project Assessment before filing a formal development application. Following submission of a complete development application, the City would have approximately six to nine months to approve qualifying projects, depending upon the number of residential units they contain. Finally, the measure aims to attract a larger, more stable, and skilled construction workforce by setting minimum labor standards for Affordable Homes Now projects. These standard scale up based on the size of a project: 10+ units – All workers must be paid at least the applicable prevailing wage. 40+ units – In addition to the prevailing wage requirements, contractors that will employ construction craft employees for 1,000 or more hours are (a) required to provide medical insurance or make an $11.90/hour contribution to Healthy San Francisco per hour worked up to a weekly maximum of $476 and participate in state-approved apprenticeship programs; or (b) use contractors that are a signatory to a collective bargaining agreement that requires participation in a state-approved apprenticeship program. If no apprentices are available, projects may move forward without delay. The labor requirements are to be monitored through San Francisco’s Office of Labor Standards Enforcement, with contractors and subcontractors required to submit monthly reports confirming compliance with the above standards. Failure to submit a monthly report is subject to a $10,000 fine per month for each month the report is not provided, as well as fines of $200 per worker per day employed in contravention of Affordable Homes Now requirements. The Affordable Homes Now Initiative is proposed by a coalition of labor and housing advocates, including the Nor Cal Carpenters Union; Housing Action Coalition; Habitat for Humanity; Greenbelt Alliance; YIMBY Action; SPUR; and Grow SF. It is backed by Mayor London Breed; Senator Scott Weiner; and Supervisor Matt Dorsey. The

statute of limitations

What is S.O.L. for Bringing Quiet Title Claim?

| Michael Corbett

Imagine being at home one day when you receive news that someone (or some entity) is claiming to be the true owner of that same property you worked so hard, and paid so much, to purchase. Is there a chance there is actual merit to such a claim? What does this mean for your ability to sell the property in the future? Could the unthinkable happen, and you lose your home? Most importantly, what should you do next? When a dispute arises between parties as to who holds superior title to all or a portion of certain real property, a complaint to “quiet title” (among other causes of action) is typically brought before the court. The purpose of quieting title is to establish clear title against adverse claims to real property or any interest in the same. Cal. Civ. Code § 760.020. In other words, a quiet title action is a legal proceeding where a party claims title to all or a portion of specific real property and requests that the court find that party’s title to be superior to any interest that is claimed by the other party. One of the most common defenses to such actions relies on the applicable statute of limitations. While California Code of Civil Procedure does not have a specific statute of limitations for quiet title actions, the courts have provided guidance on when such claims must be brought, depending on the underlying theory of relief. Muktarian v. Barmby, (1965) 63 Cal.2d 558, 560. In 2015, the appellate court in Salazar v. Thomas, (2015) 236 Cal.App.4th 467, 477, ruled that the likely statute of limitations applicable to various underlying causes of actions were as follows: 3 years for claims based on fraud or mistake; 4 years for claims based on the cancellation of an instrument; and 5 years for claims based on adverse possession. Complicating matters further, quiet title actions have special rules for when the limitations period begins. Id. Importantly, no statute runs against a plaintiff seeking to quiet title while he is in possession of the real property in dispute. Muktarian, supra, at pp. 560-561. However, possession does not provide a party with an unlimited tolling period without qualification. Instead, the statute of limitations commences on a quiet title action when the party is no longer in “undisturbed possession.” Mayer v. L&B Real Estate, (2008) 43 Cal.4th 1231, 1238. In determining whether such a disturbance has arisen, courts will consider the following questions: When were the plaintiffs no longer owners in “exclusive and undisputed” possession of the land; When was defendants’ adverse “claim …pressed against” plaintiffs; or When was defendants’ hostile claim “asserted in some manner to jeopardize the superior title” held by plaintiffs? Salazar, supra, at 478. In the case of our homeowner who was notified of an adverse claim, the court would look to the factual history of the adverse claim being asserted, and to what extent, if any, the party asserting such claim had previously acted to move it forward. For example, where the underlying cause of action is based on the cancellation of an instrument, appellate courts have held that a notice of default (Salazar, supra, at p. 481) and a notice of trustee’s sale followed by a postponed sale (Huang v. Wells Fargo Bank, N.A., (2020) 48 Cal.App.5th 431), were insufficient to dispute or disturb the property owners’ possession and trigger the statute of limitations. Further, in Mayer, supra, at 1231, the California Supreme Court held that although a defective notice of tax sale did not disturb possession, a subsequent letter from the tax collector notifying the owners that the property had been sold at public auction was sufficient. (Id. at p. 1240.) And, in the recently published appellate court opinion of Kumar v. Ramsey, (2021) 71 Cal.App.5th 1110 – a matter involving a property in South Lake Tahoe, purchased out of foreclosure, where the buyer was aware of certain, previously recorded, land coverage transfer agreements – the court found that buyer’s mere knowledge of previously recorded agreements, which buyer’s counsel found legally invalid, posed only a dormant threat to buyer’s title, thus tolling the statute of limitations until the party asserting the adverse claim attempted to sell those alleged property rights to a third party. Lingering adverse claims on title create a cloud on the same, negatively impacting the marketability of the subject property, or worse, leading a court to find another party has superior title. The more complex the factual history regarding an adverse claim, the less one can be certain how a court will rule on the issue of when the statute of limitations period should commence. Property owners would be wise to promptly act upon being informed of an adverse claim against their real property, and request the court formally quite title to the property in such party’s favor. Because, unless title is made quiet, how can the issue ever really be put to bed?[1] [1] Note: The remedy provided in a quiet title action in California is cumulative and not exclusive of any other remedy, right of action, or proceeding provided by law for establishing or quieting title to property. Thus, a quiet title action may be brought in conjunction with another cause of action (e.g., declaratory relief or ejectment). Cal. Civ. Code § 760.030(a).   Authored by Reuben, Junius & Rose, LLP Attorney Michael Corbett. 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.

Zoning

Draft Zoning Amendments Released for Downtown Oakland

| Justin A. Zucker

The Downtown Oakland Specific Plan (“DOSP”) is Oakland’s sixth area plan and has been in the works since the mid-2010s. On April 27, 2022, Zoning Code Amendments to implement the objectives of the DOSP were released. The DOSP’s objectives, include new and equitable housing production, economic opportunity, social justice, culture keeping, quality urban form, climate-friendly mobility, and climate-responsive development. The Zoning Amendments consist of changes to both the Oakland Zoning Map and the Planning Code. Key elements of the proposed Zoning Amendments include: Establish a Zoning Incentive Program. The Zoning Incentive Program allows developers to elect to provide one or more community benefits, or pay a fee to the city to fund such benefits, in exchange for increases in allowable building height and/or density. Community benefits in the Zoning Incentive Program were selected to increase housing affordability, provide affordable rent for small businesses, train Oakland’s workforce, and create resources that support public health. Details of the Zoning Incentive Program have yet to be released and are expected sometime in mid-May. New area-specific regulations. The current Central Business District includes four zoning districts and will increase to ten, each with development standards and allowable uses tailored to specific conditions, objectives, and geography. High-density efficiency units. Allowing for dwelling units of 500 square feet or less at a higher density than regular dwelling units. Office Priority Combining Zone. Establishing an Office Priority Combining Zone within which properties must dedicate at least sixty percent of building floor space to office uses before other uses are allowed. Green Loop Combining Zone. Establishing a Green Loop Combining Zone to provide safe, inviting pedestrian connections between commercial, cultural, recreational, natural and entertainment areas of the Downtown District. Controls include the provision of pedestrian-oriented amenities along ground-floor storefronts and development standards for attractive, inviting open space between buildings and sidewalks. Transfer Development Rights (“TDR”) program. Establish a TDR program to protect historic buildings from demolition by allowing their owners to sell development rights to owners of sites in less historic areas of downtown. The DOSP has undergone revisions in response to extensive community review of the draft released in 2019. In conjunction with release of the Zoning Code Amendments, the Planning and Building Department will be hosting several additional community outreach meetings and hearing in the coming months. Individuals interested in the DOSP and its Zoning Amendments are encouraged to attend one or all of the following upcoming meetings: Special Districts, May 16 6:00-7:30 p.m. Development Standards and Zoning Incentive Program, June TBD 6:00-7:30 p.m. Community Advisory Group (CAG) Meeting, TBD Zoning Update Committee (ZUC) Hearing, TBD Later this year, the City Council is anticipated to consider both the Final Draft Zoning Amendments and Final DOSP for adoption. 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. We will continue to track this significant rezoning and community planning effort as it moves forward. 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.

moratorium

San Carlos Enacts Northeast Area Development Moratorium

| Matthew Visick

Pending Specific Plan Will Streamline CEQA Review of Future Life Science Projects On April 25th, the City of San Carlos enacted a development moratorium covering approximately 120 acres of land in the north side of the City, and east of Old County Road (see map below).  San Carlos has seen significant life science and R&D development in recent years, and the northeast area is anticipated to see an expansion of those uses.  The moratorium is broad, applying to virtually all development applications other than tenant improvements and projects with complete, filed applications.  It is expected to be in effect for two years while the City prepares a Specific Plan that will guide future development, articulate the public benefits future projects will provide, and streamline CEQA review of projects consistent with the Specific Plan. State law allows a City Council or County Board of Supervisors to enact a development moratorium of up to two years after it makes findings that approving projects would create an immediate threat to the public health, safety, or welfare.  The moratorium is initially limited to 45 days but can be extended with another vote of the City Council or Board of Supervisors to a maximum of up to two years.  Both the vote to enact the moratorium and the vote to extend must be approved by a supermajority (i.e., 4/5ths) vote. The San Carlos City Council found development in the northeast area would have health, safety, and welfare impacts unless the Specific Plan considered how it would affect the “supply of land and adequate sites suitable, feasible, and available for the development of housing.”  The findings anticipate that the Specific Plan will “develop policies and strategies to incorporate housing as a part of this new development.” While not expected, it is possible the City Council will carve out additional projects when it considers whether to extend the moratorium.  Several project sponsors opposed the enactment of the moratorium at the meeting on April 25, urging the Council to exempt projects with applications pending even if those applications were not yet complete.  At least one Council member appeared sympathetic to those arguments during the May 25th meeting (as noted above, at least four of the five Council members would need to vote to extend the moratorium). Planning Department staff will hold a public meeting with stakeholders on May 11th to gather stakeholder input and that input will be shared with the Council. Planning Department staff emphasized at the April 25th hearing that the Environmental Impact Report (EIR) the City is preparing for the Specific Plan will help streamline the approval of future projects that are consistent with the Plan.  State law provides several CEQA streamlining tools for projects consistent with a specific plan analyzed with an EIR.  Development under Redwood City’s Downtown Precise Plan (DTPP) provides a good example of the advantages of this approach for both the City and the applicable project sponsors.  Projects consistent with the DTPP required little to no additional project-specific CEQA review, allowing them to move through the approval process in a fraction of the time normally required.  In an ideal world, this strategy allows over-stretched Planning Department staff to redirect their time from project-level CEQA review to other priorities, and project sponsors to significantly reduce the often inordinate time and cost associated with CEQA review of individual projects.   Authored by Reuben, Junius & Rose, LLP Attorney Matthew Visick. 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.

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