SB 7

SB 7 Renews Expedited CEQA Review for Leadership Projects

| Kaitlin Sheber

Titled the “Jobs and Economic Improvement Through Environmental Leadership Act of 2021,” SB 7 reenacts and revises expedited CEQA administrative and judicial review procedures for certain Environmental Leadership Development Projects (“Leadership Projects”) established by AB 900. The bill was introduced by Senator Atkins as an urgency measure and went into effect on May 20, 2021. Since enactment, large projects are again eligible to be certified as Leadership Projects, and a new category of smaller housing projects may now be certified. Requirements for each type of project are discussed below. Examples of projects certified by the Governor as Leadership Projects in the past include the Apple Campus 2 project in Cupertino, the Golden State Warriors Event Center and Mixed-Use Development project in San Francisco, the Downtown West Mixed-Use Plan in San Jose, the Potrero Power Station project in San Francisco, and the Hollywood Center project in Los Angeles. Once the Governor certifies a project, it must be approved by its lead agency within a certain period of time. By requiring CEQA challenges to Leadership Projects to be resolved in under a year, SB 7 aims to expedite construction for housing projects and boost high-wage employment with the prevailing wage requirements that are a prerequisite for receiving the benefits of SB 7. However, given the increased costs prevailing wage requirements add to projects, developers of smaller housing projects that are unlikely to be challenged in court may not find Leadership Project certification economical. How many smaller residential projects choose to opt in to the program is yet to be seen. Environmental Leadership Development Projects: Only certain development projects qualify to be certified as Leadership Projects. These projects include: Large residential, commercial, retail, sports, entertainment, cultural, or recreational use projects that: Result in at least $100,000,000 in investment Create high-wage and highly skilled jobs that pay prevailing and living wages, provide construction jobs and permanent jobs for Californians, help reduce unemployment, and promote apprenticeship training Are 15% more transportation efficient than comparable projects, i.e. that generate fewer vehicle trips per employee, visitor, or customer Are located on an infill site Are consistent with any local sustainable communities strategy or alternative planning strategy and applicable policies where the California Air Resources Board has accepted the strategy achieves Greenhouse Gas reduction targets Meet other environmental standards, including no net new greenhouse gas emissions with an emphasis on on-site emission reductions Provide unbundled parking for multifamily residential projects Housing development projects that: Would result in an investment between $15,000,000 and $100,000,000 Create high-wage and highly skilled jobs that pay prevailing and living wages, provide construction jobs and permanent jobs for Californians, help reduce unemployment, and promote apprenticeship training Are located on an infill site Are consistent with any local sustainable communities strategy or alternative planning strategy and applicable policies where the California Air Resources Board has accepted the strategy achieves greenhouse gas reduction targets Meet other environmental standards, including no net increase in greenhouse gas emissions Dedicate at least 15% of the project to lower income households or dedicate the percentage required by local government, whichever is higher Do not provide short term rentals Do not include industrial or manufacturing uses Dedicate at least 2/3 of the square footage to residential use Provide unbundled parking for multifamily residential projects Renewable clean energy projects that generate electricity through wind or solar only Qualifying projects must go through a certification process to become Leadership Projects. First, the Governor must determine the project meets each condition as required above. Second, the Governor must submit that determination to the Joint Legislative Budget Committee, along with any supporting information, for review and concurrence or nonconcurrence within 30 days. If there is no concurrence or nonconcurrence from the Joint Legislative Budget Committee within those 30 days, the project will be deemed certified. Typically, the entire process takes 3 to 6 months. Extension of time and new requirements: The following timelines are in effect under SB 7: Leadership Projects must be certified by the Governor before January 1, 2024. Leadership Projects must be approved by the lead agency before January 1, 2025. The provisions of the bill will expire January 1, 2026. Projects certified by the Governor before January 1, 2020 and approved by a lead agency before January 1, 2022 are subject to the former AB 900 requirements in place on January 1, 2020. SB 7 has added requirements that eligible projects use a “skilled and trained” workforce for all construction work and project applicants pay all trial court costs in addition to court of appeal costs associated with hearing and deciding any case. The bill has also authorized the Governor’s Office of Planning and Research (“OPR”) to charge a fee to applicants. Given the additional requirements SB 7 has introduced for Leadership Project certification, it is unclear how feasible or desirable it will be for development projects, especially smaller housing development projects, to obtain Leadership Project certification going forward.   Authored by Reuben, Junius & Rose, LLP Attorney Kaitlin Sheber. 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 Seeks to Increase Corner Lot Density in RH Districts

| Melinda Sarjapur

On May 18, 2021, District 8 Supervisor Rafael Mandelman introduced legislation that could increase residential density on corner lots located in Residential, House (“RH”) zoning districts. RH Districts, which occupy most of the western San Francisco landscape, also have the lowest residential density levels that encourage development of single-family homes as well as some duplexes and triplexes. Mandelman’s proposed legislation creates an exception from residential density limits for all corner lots in RH districts, allowing development of up to 4 units in addition to any permissible Accessory Dwelling Units (“ADUs”). For reference, lots that permit development of four or fewer dwelling units are typically allowed just one ADU under existing zoning. The exception would not apply to projects seeking or receiving a density bonus under California state law.  Further, projects taking advantage of the density exception would be subject to building standards (rear yard setback, usable open space, etc.) applicable to the RH-3 District. As reported in a recent San Francisco Chronicle article, the legislation originally would have applied to all lots located within a half-mile radius of Muni, CalTrain, or BART station, as well as corner lots. However, Mandelman stated that the broader version would have required extended CEQA study and failed to provide a significant benefit over the current version, since the majority of larger mass transit stops are located on the east side of the City where residential density levels are typically higher. Mandelman stated that he may sponsor citywide legislation to permit fourplexes in the future, but not until San Francisco has completed its pending, long-range “Housing Element” update to the General Plan – likely next year. Still, the legislation’s current focus on RH districts could provide for significant development potential. The legislation notes that roughly 60% of San Francisco’s developable land area is located in the RH Districts, with 38% of that area zoned exclusively for development of single-family homes. And, according to the San Francisco Planning Department’s March 2020 City’s Housing Affordability Strategies Report, local housing production has been heavily concentrated outside of the RH Districts, in the eastern and southeastern parts of the City, with approximately 90% of all new housing produced in just 10 eastside and central neighborhoods. Mandelman’s fourplex legislation marks the latest in a number of local, regional, and statewide efforts to increase residential density in areas traditionally zoned for single-family homes or small multi-unit buildings. Berkeley and Sacramento have recently enacted legislation eliminating single-family zoning, while cities like San Jose and Oakland are considering similar measures. And, at the state level, the pending Senate Bill (“SB”) 9 legislation proposes to allow existing residentially-zoned properties state-wide which meet certain requirements to be subdivided into two lots, each of which can contain up to two units (duplex) in a single-family zone with ministerial processing.  After a third reading on the Senate floor and a favorable vote of 28-6, SB 9 is now headed to the Assembly and could pass in this year. Following its introduction to the Board of Supervisors on May 18, 2021, Mandelman’s fourplex legislation was assigned to the Land Use and Transportation Committee for review following a mandatory 30-day hold period. A Committee hearing date has not yet been set for this legislation. 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.

Housing Element

San Francisco Housing Element Update

| 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. 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.

Use

Legislative Updates: San Francisco

| Daniel Turner

With the end of the Covid-19 Health Emergency on the horizon, San Francisco is seeing an influx of land use legislation as City leaders set their sights on post-pandemic recovery. Below are two recent proposals to watch as they make their way through the approval process. Small Business Recovery Act: Simplifying and Streamlining Small Business Approval On March 16, 2021, Mayor London Breed introduced the Small Business Recovery Act (the “SBRA”), an ordinance proposing sweeping amendments to the Planning, Business and Tax Regulations, and Police Codes that are designed to stimulate and retain commercial and entertainment uses in the City. After receiving a 4-3 approval at the April 22, 2021 Planning Commission hearing, Mayor Breed introduced a third version of the SBRA on May 11, 2021. The SBRA will need to go through further review before the Board of Supervisors ultimately votes on the ordinance. The current version of the SBRA (as of May 13, 2021) would make the following changes: Conditional Use Authorizations would no longer expire from abandonment as long as there is no intervening use. Currently, a Conditional Use Authorization expires after three years of disuse. ADUs would be allowed in commercial spaces in Neighborhood Commercial Districts as long as the first 25 feet of lot depth is reserved for commercial use. Neighborhood Notification would no longer be required for changes of use in the Eastern Neighborhoods, potentially removing the 30-day notification hold. The eligibility for expedited 90-day processing for Conditional Use applications would be expanded to include Formula Retail uses with fewer than 20 locations, Bars, Nighttime Entertainment, Cannabis Dispensaries, non-retail sales and service uses, and any eligible use seeking to operate outside of principally permitted operating hours. The Planning Department would be mandated to develop and use an abbreviated case report format to ensure the efficient processing of expedited Conditional Use applications. Catering would be permitted as an accessory use in most Restaurants, subject to certain accessory use restrictions. Additional code modifications would be implemented to give Entertainment Uses greater flexibility. Elimination of Historic Preservation Commission Review and Appeals for Certain Alteration Permits The SBRA would also eliminate the review and appeals period for Administrative Certificates of Appropriateness and Minor Alteration permits, which are required for certain projects involving landmarks or historic structures. Under current law, the Planning Department reviews and makes an administrative determination on these permits. After the Department makes a determination, anyone can appeal the decision to the Historic Preservation Commission (“HPC”) within 15 days. The HPC can also review any determination of its own volition within 20 days. The SBRA would remove both the appeal and review periods, meaning the determination of the Department would be virtually final. This could significantly speed up certain projects by eliminating the ability of project opponents to contest approvals. However, it also means that project sponsors would lose a guaranteed avenue to quickly appeal a denial. Removal of Life Science and Medical Special Use District On May 4, 2021, District 10 Supervisor Shamann Walton introduced legislation to remove the Life Science and Medical Special Use District (“SUD”) in the Dogpatch Neighborhood. The SUD was created 12 years ago to encourage Life Science and Medical uses that would benefit from the close proximity to UCSF Mission Bay, which opened directly to the north in 2003. The SUD covers about a third of the Dogpatch, and is concentrated on the blocks immediately south of UCSF Mission Bay, a thin corridor adjacent to I-280, and along 23rd Street. The SUD overlays the existing Urban Mixed-Use zoning and principally permits Life Science Office, Life Science Lab, and Medical Service uses and exempts them from certain size and PDR replacement controls. In his proposal to remove the SUD, Supervisor Walton expressed dissatisfaction with the SUD and claimed it was operating contrary to Eastern Neighborhoods Plan by failing to provide a buffer around the Dogpatch and allowing encroachment of large office uses. The proposal claims that the SUD does not contribute to the neighborhood, and that placement of Life Science start-ups in the Dogpatch increases rents and pushes out vibrant and varied community-serving uses. Under San Francisco’s 30-day rule, consideration of the proposed ordinance cannot take place until after June 3, 2021.   Authored by Reuben, Junius & Rose, LLP Attorney Daniel 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 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.

sublease

To Sublease Or Not To Sublease?

| Michael Corbett

With overall rental rates having fallen nearly 30% and vacancy rates risen roughly 150% between Q4 of 2019 and Q1 of 2021[1], the leasing of office space in San Francisco undisputedly remains a tenant’s market. Of the approximately 20.2 million square feet of available office space in San Francisco, nearly 45% is comprised of sublease offerings.[2] For companies in the market for office space, special factors should be considered when evaluating sublease opportunities. The following outlines the primary benefits and potential risks of subleasing office space in San Francisco. BENEFITS Discounted Rental Rates. Sublease offerings traditionally undercut the prevailing market rates for direct deals with a master landlord and offer the greatest benefit to a sub-tenant. Sub-landlords are generally more inclined to provide a substantial period of rent abatement as compared to master landlords. Flight to Quality. With discounted rental rates comes the opportunity for a sub-tenant to lease higher-quality space it otherwise would not be able to afford, enhancing the image of the sub-tenant company without paying the premium a master landlord would otherwise require. Plug and Play. A sublease may provide the sub-tenant with the option of using – often at no additional charge – existing furnishings, fixtures and wiring within the sublet premises. Such “plug and play” opportunities are a benefit to a sub-tenant’s bottom line, and may allow for a more efficient, seamless relocation and/or opening. Less Detailed Lease Negotiation. Sublease agreements are typically shorter in length and more simplified as compared to master leases. RISKS Master Landlord and/or Lender Consent. Proposed subleases generally require the consent of the Master Landlord, which poses a risk of uncertainty for both prospective sub-landlords and sub-tenants seeking to enter into a sublease agreement. Further, in instances where an approved sublease requires the sub-tenant to first obtain sub-landlord consent (e.g., making alterations to the premises), prior consent of the master landlord will also be necessary. Depending on the terms of the master lease, approval of master landlord’s lender may be required in certain instances. Recapture and Termination Rights. Depending on the terms of the master lease, the master landlord may have the right to recapture the premises and/or terminate the master lease in the event a request to sublease is made. Sub-Tenant is Subject to Master Lease. Sub-tenants are responsible for complying with the sublease agreement as well as the master lease. As a sub-tenant, it is important to review the master lease to avoid unexpected obligations and limitations (e.g., insurance requirements, operating expense pass throughs, relocation rights, requirements to restore the premises to original condition, burdensome indemnity provisions, etc.). Less Opportunity for Improvements. Generally, sub-landlords are less inclined to offer a Tenant Improvement Allowance, requiring the sub-tenant to instead sublease the premises on an “as-is” basis. Eviction and/or Attornment Issues. A breach of the master lease by sub-landlord may result in the sub-tenant being unexpectedly evicted (if master landlord terminates the master lease) or having to attorn to the master landlord (if required by the sublease and authorized by the master lease). Potential Tax Pass-Through Obligations. Master landlords may pass through to the sub-landlord those taxes generated pursuant to San Francisco’s Early Childcare and Educational Commercial Rents Tax Ordinance and the Gross Receipts Tax Ordinance. Depending on the terms of the sublease agreement, sub-landlord may in turn pass through such costs to sub-tenant. Increased Documentation. While the sublease agreement is usually less involved than a master lease, a review of the master lease is also necessary, and possibly a separate attornment and/or lender consent agreement. No Direct Recourse Against Master Landlord. Because a sub-tenant is not in privity of contract with the master landlord, sub-tenants do not have any direct remedies against the master landlord. This can be especially problematic when there are poor or defective building conditions and/or service issues, as the sub-tenant finds itself at the mercy of the sub-landlord to seek recourse from master landlord on sub-tenant’s behalf. Allocation of Expenses Disputes. Issues may arise regarding whether the sub-landlord or sub-tenant is responsible for paying certain operating costs passed through by the master landlord. Companies considering a sublease in San Francisco should make clear in any such agreement which party will be responsible for what costs and understand how the terms of the master lease may impact their sub-tenancy. Without a meaningful evaluation of the above risk factors, the boon of discounted rent that accompanies a sublease could quickly be erased by unexpected costs and obligations over the course of the sublease term. Please contact Michael Corbett by email at mcorbett@reubenlaw.com for answers to any questions related to this update. [1] Colliers International, Q1 2021 Office Market Report [2] Id.   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.

SB 35

Berkeley SB 35 Project Wins Appeal

| Matthew Visick

Court of Appeal Rejects City’s Bases for Denying the Project After more than two years of legal wrangling in the courts, a 260-unit mixed-use project at 1900 Fourth Street in Berkeley (the Spenger’s parking lot) will soon be able to move forward under the streamlined approval process set forth in Senate Bill 35 (“SB 35”).  This week, the Court of Appeal determined—in a published decision that will have precedential value in other cases throughout the state—that the City’s rationale for denying the project had no merit.  The Court’s opinion reversed the decision of the trial court, which had upheld the City’s denial of the project. Background The project was originally proposed to include 135 apartments over 33,000 square feet of retail.  The project site is within a three-block area that the Berkeley Landmarks Preservation Commission (“Commission”) designated as a City landmark based on its proximity to the West Berkeley Shellmound.  The Shellmound is considered to have been a significant cultural resource and is listed on the California Register of Historical Resources.  However, as the Court noted in its opinion, nothing remains of the Shellmound above ground and decades of development had “systematically demolished” most of the Shellmound. The draft Environmental Impact Report (“EIR”) for the original project exhaustively reviewed the potential impacts of the project on the Shellmound and concluded that there was very little chance, if any, that part of the Shellmound had been located on the project site.  The draft EIR nonetheless recommended mitigation measures to ensure that, if any of the Shellmound was discovered during construction, the project would not disturb it.  However, despite the robust analysis and mitigation measures in the draft EIR, the Commission took the position that the draft EIR was “seriously deficient” in its analysis of cultural resources. In response to the Commission’s position, the project sponsor reformulated the project to take advantage of SB 35, which would allow the project to move forward without CEQA review.  The SB 35 project would include 260 apartments (nearly double the original number) over 27,500 square feet of retail space and parking.  To take advantage of SB 35, the project would make 50% of the units affordable to low-income households (we note that in some cases, only 10% of the units need to be affordable to low-income households). The City Denies the Project The City denied the revised application on several bases: (1) SB 35 does not apply to projects that require demolition of an “historic structure”; (2) SB 35 does not apply to the City because it is a Charter City; and (3) the project conflicts with the City’s affordable housing fee and traffic impact requirements.  After denying the revised application, the City offered that the project sponsor could restart the processing of the earlier application or revise it to conform to the SB 35 project.  The project sponsor sued. Trial Court Upholds the City’s Denial of the Project As described in a prior update, the trial court upheld the City’s denial of the revised application on two bases.  First, the trial court concluded that it was bound to uphold the City’s determination that the project might require demolition of an “historic structure” (i.e., the Shellmound) if there was any evidence to support it, however thin the evidence might be.  Second, the trial court concluded, after parsing the language of SB 35, that SB 35 did not apply to mixed use projects except in the very limited circumstance when the zoning specifically required at least 2/3 of the square footage to be residential. Court of Appeal Rejects City’s Arguments and Reverses the Trial Court Decision The Court of Appeal took a less deferential approach to its review of the City’s decision, concluding that the Legislature had intended to restrict cities’ discretion when it enacted SB 35.  The Court saw no evidence that the Legislature intended the term “historic structure” to include an historic site (like the Shellmound) and no evidence of a structure that could be demolished by the project.  The Court also rejected the City’s arguments that the revised project would conflict with its affordable housing fee and traffic impact requirements. Significantly, the Court confirmed that the housing crisis is a matter of statewide concern and that the Legislature can therefore impinge upon a Charter City’s normally broad authority over its municipal affairs so long as the restriction of local authority is not overly broad.  In this case, the Court found that the extent to which SB 35 limited the City’s authority over historic preservation was not overly broad, and thus allowable.  This aspect of the Court’s opinion augurs well for the raft of recent state housing legislation, much of which restricts local discretion. Finally, the Court rejected the notion that SB 35 does not apply to mixed-use projects except where the zoning requires at least 2/3 of the square footage to be residential.  The Court saw this interpretation of SB 35 as “strained and unreasonable” and concluded it “makes no sense in light of the statute’s purpose” to facilitate housing.  The Court affirmed that SB 35 is available so long as the project itself designates at least 2/3 of its square footage for residential use. We expect the project sponsor will recover its attorney fees associated with the litigation given that the lawsuit ensured that the City would follow state housing law.  The Court’s opinion already provides for the sponsor to recover its costs (exclusive of attorney fees) related to the appeal.   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

ADUs

Accessory Dwelling Units – Oakland Update

| Justin A. Zucker

As previously reported, a slate of new California State laws became effective on January 1, 2020, that encourage the construction of Accessory Dwelling Units (“ADUs”). State law holds that until a city adopts an ordinance that complies with State law, a city’s existing ADU regulations are null and void and only State standards may be applied. Currently, the City of Oakland’s ADU regulations are not in line with State law. In response to this inconsistency, Planning Department staff is proposing amendments to its ADU regulations to bring them in line with State law. Below are some of the key changes to Oakland’s ADU regulations: ADU permit approval within 60 days of application submittal. Ministerial approval for one interior, attached, or detached ADU and one Junior ADU (“JADU”), which are a type of ADU no more than 500 sf with an efficiency kitchen, but do not require a private bathroom, per single-family lot. Ministerial approval of a detached ADU, provided it is up to 800 sf, 16 feet in height, and maintains 4-feet rear and side setbacks. Ministerial approval of at least one interior ADU on multifamily lots, up to a number equal to 25% of the existing units, that involves conversion of non-habitable space, and no more than two detached ADUs. Conversion of existing accessory structures, such as carports and garages, into ADUs without requiring off-street parking replacement if the parcel is within half a mile walking distance of public transit. Continued prohibition on all new ADUs and JADUs within the S-9 Fire Safety Protection Combining Zone Overlay (basically, the Oakland Hills) and now on streets with a width less than 20 feet or cul-de-sacs greater than 600 feet in length, due to the limited space for cars to escape in an emergency, such as a fire, natural disaster, or a health crisis. Consultation with Historic Preservation Staff is required for ADUs proposed on a Local or California Register property visible from the public right-of-way. Placement of an ADU in front of a main building on a Local or California Register property is only allowed if the lot conditions or requirements preclude an ADU of minimum allowed size anywhere else on the lot. In addition, the proposed Planning Code amendments introduce objective development standards consistent with State law: Same roof pitch, visually similar exterior wall material, and predominant door and window trim, sill, recess and style as the primary dwelling structure for ADUs located in front of a primary structure, attached to it, or visible from the public right-of-way. Applicants may pursue approval of different finishes or styles through the Small Project Design Review process. Regulation of balconies, decks, or rooftop terraces per established standards of the underlying zone. Requiring at least one tree per every 500 sf of new ADU floor area, with tree(s) allowed anywhere on the lot or within the public right-of-way in front of the site. ADUs that do not comply with the objective standards may go through the Small Project Design Review process. These proposed Planning Code amendments are anticipated to be reviewed and considered by the Planning Commission later this spring with adoption by the City Council this summer. We will continue to monitor this proposed legislation and keep you updated.   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.

Monument

Monument Referencing Before Construction

| Gillian Allen

New construction and alteration projects that require a permit for public right of way work often spend a year or more working with San Francisco Public Works (“DPW”) towards an issued permit. It is only upon approval that a parallel group within DPW, the Preservation Monument Team, notifies permit applicants that they must reference all monuments within 20 feet of construction prior to starting work within the public right of way. In 2018, under DPW Order 187,592, the City and County of San Francisco (“CCSF”) Bureau of Street Use and Mapping (“BSM”) established clear guidelines for this process, however it is not identified on the DPW applications as being a step required for issuance. Because of the delayed notice of the monument referencing requirement some projects and contractors incur significant postponement to their schedules because they cannot activate a street improvement permit until this process is completed. Monuments are essential to establishing and maintaining horizontal and vertical survey control for subdivisions, tracts, boundaries, roads, streets or highways and are further protected under California state law under Penal Code § 605, Streets and Highways Code §§ 732, 732.5, 1492.5, 1810.5, as well as Business and Professions Code §§ 8725, 8771 and 8773.3. Due to the potential for movement or disturbance of survey monument during construction, all monuments within 20 feet of any proposed construction must be located and referenced through a field survey and the filing of a Corner Record, or Record of Survey, prior to any construction taking place. This is to allow for positional verification or replacement should a monument be disturbed or removed by the construction. Referencing can be conducted by a licensed Land Surveyor or CCSF BSM. Currently, when a street improvement, minor sidewalk encroachment, or excavation permit is approved, the known monuments are referenced on the permit, however there are monuments that are not of record. Not of record means the monument does not appear on any maps or documentation that has been duly noticed by recordation with the City and County of San Francisco. DPW Order 187,592 requires that an onsite field review is performed to determine if such non-record monuments exist. As described in CCSF BSM’s guidelines, non-record monuments are “old original subdivision marks that typically do not appear on any record maps. Within the City and County of San Francisco, not of record monuments typically are “L”, “T” and “+” cuts and lead plugs with brass tacks. ““L”, “T”, “+” cuts, lead plugs with brass tacks and or 1-inch disks are typically located in curbs and additionally can reside anywhere along property lines extending from street curb to the back of sidewalk.” Projects will need to submit a letter from a licensed surveyor indicating that they performed a field survey and no monuments were found. The CCSF BSM guidelines have detailed pictures and examples of what to survey for in the field. While it is the responsibility CCSF BSM to preserve these survey monuments and to maintain their exact positions, it is the project sponsor’s responsibility to survey for the monuments both through the monumental map and in the field. Performing this survey when you file street improvement applications rather than waiting until they are issued will save your project time. Extended Referencing is required where construction proceeded prior to standard monument referencing having been performed. This can happen when due to the backlog and delays in DPW permits being issued, a project decides to proceed with work “at risk” and/or was unfamiliar with the DPW order. In these situations, a comprehensive field survey and office analysis shall be required to determine if the construction activity caused any potential movement of the monument or to reestablish the monument position if a monument was destroyed. To perform this Extended Referencing, additional fees shall be assessed and are estimated to be $10,000 or more. If any monuments are covered, disturbed, destroyed, or removed, any costs incurred to re-establish the monument will be in addition to the initial application fee and may vary due to time and methods required. If you elect to have CCSF DPW BSM conduct research, please contact monument.preservation@sfdpw.org to request a proposal of these services. Project teams who wish for BSM to perform the field survey and referencing should apply six to eight weeks ahead of construction to allow for payment to clear and crews to be scheduled. CCSF BSM Standard Referencing Fee is $3,876 and CCSF BSM Monument Referencing Fee for 2020-2021 is $3,876 per monument and covers the field and office-related costs for the standard monument referencing process. The Monument Referencing Fee is adjusted each year to reflect changes in the relevant Consumer Price Index. Before contacting BSM to do the monument referencing, please fill out and submit an application.   Authored by Reuben, Junius & Rose, LLP Manager, Post Entitlement Division Gillian Allen. 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.

Laws

Two Legislators Take Aim at Statewide Planning Laws

| 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. 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.

size

Size Restrictions Proposed on San Francisco Homes

| Thomas P. Tunny

San Francisco policy-makers continue to scrutinize the size of dwellings in an attempt to manage affordability and housing stock.  Merits aside, policy-makers have expressed a consistent concern about demolitions, expansions, and new large-home construction.  The latest measure is an ordinance introduced last month by Supervisor Rafael Mandelman (District 8), whose district includes the Castro, Noe Valley, Glen Park, and Bernal Heights. Planning Code Section 317 already requires a conditional use authorization for residential demolitions, mergers, and removals.  Supervisor Mandelman’s proposal would discourage residential units over 2,500 square feet by requiring, with some limited exceptions, a conditional use for them in RH (residential, house) zoning districts: Expansions On a developed lot where no existing dwelling unit exceeds 2,500 square feet of gross floor area, expansion of the residential use that would result in an increase of more than 50% of gross floor area to any dwelling unit or would result in a dwelling unit exceeding 2,500 square feet of gross floor area, except where the total increase of gross floor area of any existing dwelling unit is not more than 10%. On a developed lot where any existing dwelling unit exceeds 2,500 square feet of gross floor area, expansion of the residential use that would result in an increase of more than 10% of gross floor area of any dwelling unit. New Construction Residential development on a vacant lot, or demolition and new construction, where the development would result in only one dwelling unit on the lot or would result in any dwelling unit with a gross floor area exceeding 2,500 square feet. New Conditional Use Criteria In addition to the standard conditional use criteria, the Planning Commission must consider the following new criteria: the property’s historic preservation status; whether additional dwelling units are added; whether the proposed development preserves or enhances the existing neighborhood character by retaining existing design elements; whether the development proposes to remove more than 50% of the existing front façade; and whether the project removes rent control units. Exceptions The legislation would except developments from the new conditional use authorization requirement where a complete development application was submitted before February 2, 2021. The legislation would also except developments that increase the number of dwelling units on the lot provided that no dwelling unit exceeds 2,500 square feet of gross floor area as a result of the development, no proposed dwelling unit is less than one third the gross floor area of the largest dwelling unit resulting on the lot, and that neither the property or any existing structure on the property: (i) is listed on or formally eligible for listing in the California Register of Historic Resources; (ii) has been adopted as a local landmark or a contributor to a local historic district under Articles 10 or 11 of the Planning Code; or (iii) has been determined to appear eligible for listing in the California Register of Historic Resources. The legislation has been referred to the Planning Department for review and consideration by the Planning Commission.  To date, there is no estimate of how many projects would be affected by this requirement in a typical year, how many hours of staff time it would take to process them, or how the volume of new conditional uses would affect backlogs for all projects. No hearing date has been set for the Commission to consider the legislation, but we will continue to monitor and keep readers informed.   Authored by Reuben, Junius & Rose, LLP Attorney Thomas P. Tunny. 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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