This week’s update continues our series on Central SOMA and focuses on a long-awaited milestone.  Legislation implementing the Central SOMA Plan has finally released to the public two weeks ago, and the “initiation” hearing for the legislative package is set for tomorrow at the Planning Commission.  This is the first formal step to San Francisco adopting the plan.  Planning Department staff and the City Attorney’s office have been hard at work crafting the General Plan, Planning Code, and Administrative Code amendments up for consideration, which clocks in at 491 pages—demonstrating the scope and ambition of the plan. Instead of attempting to comprehensively summarize all legislative changes, this update highlights some key aspects of how the Central SOMA plan’s broad policy goals and the City’s long-term vision for this part of the City will be implemented. Height increases, and new base zoning, overlay, and bulk district. As everyone is aware, Central SOMA will increase height and loosen use restrictions on a number of parcels in the city in exchange for increased community benefits, and the legislation does just that.  As far as we can tell, the legislation maintains height increases on the parcels identified in earlier plan documents.  The legislation will also change the zoning of most of the Plan area to a new base zoning district:  Central Soma Mixed Use – Office, sure to be referred to by its acronym CMUO.  It adds an overly special use district and a new bulk district with the famous “skyplane controls” that applies to most sites upzoned to 130 feet or higher. This approach allows the City to apply broad use controls throughout the Plan Area via the base CMUO district while locating more specific development limitations and design restrictions in the special use district and the bulk controls sections.  Municipal Code and land use regulations should be understandable to experts and laypeople alike.  Rezoning in this way should help streamline understanding of overarching use controls while segmenting the tricky and complicated bulk and special use district regulations to stand-alone sections, minimizing the need to sprinkle new rules throughout existing sections of the Planning Code where they can be hard to identify. POPOS requirement for most large non-residential projects. Projects proposing more than 50,000 square feet of most non-residential uses—including retail and office but not PDR—will need to provide privately owned public open space, commonly referred to as POPOS (or pay an in-lieu fee).  Although outdoor POPOS is preferred, it can be indoors also, providing welcome relief for some project sites where outdoor open space causes design headaches.  Among other design restrictions, it must be at street grade for at least 15% of the project site’s lot area, lined with “active” uses such as retail for outdoor POPOS, and feature amenities complimentary to nearby open spaces. PDR and micro-retailers locked into medium and large projects. Projects proposing at least 50,000 square feet of new office use are required to include PDR in the project.  The on-site amount is either 40% of the total lot area of the project (i.e. 0.4 FAR) or the replacement space required under Prop. X—whichever is greater.  Alternatively, sponsors can provide 1.5 times the required amount of PDR space off-site or preserve twice as much existing PDR space than what is required on-site.  Similarly, projects on very large development sites are required to have at least one 1,000 square foot or smaller “micro-retail” unit on the ground floor that’s directly accessible from a public right of way or POPOS. Eating and drinking retailers with over 10 stores locked out. The Central SOMA plan is not great news for established businesses looking to take advantage of increased retail opportunities, particularly eating and drinking retailers.  San Francisco classifies most retailers with over 10 stores worldwide as “formula retailers.”  New bars, restaurants, and cafes that also happen to be formula retailers would be prohibited in the new CMUO zoning district. All other formula retail users will need to get a Conditional Use authorization like they do now in most parts of San Francisco outside of downtown.  Formula retailers are also not allowed to occupy the 1,000 square foot or smaller “micro-retail” spaces on the larger Central SOMA project sites. Central SOMA’s own Transferable Development Rights (“TDR”) program. Property owners of historically significant buildings and developers of large sites within Central SOMA will need to brush up on their knowledge of San Francisco’s historic building air rights program.  The TDR program—long a staple of large-scale development and a way to preserve historic buildings in San Francisco’s downtown core—will be extended into Central SOMA. Projects proposing over 50,000 square feet of non-residential use that received an upzoning of over 85 feet, or were rezoned from SALI or SLI with a new height limit over 85 feet, will need to purchase some TDR.  But the amount is relatively low compared to the TDR program in C-3:  only for the floor area between 3.0-to-1 and 4.25-to-1 FAR.  Sponsors can acquire TDR from either C-3 zoning districts or Central SOMA, which should open up the market somewhat and not make development over 3.0-to-1 FAR cost prohibitive. Owners of buildings in Central SOMA that are landmarked, significant, or contribute to a historic district under Articles 10 or 11, are eligible to create and sell TDR, so long as the historic building itself doesn’t exceed allowable existing floor-area ratio controls. Impact fees and an expected Community Facilities District. The legislation also includes two new impact fees specific to sites in Central SOMA that were upzoned by 15 or more feet or rezoned from SALI or SLI to CMUO.  One of these fees will fund cultural facilities, health clinics, and job centers, and the other will fund public transit, recreation, and open spaces.  Also, the Planning Department’s staff report notes that although this version of the legislation did not include a Central SOMA-specific Community Facilities District (aka a Mello-Roos district), it is still in the works and “expected” to be part of the final legislative package.  The impact fees

With the mayoral election in June, many in the real estate industry are busy sizing up the candidates. Supervisors Breed and Kim currently serve in City Hall, so their priorities and recent legislative efforts in the development arena are well known. This week, we take a look at some of candidate Mark Leno’s positions during his lengthy service as an elected official on the Board of Supervisors (1998-2002), in the state Assembly (2002-2008), and in the Senate (2008-2016). Though Mr. Leno’s legislative efforts are far-reaching – he sponsored bills to raise the minimum wage, promote LGBT rights, and expand tenant protections – our focus here is primarily on issues related to real estate development during Mr. Leno’s tenure as a supervisor. This is not intended to be an endorsement of any particular candidate, or, for that matter, a comprehensive review of Mr. Leno’s position on every development issue that came before him. Instead, we hope this high-level summary of his positions or votes will provide some insight into the values and priorities Mr. Leno would bring to Room 200 if elected. Increasing Residential Density in Commercial and Manufacturing Districts. Mr. Leno sponsored legislation to exempt residential units downtown and along the northeastern waterfront (C-3 and C-2 Districts) from FAR limits and to increase residential density limits in the same area and large areas of SoMa, Potrero Hill, and other formerly industrial parts of the City. By some estimates, this would have allowed up to 9,000 new units downtown. Ultimately, the legislation was not passed but was subsumed into area plans for Market-Octavia, Rincon Hill, Transbay, and the Eastern Neighborhoods. Inclusionary Housing Requirements. In 2002, then-Supervisor Leno sponsored San Francisco’s Inclusionary Housing Ordinance, which established a uniform set-aside policy for affordable housing in market-rate developments. Prior to the ordinance, the Planning Commission had the option of mandating affordable housing in residential projects requiring a conditional use, which lead to uneven results for similar projects and uncertainty in the development process. At the time, Mr. Leno’s efforts were hailed as a consensus-oriented approach, with support from SPUR, the SF Housing Action Coalition, along with some developers and affordable housing advocates. More recently, Mr. Leno supported the more divisive Proposition C in 2016, which doubled inclusionary housing requirements for most residential developments. Mr. Leno also supported Assemblymember Ting’s failed AB 915, which would have extended inclusionary requirements to bonus units under the state density bonus law. This would have effectively increased inclusionary requirements for density bonus projects. Sustainable Transportation Infrastructure. As a Supervisor, Mr. Leno advocated the tear-down of the Central Freeway in a series of competing ballot initiatives over a years-long period in the late 1990s. Leno also introduced the resolution to establish bike lanes on Valencia Street, which served as a model for the subsequent expansion of San Francisco’s bike network. Mr. Leno also passed legislation mandating bike parking in new commercial buildings and was an early supporter of City Car Share. Notification Requirements for Neighborhood Commercial Districts. Mr. Leno sponsored legislation that expanded public notice requirements for new construction, expansions to buildings, and changes of use in Neighborhood Commercial Districts. The upshot of this legislation was to put a 30-day hold on permits prior to Planning approval and expand opportunities for members of the public to appeal permits to the Planning Commission for discretionary review. Limits on Office Development. In 2000, San Francisco faced a situation similar to today: the amount of office space proposed exceeded what was likely to be available under its annual office cap. Competing ballot measures were proposed. Proposition K was sponsored by developers and would have loosened controls on office development by exempting certain areas from the cap, notably Mission Bay, the Port, the Presidio, and the Bayview Hunters Point Shipyard. It would have also increased impact fees and established a temporary moratorium on large office developments in the Mission and Potrero Hill. Proposition L was championed by slow-growth advocates and was supported by then Supervisor Leno. It would have exempted from the office cap a subset of the areas exempted under Proposition K, extended the moratorium on new offices to cover much of South of Market in addition to the Mission and Potrero Hill, and provided CEQA protections for industrial uses. Ultimately, both measures failed.   Authored by Reuben, Junius & Rose, LLP  Attorney, Daniel Frattin 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.

The deadline for San Francisco business tenants and property owners to submit either a pre-screening or compliance checklist in accordance with the Accessible Business Entrance Program is fast approaching. This Ordinance (San Francisco Ordinance No. 51-16 – Mandatory Disability Access Improvements), enacted May of 2016, amended the San Francisco Building Code to require any existing building with a public accommodation to either have all primary entries and path of travel into the building accessible by persons with disabilities or to receive from the City a determination of an equivalent facilitation, technical infeasibility or unreasonable hardship. In response to the Ordinance, the San Francisco Department of  Building Inspection (DBI) issued Information Sheet DA-17 which has full details and steps to compliance; however as only approximately 70 properties in these two categories have responded to date, DBI is spearheading an effort to remind Property Owners and Business Tenants to identify which Category they fall into and follow through within the compliance deadlines. It is important for Property Owners to take note that compliance requires a checklist completed by a Certified Access Specialist (CASp) or California Licensed Design Professional. In this busy development climate, this evaluation should be scheduled several months in advance of the May 2018 deadline.  If the site is found to not be in full compliance, the improvements cannot be rolled into an already existing tenant improvement permit.  DBI is requiring a separate standalone permit. Perhaps most importantly is to understand that the “path of travel into the building” includes the accessible route from public transportation and parking spaces/facilities.  Full compliance with the ordinance requires an evaluation of the sidewalk and curb.  Specifically cracks with changes in level > ½”, grates and other openings > ½”, cross slopes greater than 1:48 or slope landings exceeded 8.33% will need to be addressed.  These requirements fall under Site Arrival and involve review by the Department of Public Works (DPW).  While some exceptions may be granted for historic properties after design evaluation by the Planning Department, the path of travel to the primary entrance will not be exempted.  For Business Tenants and Property Owners engaged in lease negotiations, this is especially prescient. Compliance Responsibility – How and When Newly constructed buildings with a permit application (Form 1/2) dated on or after January 1, 2002, need only to submit a Pre-Screening Form.  This is a bit of a relief for the development community and all those people in new buildings that should all be ADA compliant in any case.  What we are seeing is the continued evolution of the difficult situation of trying to balance the needs of the ADA community with the practical realities presented by older buildings. For all other buildings with public accommodation, the San Francisco Department of Building Inspection requires that the pre-screening form or compliance checklist be completed and submitted by the category deadline. When there are multiple Business Tenants with public accommodation in one building, each Tenant must submit a separate compliance checklist as well as the Property Owner.  In some circumstances, a Tenant may qualify for a waiver based on unreasonable hardship while a Property Owner may not. As generally defined, a place of public accommodation is a business where the public will enter the building to obtain goods, and services, including but not limited to: banks, day care centers, health clubs, hotels, offices, repair shops, restaurants, retail stores, theaters, private schools, etc.  If you have questions about your fiduciary responsibilities in relation to an existing lease, please contact our firm’s transactional team.  For permit history research to identify existing compliance our permitting division can assist, as well as provide referrals to a CASp Inspector or a licensed design professional to complete and submit the official checklist:  Mandatory Disability Access Improvement Program – CATEGORY CHECKLIST COMPLIANCE FORM Timeline for Compliance DBI has developed four categories for compliance based on the existing conditions of a primary entrance. Category 1 and 2 properties must submit a Compliance Checklist by May 23, 2018. Category 1:  Properties that are in full compliance with the checklist.  Additionally, many owners may be able to document compliance with the following three case examples list within DBI’s DA-17.  Our Team can assist with permit history analysis to establish if any of the following apply: “Case A: All Primary Entries and Accessible Entrance Routes are in compliance with the requirements of the 1998 CBC, and the building or portion thereof was constructed or altered under a permit application filed prior to July 1, 1992.” “Case B: All Primary Entries and Accessible Entrance Routes are in compliance with the requirements of the 1998 CBC or a later SFBC in effect at the time of any permit application for a Tenant improvement or other alternation, the building or portion thereof was constructed or altered under a permit application filed on or after July 1, 1992, and prior to January 1, 2002, and DBI gave final approval of the accessible entry work under the construction permit or any alternation permits.” “Case C: All Primary Entries and Accessible Entrance Routes are in compliance with California Historic Building Code (CHBC) in effect at the time of the permit application, the building is eligible to use the CHBC, a permit application was filed on or after January 1, 1995, and DBI gave final approval of the accessible entry work under the construction permit or any alternation permits.” Category 2:  Properties that have no steps but other barriers as identified during the compliance inspection (i.e.  non-compliant hardware, lack of maneuvering space, door opening clear width). These properties will have to submit a Building Permit Application by August 23, 2018 for review by DBI, Planning and DPW or request an extension through DBI and the Access Appeals Commission. Our team can work with your design professional or CASp Inspector to finalize many of the additional steps for submittal: As with Category 1, DA-17 offers case examples where an analysis of permit history may result in the identification of partial compliance or full compliance with

Closing arguments were made last Wednesday in a trial over the validity of a San Francisco ballot initiative requiring voter approval for waterfront development height increases. In June 2014, San Francisco voters passed Prop B, requiring voter approval for any construction project on the waterfront that would exceed height limits in effect at the time.  It concerns an area encompassing about 7 ½ miles of the San Francisco waterfront along the Bay, including most of the property between Fisherman’s Wharf and India Basin, which the San Francisco Ports Commission controls in a public trust for the benefit of the people of California. Prop B followed on the heels of the successful November 2013 “No Wall on the Waterfront” initiative that blocked the proposed 8 Washington Street development. To date, Prop B has delayed and impacted construction of three high-visibility projects along the shoreline, including the originally-proposed Golden State Warriors’ complex on Piers 30-32 (ultimately relocated to Mission Bay); the SF Giants Mission Rock development (approved by voters in November 2015); and the Pier 70 Redevelopment Initiative (approved by voters in November 2014). Barely one month after Prop B took effect, the State Lands Commission filed suit, claiming that the San Francisco electorate lacked legal authority to pass the initiative, and that Prop B improperly advances local land use interests over statewide concerns.  The lawsuit asserts that a 1968 law vests the autonomous Port Commission (and not City voters), with exclusive planning and management authority over the waterfront.  The Lands Commission argues that Prop B subjugates statewide interests by giving San Francisco voters the power to permanently block development at a size and scale that would maximize revenue to the Port, which is needed to maintain and preserve the waterfront – a matter of statewide interest. The City disagrees, arguing that state law doesn’t prohibit voters from exercising the right of initiative over waterfront lands, and that Prop B advances statewide interests by, among other things, protecting views of and public access to the waterfront. The City also claims that Prop B hasn’t impeded development of projects beneficial to the public trust. This isn’t the first challenge Prop B has seen – Tim Colen, former executive director of the Housing Action Coalition, also sued the City in a pre-election effort to invalidate Prop B.  However, that lawsuit was later dismissed by the courts. In June 2017, Judge Suzanne Bolanos of the San Francisco Superior Court denied the City’s request to throw out the suit and allowed it to move to trial, but noted that the Commission had failed to explain how or whether Prop B’s stated intent conflicts with statewide interests. The trial in this matter began Wednesday, January 10, and concluded last Wednesday.   No decision has yet been issued, but the court has requested proposed statements of decision be submitted by both parties by February 9th.   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.

This week’s update discusses recent legislative activity at the state level affecting housing. Rent Control Sacramento has been abuzz recently with machinations among California legislative leaders and housing interest groups seeking to expand rent control.  Currently, the 1995 Costa-Hawkins Rental Housing Act exempts newly constructed housing (after 1979 in San Francisco) from rent control laws and prevents cities from limiting a landlord’s ability to raise rents on a unit after a tenant moves out. AB 1506, introduced in early 2017 and co-authored by San Francisco Assemblymember David Chiu, proposed to repeal Costa-Hawkins.  Late last week, the bill was killed in Committee.  This means that any repeal of Costa-Hawkins likely will not happen in the Legislature, and instead appears headed to the voters as a statewide ballot measure in November 2018. Besides concerns that the expansion of rent control will suppress the construction of new housing, other unintended consequences could result.  For example, in San Francisco, the expansion of rent control could make the already-arduous process of dwelling unit merger or demolition (even if the units will be replaced) even more difficult.  When the City has approved mergers and demolitions, an important criterion is that the unit is not rent-controlled.  If rent control is expanded, the pool of units allowed to be merged or demolished could be reduced significantly. High Density Near Transit Policy-makers in recent years have become increasingly enamored of higher densities near public transit.  The City’s pending Central SoMa Plan is a prime example of this.  The City is seeking to increase densities along the new 4th Street Muni extension South of Market. Under SB 827, parcels within a half-mile of a high-connectivity transit hub — like Muni, BART, or Caltrain — will be required to have no density maximums, no parking minimums, and a minimum height limit of between 45 and 85 feet, depending on various factors, such as whether the parcel is on a larger corridor and whether it is immediately adjacent to the station. (Developers can, of course, decide to build below that height.) A local ordinance can increase that height but not go below it. SB 827 allows for many more, smaller apartment buildings, described as the “missing middle” between high-rise steel construction and single-family homes. Projecting Housing Needs The Regional Housing Needs Assessment (RHNA) is how California determines how much housing each local community should build.  Although it is rarely enforced, California cities and counties that do not meet their RHNA housing production requirements are in violation of state law.  Some jurisdictions have manipulated the RHNA process to lower their required housing production. Policy-makers have become critical of the RHNA methodology, arguing that it underestimates population growth and how much housing will be needed.  Another criticism is that the RHNA allocation process needs to be standardized, is insufficiently connected to reliable data, and is highly politicized, thus giving some communities advantages when determining their required housing allocation. SB 828 attempts to address these issues.  Its intent is to require a more data-focused, objective process and to reduce the ability of local jurisdictions to affect their RHNA allocations.  SB 828 also requires communities to begin making up for past RHNA deficits.  The hope is that these measures will help address California’s considerable housing deficit.   Authored by Reuben, Junius & Rose, LLP  Attorney, Thomas 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.

Reuben, Junius & Rose, LLP hopes everyone had a great holiday and New Year.  2018 looks to be another banner year with land use issues, as we look forward to the Central SoMa Plan moving forward, a new Planning Commissioner assignment, and of course many Planning Code amendments.  As usual, Reuben, Junius & Rose will continue to monitor the latest planning and development news throughout the year.  We open our 2018 newsletter series with a “Preservation Potpourri.” Internal Revenue Code Changes to the 20% Historic Tax Credit On December 22, 2017, President Trump signed into law the landmark $1.5 trillion tax package, titled the “Tax Cuts and Jobs Act”.  One tax credit that was amended was the federal Historic Tax Credit (“HTC”) (26 USC 47).  Enacted in 1981 during the Reagan Administration, the HTC encourages the preservation and adaptive reuse of historic and older buildings and is widely utilized by developers.  The HTC consists of two separate tax credits: 1) a 20 percent credit for the rehabilitation costs of buildings listed on or eligible for the National Register of Historic Places; and 2) a 10 percent credit for the rehabilitation of non-historic, non-residential buildings built before 1936. The House’s version of the Tax Cuts and Jobs Act eliminated the HTC altogether.  However, the Senate, after pressure from the real estate and preservation communities, reinstated the HTC but made several amendments to it, which became law.  Originally the 20 percent tax credit could be claimed all at once in the first year the building “came into service”, i.e., once the rehabilitation was completed.  Starting in 2018, the 20 percent tax credit is spread out over five years.  In addition, the 10 percent tax was eliminated in its entirety. This may impact developers in several ways, as many depend upon these credits to fund projects.  It could affect the ability to get financing to start construction projects with larger rehabilitation costs, as some banks provide equity financing for rehabilitation projects by taking ownership interests in entities that hold an interest in the properties or even receive the HTCs themselves.  Some developers sell the credits to larger companies, thus getting a cash infusion into the project during construction.  By spreading out the tax credit over five years, the Tax Cuts and Jobs Act has diminished the value of the tax credit by up to 17 percent. The HTC is a popular program and has been attributed to over $131 billion in private investment, created more than 2.4 million jobs, and preserved 42,000 buildings.  Developers who utilize this credit should consult with their accountants and tax advisors to see how the modifications in the Tax Cuts and Jobs Act may impact their projects. Updated Guidelines to the Secretary of the Interior’s Standards for the Treatment of Historic Properties issued The Secretary of the Interior (“SOI”) has updated the Standards for the Treatment of Historic Properties with a new document that contains Illustrated Guidelines for each of the four treatments (Preservation, Rehabilitation, Restoration, and Reconstruction).  The Guidelines have not been updated in nearly 25 years and replace the last version from 1995. The SOI’s Guidelines help inform the Planning Department when evaluating alterations to historic buildings in San Francisco.  This includes buildings regulated under Articles 10 (Individual Landmarks and Historic Districts) and Article 11 (Downtown Buildings and Conservation Districts), as well as any property reviewed under the California Environmental Quality Act (“CEQA”).  The updated Guidelines have expanded topics and address issues pertinent to San Francisco such as mid-20th century architecture and adapting industrial interiors for office uses.  These Guidelines may be helpful when beginning a project to a historic building.   Later this year, we will look at these new standards more closely. The updated Guidelines can be found here: https://www.nps.gov/tps/standards/treatment-guidelines-2017.pdf   Proposed Legislation Establishing Cultural Districts in San Francisco Finally, we close with a local ordinance that was proposed by the Board of Supervisors in late October 2017.  Supervisors Ronen, Cohen, Kim, Fewer, Sheehy, Yee and Farrell have proposed a new chapter to the Administrative Code that would create a process for establishing cultural districts throughout San Francisco (BOS File No. 17-1140).   The stated goals of the legislation are to promote the unique neighborhoods, businesses, and communities in San Francisco while protecting them from displacement. Cultural Districts are defined as a “geographic area or location [within San Francisco] that embodies a unique cultural heritage because it contains a concentration of cultural and historic assets or culturally significant enterprise, arts, services, or businesses, or because a significant portion of its residents or people who spend time in the area or location are members of a specific cultural, community, or ethnic group.”  Five initial cultural districts are proposed: Japantown, Calle 24, SoMa Filipino, Compton Transgender, and the LGBTQ Leather Districts.  Other districts may be adopted and approved by the Board in the future. The legislation outlines a process for proposal and adoption of cultural districts and requires reports regarding certain characteristics of the district as well as recommendations and strategies to preserve and support the culture of the district from various city agencies/commissions: the Historic Preservation Commission, Office of Economic and Workforce Development, Arts Commission, Office of Housing and Community Development, Department of Public works, Planning Department, and Human Rights Commission.   Strategies can include new zoning controls, historic districts, funding for businesses, economic development, and affordable housing, as well as new public amenities. Since this legislation has been introduced, it is currently under review by each Department or Agency listed above, and is awaiting Committee action at the Rules Committee.  The impact of this legislation is unclear and Reuben, Junius and Rose, LLP will continue to monitor it and inform our readers when new action is taken.   Authored by Reuben, Junius & Rose, LLP  Attorney, Tara Sullivan 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 &

As all of us mourn the passing of Mayor Lee, many articles have already been written about his legacy and the progress he made in San Francisco.  One of the items that was pending at the time of his death was the implementation of Executive Directive 17-02, Keeping up the Pace of Housing Production, issued on September 27, 2017, wherein Mayor Lee directed all City Departments to take steps towards process improvements that would increase housing production.  The objective behind Mayor Lee’s Directive is an important one; after the 2007-2012 “…recession, we have added more than 140,000 jobs to San Francisco, but only approved 15,000 housing units.” The housing crisis is not solely a San Francisco problem, it is a regional issue with every jurisdiction having responsibility to do their part to solve it.  On July 26, 2017, the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC) adopted Plan Bay Area 2040 (Plan), which provides a long-term regional transportation and land use roadmap for future growth in the Bay Area.  The Plan acknowledges that: “The Bay Area’s housing affordability and neighborhood stability crisis has been decades in the making. Although the housing crisis has many components, its foundation is clear: there simply is not enough housing, whether market-rate or affordable, given the growing number of residents and jobs.”  According to ABAG and MTC estimates, during the first five (5) years for the 2010-2040 period, Bay Area had already added approx. 46% of the anticipated job growth, concurrently to adding only approx. 25% of the estimated housing for the same period. Mayor Lee’s September 2017 Directive called for approval deadlines, accountability and process improvements for project entitlement and post-approval phases.  The deadlines in the Directive called for an entitlement decision to be made for housing projects (i.e. those with 250 or more net new units, or exclusively residential projects with two (2) or more net new units), within certain deadline based on the level of applicable CEQA environmental review, e.g. projects that are issued a categorical exemption must by finally approved (or disapproved) by the Planning Commission or Planning Department within 9 months. Consistent with the Directive, on December 1, 2017, Planning Director John Rahaim submitted a plan to the Mayor that outlined proposed process improvements that would implement and accomplish the Directive objectives, which was in part also based on feedback from the Planning Commission from its October 5th and November 16th hearings.  The implementation plan is long and detailed, and provides some quite significant and promising steps that could have a meaningful impact on housing production and the approval processes in San Francisco. Following are few examples of the types of measures that the Planning Department has recommended, and hopefully will be undertaking.  A full copy of the Planning Department’s plan can be accessed from: http://default.sfplanning.org/administration/communications/ExecutiveDirective17-02_ProcessImprovementsPlan.pdf.  Implementation of the following was proposed to occur within first quarter of 2018: PPA (preliminary project assessment) letters to be converted to abbreviated responses, with shortened 60-day deadline (instead of current 90 days), along with overall efficiency improvements to PPA processes; Creation of a single consolidated “Development Application” form with a master project description, with supplemental forms to be submitted for specific entitlements, such as conditional uses, variances, etc., combined 30-day Planning Department application completeness determination, subsequent 30-day Notice of Planning Department Requirements (NOPDR) issuance, and a 30-day staff review period for project sponsor’s NOPDR response, with immediate commencement of CEQA and current planning review thereafter; Implementation of various CEQA related efficiency and streamlining measures (e.g. re-assessment of criteria that triggers the need for consultant-prepared technical studies, and discontinuance of CEQA exemption certificates and concurrent expansion of exemption checklist applicability); Automatic scheduling of residential projects within the 6, 9, 12, 18 or 22-month deadlines established by the Directive; and Automatic scheduling of DR (Discretionary Review) hearings to occur within 45 days after the end of the 30-day notice period; Proposed Phase 2 measures that would be implemented during the second half of 2018 would include: Increased capacity for over-the-counter (OTC) approvals, including elimination of the need for Historic Preservation Commission hearings for certain preservation permits and concurrent expansion of the permits that would instead be approved OTC by preservation staff; Streamlining of notice types, periods and mailing radius; Potential elimination of the need for a conditional use authorization (and a hearing) for changes of use from one formula retail use to another formula retail use; and Coordination and launch of an integrated and project tracking system between Planning Department and DBI. On December 1, 2017, the Planning Department and Building Department also submitted a joint voluntary plan to allow parallel processing for certain housing development applications.  The process is available primarily to less than 240-foot tall new construction projects that have either 50 or more units without any non-residential uses, or 250 or more units with other, non-residential uses.  The parallel process could be a significant time-saver as it would allow commencement of DBI review of a building permit application to occur at the same time as Planning Department’s review, prior to completion of CEQA review. More information on the parallel plan, issued by Planning Director Rahaim and Building Director Hui can be accessed from: http://default.sfplanning.org/administration/communications/ExecutiveDirective17-02_ParallelProcessingPlan_DBIPlanning.pdf   Authored by Reuben, Junius & Rose, LLP  Attorney, Tuija Catalano 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.

This Thursday the Planning Department will make an informational presentation to the Commission on a proposal to nix the “Tantamount to Demolition” standard that regulates the scope of residential remodels that require mandatory Commission review in RH Districts, and approve a new form-based Residential Expansion Threshold policy. Under current Planning Code Section 317, Planning Commission review is required for almost any project that would demolish an existing dwelling unit.   The goal of this legislation was to preserve existing housing stock, especially existing affordable housing. Under existing rules, even residential remodels that don’t require a demolition permit from the Building Department can trigger mandatory Commission review if they meet the following criteria, resulting in a project that’s considered “Tantamount to Demolition”: a major alteration of a residential building, removing more than 50% of the front and rear façade and 65% of all exterior walls measured in lineal feet at the foundation level; or a major alteration of a residential building removing more than 50% of the Vertical Envelope Elements (defined as all exterior walls that provide weather and thermal barriers between the interior and exterior of the building, or that provide structural support to other elements of the building envelope) and more than 50% of the Horizontal Elements (defined as all roof areas and all floor plates, except floor plates at or below grade) of the existing building, as measured in gross square feet of actual surface area. Ten years after this standard was adopted, the Department is less than impressed it with its impact, and concerned that it has created an almost unworkable system by incentivizing owners to design remodels just short of the threshold, resulting in awkward/inferior design proposals that skate too close to (and occasionally slipping over) the edge to full demo during construction.  The Department’s take is that the current standard is confusing and simply doesn’t work as a tool to preserve affordable housing, promote neighborhood character, or reduce the frequency of Discretionary Review hearings.  And any objective person taking a first look at this would immediately agree the system is overly complex. On Thursday, the Department will discuss its vision to nix the Tantamount to Demolition standard and adopt a new “Residential Expansion Threshold” based on the size of a proposed project rather than its impact on what’s already built on the site.  In essence, the new proposal would bring all “large” residential expansions in RH Districts to the Planning Commission for review. The Residential Expansion Threshold would use Floor Area Ratio (the ratio of a building’s total floor area to the size of the lot on which it’s constructed) to determine which remodel projects trigger mandatory Commission review.  If a proposed project is below the adopted FAR thresholds and meets the unit size minimum for a multi-unit proposal, then it will be subject to a staff-level review and neighborhood notification with no mandatory Commission hearing.   Projects exceeding the FAR thresholds would trigger a Planning Commission hearing and the need for approval of a new “Large Home Authorization,” regardless of whether an alteration or demolition permit is sought. Existing rules requiring a Conditional Use hearing for the elimination of rent-controlled units would remain in place, and the new policy would have no effect on the Department’s existing design or historic resource review procedures. However, the new standard would eliminate the existing hearing exemptions for demolition of demonstrably unaffordable or structurally unsound single family dwellings in RH Districts. As of October 2017, the proposed FAR thresholds were as follows: Zoning FAR Trigger/Unit Count RH-1(D) 1.2 RH-1 1.4 RH-2 1.0  (1-unit project) 1.8 (2-unit project) RH-3 0.9 (1-unit project) 1.3 (2-unit project) 2.6 (3-unit project)   Planning’s goal is to incentivize increased density by allowing multi-unit projects where permitted by underlying zoning to include more square footage without triggering a mandatory hearing. Multi-unit projects in the RH-2 and RH-3 Districts would also be subject to a minimum use-size threshold equivalent to 1/3 of the total building square footage – a standard intended to promote proportionality of new units. If a Commission hearing is triggered, the Commission would be asked consider specific design criteria for larger residential development, such as whether high-quality design; use of contextual and compatible building siting, orientation, massing, fenestration pattern, an scale; relationship to surrounding residential density; provision of family-friendly units; and whether the project would remove an existing full-floor flat.  Their determination could then be appealed to the Board of Permit Appeals. Further, the Department has proposed allowing administrative review for some minor (up to 10%) expansions to units in existing buildings that exceed the FAR thresholds, and similar administrative processing for additions of Accessory Dwelling Units.  No word yet on whether grandfathering for pipeline projects will be proposed. While the new policy may provide clearer standards for whether a residential remodel in the RH Districts will trigger a mandatory hearing, the jury’s still out on whether it will streamline the approval process or provide more certainty for property owners, since even projects meeting the prescribed thresholds would remain subject to neighborhood notice and potential Discretionary Review actions. Following Thursday’s informational hearing, the Department is targeting a January 11th Planning Commission hearing to initiate new legislation and a February 15th Commission hearing for recommendation of the proposed legislation to the Board of Supervisors.   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.

This week the Board of Supervisors considered final approval of proposed new comprehensive cannabis regulations, but ultimately voted to continue the matter for two weeks.  The Board’s consideration of the regulations has revisited a pervasive and ongoing balkanization on the Board, with the Board torn between individual district interests and the broader interests of the City as a whole. The new regulations fall into two broad categories.  The first category comprises a new permitting and monitoring scheme of both medical and recreational cannabis activities.  The legislation creates and regulates a whole new industry of cannabis-related commercial activities, including cannabis cultivation, cannabis manufacturing, cannabis testing, cannabis distribution, and cannabis microbusiness, all constituting new, defined land uses.  In addition, the new Office of Cannabis replaces the Department of Health as the primary cannabis regulatory and permitting agency. The second category consists of the various new planning and zoning regulations.  These regulations establish what kind of commercial cannabis activities will be allowed in particular zoning districts, as well as review and approval requirements at the Planning Commission.  These regulations are discussed in greater detail below. One particular area where the legislation has made some progress, but still does not go far enough, is in the appeals process for cannabis permits.  Permits to operate and approved building permits for medical cannabis dispensaries are now appealed to the Board of Appeals.  This, however, can result in highly-charged public hearings often involving technical regulatory questions with which the Board is not familiar. These technical issues are only going to become more complicated under the new regime.  While the legislation makes progress by creating an Office of Cannabis appeals hearing officer who will have expertise in the new cannabis regulations, the hearing officer only hears appeals of permit violations and revocations.  The hearing officer’s jurisdiction should be broadened to include any permit that may be appealed to the Board of Appeals.  This would streamline and narrow the issues on appeal to the Board. Turning back to the new cannabis zoning regulations, the adopted controls include the following: Medical cannabis sales and recreational cannabis sales would be combined as one new defined use known as “Cannabis Retail”. Cannabis Retail generally would be permitted where other retail is permitted. Cannabis Retail would be permitted as an accessory use where the Office of Cannabis has issued a permit to the Cannabis Retail establishment to operate accessory to another activity on the same premises. The Board is divided on whether to limit the proximity of Cannabis Retail to schools to 600 feet or 1000 feet, and whether to include daycare centers in the buffer zone. The legislation establishes a land use process for the conversion of existing Medical Cannabis Dispensaries to Cannabis Retail establishments. As stated above, the proposed controls are scheduled to return to the Board in two weeks.  We will continue to monitor the legislation and keep readers apprised.   Authored by Reuben, Junius & Rose, LLP  Attorney, Thomas 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.