On Monday June 19, the Land Use Committee of the Board of Supervisors introduced a revised version of the compromise Inclusionary Affordable Housing legislation that Supervisors Breed, Kim, Peskin, Safai, and Tang introduced in May. We expect the legislation to be heard again, likely for the final time, at the Land Use Committee on July 10th. Any additional clarifications and/or potential amendments should be addressed prior to or at the July 10th hearing, before the Committee forwards the legislation on to the full Board of Supervisors for a vote, possibly as early as July 11. After Prop. C passed in June 2016, the Board of Supervisors adopted trailing legislation (Ord. 76-16) updating the affordable housing requirements, which resulted in the current Citywide affordable housing scheme—with a 25% on-site requirement or a 33% fee/off-site requirement for projects with 25+ units, and a lower 12% on-site or 20% fee/off-site requirements for projects with 10-24 units. Prop. C also called for the City Controller’s Office to prepare an analysis to determine the maximum feasible inclusionary housing requirements. The Controller presented its preliminary findings in the fall of 2016 and final recommendations in February 2017. Over the last few months the Planning Commission and Board of Supervisors have heard two competing versions of updated affordable housing legislation—the Peskin-Kim proposal and the Safai-Breed-Tang proposal. Last month, compromise legislation was introduced by the five Supervisors, and that version of the legislation was further amended at the Land Use Committee meeting on June 19. The Compromise legislation is pending under BOS File no. 161351 (and is available here: https://sfgov.legistar.com/View.ashx?M= F&ID=5243 881&GUID=CFA3750B-25F3-4C15-9C57-20E691DE66A2). Under the current version of the legislation, projects that have submitted an Environmental Evaluation Application (“EE Application”) before January 1, 2013 are subject to the old 12% on-site/20% fee and off-site rates. For projects that submit an EE Application between January 1, 2013 and January 12, 2016, the existing grandfathered rates apply, set forth in Planning Code Section 415.3(b).[1] Notably, the amended legislation adds a requirement that a project sponsor obtain a building or site permit within 30 months of project approval. Projects that fail to procure a permit within that timeframe would be subject to the inclusionary affordable housing requirements applicable at the time such permit is obtained. Affordable Housing In Lieu Fee: As currently proposed, for 10-24 unit projects, a 20% in-lieu fee requirement applies. Projects with 25 or more units that wish to pay the fee are subject to an amount equivalent to 33% if ownership units or 30% if rental units. Each year, by January 1, the City (via the Mayor’s Office of Housing and Community Development (MOHCD)) would be required “to adjust the fee based on the cost of constructing housing.” The affordable housing fee would also be imposed on any additional units or square footage authorized pursuant to the State Density Bonus Law (excluding projects that filed a complete EE Application by January 1, 2016). Affordable On-Site Unit Option: 10-24 unit projects would continue to be subject to a 12% on-site requirement, with sales prices at 80% AMI or less. Rental units would need to be offered at a rent set at 55% AMI or less. Starting on January 1, 2018, the City (via MOHCD) would increase the on-site requirements by 0.5% each year, until the requirement maxes out at 15%. Projects with 25 units or more would be subject to the following requirements: On-Site Ownership Units: 20%, of which: 10% to be affordable to low income households (price set at 80% AMI or less); 5% to be affordable to moderate income households (price set at 105% AMI or less); 5% to be affordable to middle-income households (price set at 130% AMI or less); and Ownership units to be offered at 130% AMI or above may not be studio units. On-Site Rental Units: 18%, of which: 10% to be affordable to low income households (rent set at 55% AMI or less); 4% to be affordable to moderate income households (rent set at 80% AMI or less); 4% to be affordable to middle income households (rent set at 110% AMI or less); and Rental units to be offered at 110% AMI or above may not be studio units. Regardless of these rates, the maximum affordable rent or sales price may not be higher than 20% below the median rental or sales price for the neighborhood in which the project is located, defined in accordance with the American Community Survey Neighborhood Profile Boundaries Map. For Projects with at least 25 units, the on-site requirement will increase by 1% each year for two consecutive years, beginning on January 1, 2018. Starting January 1, 2020, the required on-site requirement will increase by 0.5% each year, until the requirement reaches 26% for ownership units and 24% for rental units. The amended legislation further requires the Planning Department and Controller to do a study of areas where an Area Plan, Special Use District, or other re-zoning is being considered or has been adopted after January 1, 2015, in order to determine whether a higher on-site requirement is feasible on sites that have received a 20% or greater increase in developable residential gross floor area or a 35% or greater increase in residential density. Affordable Off-Site Option: 10-24 unit projects would be subject to a 20% off-site requirement, with the sales prices at 80% AMI or less. Rental units would need to be offered at a rent set at 55% AMI or less. Projects with 25 units or more would be subject to the following requirements: Off-Site Ownership Units: 33%, of which: 18% to be affordable to low income households (price set at 80% AMI or less); 8% to be affordable to moderate income households (price set at 105% AMI or less); 7% to be affordable to middle-income households (price set at 130% AMI or less); and Ownership units offered at 100% AMI or above may not be studio units. Off-Site Rental Units: 30%, of which: 18% to be affordable to low income households (rent set at

Sneak Peek at Affordable Housing Compromise The San Francisco development community has been waiting for Board of Supervisors action on affordable housing requirements.  As last reported in our April 26 update, competing affordable housing legislation has been working its way through the Land Use and Transportation Committee and the Planning Commission. It is now being reported that compromise legislation may soon be adopted that would set rental projects at 18% affordable and for sale projects at 20% affordable, and would include a mix of low and middle income housing. We do not yet know the specifics of grandfathering under the legislation, a major concern for projects in the pipeline, or unit mix requirements. The matter is set to be heard by the Land Use and Transportation Committee today, and then heard by the full Board tomorrow, so stay tuned for more information. New Online Resource for San Francisco Street Trees It is spring in San Francisco and time for an update on trees. In March, the City completed its first comprehensive census of San Francisco Street trees, EveryTreeSF. This is part of the City’s Urban Forest plan, which seeks to create a more green San Francisco, starting with a focus on thriving street trees, and then directing efforts at parks and open space and buildings and private property. The City, in collaboration with Friends of the Urban Forest (FUF), has created an online resource http://urbanforestmap.org/, which allows users to look up exact location, species and current condition of every street tree. The City will formally take over maintenance responsibility for street trees on July 1. Proposition E, passed in November 2016, transferred responsibility for street trees to the Department of Public Works and provided $19 million in funding for maintenance. The proposition was a reaction to the poor condition of many street trees, caused in part by confusion about maintenance responsibility and lack of resources for maintenance. It is frequently difficult to obtain Public Works approval for removal of street trees, even where removal would greatly aid construction logistics and where a greater number of trees are proposed for planting. Although the City initiative focuses on maintenance of street trees, it is possible that transfer of responsibility to the City will make it easier to obtain a permit to remove trees that pose maintenance challenges, such as ficus trees, which are prone to instability and often cause sidewalk damage. The City has already moved towards allowing ficus removal where the trees are co-dominant (split in two) or otherwise pose a risk of falling limbs. It remains to be seen whether the resources provided to Public Works after Proposition E are sufficient to dramatically improve the health of street trees in San Francisco. 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.    

Planning’s Retooled Approach to Residential Projects in RH Districts – The Large Home Program Last week, the Planning Department unveiled its revamped approach to residential expansions and new ground-up construction in the RH zoning districts: the Large Home Application. The name of the program is derived from the Eastern Neighborhoods’ primary entitlement document, the Large Project Authorization, and the concept is also similar. For most projects in RH districts creating units over a certain threshold, (1) a Planning Commission hearing would be required, and (2) the Commission will have a clear set of design guidelines to apply against the project when considering authorization. The program would replace the “tantamount to demolition” approach to certain expansions, which can result in oddly constructed units and is often criticized for not accomplishing the purposes of the Planning Code’s restrictions on removing dwelling units. The threshold that would automatically trigger a Commission hearing is based on the floor-area ratio of the unit/home, and not size. The Planning Department had initially proposed a 3,000 square foot size threshold; this retooled approach is meant to respond to community feedback and Commission direction for a more refined metric. Planning’s proposed per-unit size thresholds, by district: In short, subject to a few narrow exceptions, if a single family home or any unit in a multifamily building exceeds this FAR, it would automatically trigger a hearing. Planning’s logic makes a lot of sense: owners, sponsors, and architects can know with certainty what size home or unit would automatically trigger a Commission hearing. Unfortunately, the Program will not replace the Discretionary Review process, so uncertainty about timing will still persist for all residential projects. Even if a project is below the Large Home Application FAR threshold, it could still end up at the Planning Commission if a Discretionary Review application is filed. That being said, Planning staff did explain that many recent residential expansion or new construction projects that ended up on the Discretionary Review calendar would have automatically required a Large Home Application if the program had been in place. And instead of the somewhat vague “exceptional and extraordinary circumstances” standard of review on DR, staff is proposing a set of specific criteria to guide the Commission’s decision making. Those criteria are: (1) high quality architectural design; (2) contextual and compatible with regards to factors such as siting, orientation, massing, and scale; (3) compatible with surrounding unit density; (4) family-friendly amenities; (5) for projects reconfiguring units, quality and family-friendly redesign; and (6) access to and quality of open space for each unit. Some other interesting details of the proposal: It would eliminate Section 317 exemptions from Planning Commission hearings for demolitions of RH-1 homes that are demonstrably not affordable or that are unsound. Soundness and affordability will remain criteria for the Commission to consider, but they would no longer be sufficient in and of themselves to avoid a Commission hearing. For multifamily projects that are subject to the program, a minimum unit size of 1,000 square feet is proposed. Staff explained that they are open to other suggestions for maintaining housing equity, and that the idea with this control is to prevent remodels or new construction where one unit is significantly smaller than the others. There would be exemptions for minor expansions and some ADUs. Existing units that already exceed the FAR threshold would be allowed a 10% addition before a hearing is triggered. Consistent with San Francisco’s current rules and state law, certain ADUs would also be exempt—specifically ADUs that are 25% of a unit size or 750 square feet, whichever is smaller. Section 317 approval criteria for mergers, conversions, and demolitions would stay in place. The Large Home criteria would be an additional set of substantive criteria for Section 317 projects to meet if the FAR threshold is triggered. Staff is making a presentation at the Planning Commission on June 1. We will continue to follow this proposal as it makes its way through the City approval process. 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 Right to Repair Act or SB 800 (“Act”) provides for certain rights and procedures for homeowners and builders with respect to construction defect claims.  The Act requires certain pre-litigation notice and cure obligations between the parties before a suit may be filed by the homeowner.  A recent case entitled “Blanchette v. Superior Court” interpreted and clarified certain notice and time requirements of the Act (8 Cal.App.5th 521 (2017)).  In brief, the Act requires that, before initiating litigation, construction defect claimants must give the affected builder notice of an alleged defect and if the builder wishes, an opportunity to inspect and repair the noticed defects.  The claimant’s notice should set forth the defects “in reasonable detail” sufficient to determine the nature and location of the alleged defects.  After receiving the notice, a builder has 14 days in which to acknowledge receipt of the claim, and 14 additional days in which, if the builder wishes, to inspect the premises.  If an inspection is completed, a builder may thereafter make an offer to repair the claimed defects within 30 days.  The Blanchette case confirms that, as long as the homeowner’s notice includes general information to put the builder on notice of a construction defect claim covered by the Act, the 14-day clock for the builder to respond is triggered, even if the notice does not set forth the alleged defects “in reasonable detail”. In Blanchette, Mr. Blanchette bought one of 28 homes constructed by GHA Enterprises, Inc. (“GHA”).  Mr. Blanchette served GHA with a notice setting forth a number of general construction defects in the 28 homes and a list of the affected homeowners, both required conditions of the homeowner’s notice under the Act.  However, his claim did not set forth the defects “in reasonable detail” sufficient to determine the nature and location of the alleged defects, also required by the Act.  GHA did not respond within the required 14 days and Mr. Blanchette asserted its response was untimely and excused him from any further obligations under the Act.  He thereafter filed suit against GHA for construction defect claims.  GHA moved to stay the litigation until Mr. Blanchette satisfied the pre-litigation requirements of the Act, specifically by providing a new notice to GHA which included the required “reasonable detail”.  The trial court agreed and held that Mr. Blanchette would need to serve a new notice of claims on GHA which (i) identified each individual claimant by address, (ii) provided a defect list for each subject property, (iii) listed the location, nature and severity of each alleged defect, and (iv) identified the code section(s) the claimants contend each alleged defect violates, as required by the Act.  Mr. Blanchette challenged the trial court’s order. The Court of Appeal analyzed the issue under the framework of the Act’s intention to “promote resolution of a homeowner’s construction defect claim in an expeditious and non-adversarial manner”.  The Court found that Mr. Blanchette fulfilled the requirements of the Act in his original notice by listing the names of the owners of the affected homes and stating the general defects, even though he did not specifically meet the other condition of providing “reasonable detail” of the alleged defects.  The Court determined that the requirement of providing “reasonable detail” is subjective and could vary according to the factual situation.  However, they considered the Act’s requirement to respond within 14 days after receipt of claimant’s notice to be clear and not subject to interpretation.  As such, they held that the builder must respond to a homeowner’s notice within the 14-day period, even if it is to ask them to clarify their original notice and provide more specificity.  If the builder fails to do so, the homeowner can be excused from further pre-litigation procedures required under the Act and may directly proceed with litigation.  The Court theorized that allowing GHA to ignore the original notice in this case due to a lack of specificity would discourage the expeditious and non-adversarial resolution of claims.  By requiring a timely response from the builder, even if to lodge an objection with the homeowner for lack of specificity, the parties could resolve the issue in a more timely manner and before litigation is commenced. The Blanchette case provides more clarity as to the pre-litigation notice procedures between a builder and homeowner under the Act.  It also highlights that it would be prudent for a builder to respond to each general claim of construction defect by a homeowner within 14 days, if only to ask for clarity from the homeowner or to object to its contents.  If that does not occur, a builder could waive its rights under the Right to Repair Act and a homeowner could properly bring an immediate suit for construction defects.   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.

City policy-makers have been busy addressing the City housing issues, and this week we discuss recent developments in two areas of housing policy:  affordable housing and accessory dwelling units. Affordable Housing In previous updates, we have reported on legislation proposed by members of the Board of Supervisors that amends the City’s affordable housing requirements.  Two competing measures, one proposed by Supervisors Peskin and Kim, and one proposed by Supervisors Safai, Breed and Tang are now coming into focus and being considered by the Planning Commission.  Following an informational presentation at the Planning Commission on March 16, 2017, the Planning Commission is now scheduled to consider the measures again and adopt a recommendation to the Board of Supervisors this Thursday, April 27. Planning Department staff has released its recommendations to the Planning Commission concerning the two proposals, which recommendations largely support the Safai proposal.  Of particular note is the recommendation discussed below concerning the grandfathering of existing projects. In general, Planning Department staff recommends that the Planning Commission support the following: Providing affordable units on-site: Adopting Safai proposal (18% for rental projects; 20% for ownership projects) Providing affordable units off-site/in-lieu fee alternatives: Adopting Safai proposal (23% for rental; 28% for ownership) Schedule of annual increases: Amending legislation to require rate increases of 1% every 2 years, until a maximum requirement is met (on-site: 23%/25% rental/owner; off-site or fee: 28%/33% rental/owner) Applicability of affordability requirements: Requirements to be set at time of Environmental Application filing, but reset to current rates if a project has not received its first construction document within 3 years of entitlement. In-lieu fee: Adopt Safai proposal to: (1) revise method of calculation to apply the fee on a per gross square foot basis; (2) calculate fee to match actual costs to City to construct affordable units. Income levels of qualifying households for affordable units: Adopt Safai proposal with modifications: Smaller Projects (10-24 units): Rental: 80% Area Median Income (“AMI”) Owner: 110% AMI Larger Projects (25+ units): Rental: tiers at 55, 80,and 110% AMI Owner: tiers at 90, 110, and 140% AMI Unit mix: Set unit mix requirements that would not exceed 40% total large unit requirement already in place in Plan Areas; require a mix of 2- and 3-bedroom units. Grandfathering: Adopt Safai proposal to retain grandfathering for projects that provide affordable units on-site, but eliminate it for projects that choose to pay the in-lieu fee, provide affordable units off-site, or are located in the UMU (Urban Mixed-Use) Zoning District.  For most in-lieu fee/off-site pipeline projects, this would result in applying the proposed 23%/28% requirements. However, higher rates applicable under Section 419 for projects in the UMU District would continue to apply. The Department also recommends that final legislation include an express statement that grandfathering, where applicable, applies only to percentage requirements, and all other Section 415 provisions would continue to apply to pipeline projects. Accessory Dwelling Units This week the Board of Supervisors approved the first reading of an ordinance bringing the requirements for Accessory Dwelling Units (ADUs) in single-family homes into conformity with new mandates of state law. Under the proposed legislation, the Planning Department must approve an ADU if it, among other technical requirements: (1) is contained within the existing space of a single-family residence or accessory structure that is in an RH-1, RH-1(S), or multifamily residential zone; (2) does not require a waiver of rear yard, open space or dwelling unit exposure requirements; (3) has independent exterior access from the existing residence; and (4) has side and rear setbacks sufficient for fire safety. The Planning Commission and Board of Supervisors are considering additional changes to existing ADU controls that have been proposed by Supervisors Farrell and Sheehy. We will monitor and report on these amendments as they are further developed.   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.

Real estate brokers, and the licensees who work under their supervision, owe fiduciary and other duties to their clients. Can those duties be fulfilled in the context of dual agency?  The potential conflicts of interest that may arise when brokers undertake the representation of more than one party to a real estate transaction are again before California lawmakers, in the wake of the California Supreme Court’s November 2016 decision in Horiike v. Coldwell Banker Residential Brokerage Company (2016) 1 Cal.5th 1024. Among the duties owed by a real estate licensee is a “fiduciary duty of utmost care, integrity, honesty, and loyalty” in dealings with her own client.  A licensee’s duties to both parties in a transaction include (a) a duty to exercise reasonable care and skill, (b) a duty of good faith and fair dealing, and (c) a duty to disclose facts that are known to her and which materially affect the value or desirability of the property and which are not within the diligent attention and observation of one or both parties. “Dual agency” arises when a single real estate brokerage represents both parties to a transaction.  Often, two real estate salespersons represent the different parties, but they are both supervised by the same broker or corporate brokerage.  Continued consolidation in the brokerage industry had made dual agency increasingly common. In most cases of dual agency, each party interacts exclusively with her own salesperson, rather than with the supervising broker.  Nonetheless, the Real Estate Law considers the client’s relationship to be with the broker.  Principles of agency create concerns about how the broker – who acts through the licensed salespersons he supervises – can fulfill his fiduciary duties to both of the adverse parties to a real estate transaction, while maintaining the confidences of one party to the exclusion of the other. In 1986, California enacted legislation that addressed, to some extent, the practice of dual agency.  Rather than prohibiting dual agency or reconciling the conflicts of interest inherent to dual agency, however, California focused on disclosure: dual agency was permitted, if the broker obtained the informed consent of both clients.  With one exception, the Real Estate Law left intact the duties – including fiduciary duties – that a broker owes to his clients.  Notwithstanding their fiduciary duties, the broker and his associate licensees were required to maintain the confidence of the parties’ respective positions regarding price. The dual agency legislation initially applied only to residential transactions, but in 2015 it was extended to commercial real estate brokers. The Supreme Court’s decision in Horiike significantly changes the legal landscape.  The Court there determined that when a real estate brokerage serves as a dual agent in a residential real estate transaction – albeit through salespersons who each have a relationship with only one of the parties – the brokerage’s fiduciary duties to both parties are imputed to the listing agent.  The practical import of the decision is that the listing agent, who was historically viewed as having fiduciary duties only to the seller, is now held to have fiduciary duties to both the seller and the buyer.  The Court held that the listing agent has a fiduciary duty to the buyer to learn about and disclose all facts that materially affect the value and desirability of the property.  In some contexts, doing so could require the listing agent to work against the interests of its client, the seller. The facts of Horiike limit its application to residential transactions.  How the decision will impact on dual agency in the commercial real estate context is not yet clear.  However, two pieces of legislation were proposed in response to Horiike, each of which bears consideration. Assembly Bill No. 1059 would completely prohibit real estate brokers or their associated licensees from representing both the seller and buyer in any commercial real estate transaction, i.e., “any negotiation regarding an agreement or the consummation of an agreement to lease, purchase, or sell commercial real estate. . . .”  Assembly Bill No. 1059 is pending before the Assembly Judicial Committee, and is set for further hearing on May 2, 2017. Assembly Bill No. 1626 is expressly drafted to clarify the duties of real estate licensees in the wake of the Horiike decision.  Rather than prohibiting dual agency, Assembly Bill No. 1626 would maintain the current focus on informed consent, and would require modification of the statutorily-required disclosures.  The legislation would provide some protection to licensees in that the fiduciary duties of a dual agent would be considerably more limited than those imposed on a licensee who exclusively represents the buyer.  The dual agent’s duty to “learn about and disclose all facts that materially affect the value and desirability of the property” will be limited to disclosure of facts that are actually known to her, or which could have been learned by “a reasonably competent visual inspection” of the property [emphasis added]. Assembly Bill No. 1626 is set for hearing on April 25, 2017 before the Assembly Judicial Committee. Time will tell whether dual agency survives in California, or to what extent legislation will scale back or eliminate the fiduciary duties that real estate brokers who serve as dual agents owe the parties to commercial real estate transactions. 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.

Back in December 2015, Supervisor Breed introduced legislation that would eliminate the Affordable Housing Program grandfathering provisions of Proposition C and impose increased affordable housing rates for certain properties in the Divisadero and Fillmore Neighborhood Commercial Transit (NCT) Districts. The higher requirements would apply to sites in those two districts that received at least a 50% increase in development potential as a result of the rezoning of those two districts in 2015. After stalling last summer, an updated version of the ordinance was substituted and assigned to the Land Use and Transportation Committee on March 21, 2017. The legislation follows the August 2015 rezoning of the Divisadero and Fillmore Street corridors. Ordinance No. 127-15 rezoned the area along Divisadero Street between Haight and O’Farrell Streets to become the Divisadero Street NCT, and Ordinance No. 126-15 rezoned the area along Fillmore Street between Bush and McAllister Streets to become the Fillmore Street NCT. The rezoning eliminated any previously applicable residential density limits based on lot area. Meaning that after the rezoning, sites within the new NCTs could add any number of residential dwelling units permitted by the physical envelope controls like height, bulk, and setback requirements—affording greater development potential on certain sites within those districts. Since the legislation was introduced at the end of 2015, San Francisco voters passed Proposition C in June 2016—which, as everyone knows, made a number of changes to the Affordable Housing Program, including raising the affordable housing requirements for on-site affordable housing, off-site affordable housing, and the in-lieu fee. The current city-wide affordable housing requirements (excluding UMU districts) are as follows: Ordinances proposed by Supervisors Safai, Breed, and Tang (available here) and by Supervisors Kim and Peskin (available here) would amend these city-wide requirements. In the meantime, the increased affordable housing requirement proposed by Supervisor Breed’s legislation would apply to any property in either the Divisadero Street NCT or Fillmore Street NCT that received at least a 50% increase in density from the 2015 rezoning of those districts (previously the Divisadero Street Neighborhood Commercial District and Fillmore Street Neighborhood Commercial District, respectively). The density limit in the previously existing Divisadero Street NCD was 1 unit per each 800 square feet of lot area and the density limit in the previously existing Fillmore Street NCD was 1 unit per each 600 square feet of lot area—with a few exceptions for certain parcels previously zoned RH-3, RM-4, and RM-3. The rezoning eliminated those density limits, allowing any number of units to be constructed, with building sizes restricted instead by applicable building envelope controls. For sites covered by the ordinance, the otherwise applicable citywide affordable housing requirements would apply, except that the grandfathered rates available to projects that submitted an Environmental Evaluation Application by January 12, 2016, would not be available. Instead, the following requirements would apply: Affordable Housing Fee: 30%Off-Site Housing: 30% Off-Site Housing: 30% On-Site Housing: 23%—with 6% of the units affordable to households earning up to 55% AMI, 8% of the units affordable to households earning up to 120% AMI, and 9% of the units affordable to households earning up to 140% AMI. Notably, the legislation includes a provision stating that if the Board of Supervisors adopts citywide affordable housing requirements higher than those imposed by this ordinance, the higher requirements will apply. The legislation is scheduled to be heard by the Land Use Committee on Monday, April 3. 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.

There are tens of thousands of common interest developments in California, ranging from 2-unit buildings to large condominium towers and planned unit developments.  The Davis-Stirling Common Interest Development Act (“Davis-Stirling Act”) is the primary body of law governing condo projects and homeowners associations (“HOAs”) in the state. This update summarizes a few recent changes to the Davis-Stirling Act.  The first, Assembly Bill No. 968 (“AB 968”), clears up some confusion regarding condo owner versus HOA responsibility for repair or replacement of exclusive use of common area.  The second, Assembly Bill No. 1963 (“AB 1963”), extends a requirement for HOAs of more than 20 units to follow certain pre-litigation alternative dispute resolution procedures. Clarification of Maintenance, Repair and Replacement Responsibilities There has been long-standing uncertainty concerning who has the responsibility to maintain, repair and replace exclusive use common area appurtenant to an owner’s unit – the unit owner or the HOA?  Exclusive use common area generally refers to private decks, patios and balconies appurtenant to an owner’s unit, and can also include other improvements that exclusively serve an owner’s unit.  While a unit owner must maintain such exclusive use common area, it was less certain who must repair and replace such exclusive use common area.  California Civil Code Section 4775 provided a default rule to address this issue, but the wording of the statute was unclear. AB 968, effective January 1, 2017, amended Civil Code Section 4775 to address the uncertainty of who bears the responsibility for repair and replacement of exclusive use common area.  In a nutshell, unless otherwise provided in the condo declaration (CC&Rs), the HOA is responsible for repairing and replacing exclusive use common area, and the unit owner is responsible for maintaining exclusive use common area appurtenant to that owner’s unit.  While this is the default rule, CC&Rs may be drafted to provide an alternative approach for repair and replacement of such areas.  HOAs whose CC&Rs are not clear on the allocation of such responsibility may consider whether some action should be taken to address any uncertainty. Extension of Requirement for Larger HOAs to Follow Alternative Dispute Resolution Procedures California Civil Code Section 6000, known as the Calderon Act, establishes dispute resolution procedures that an HOA for a condo project with 20 or more units must satisfy before it can sue a developer for construction defects.  These procedures are known as the “Calderon Process.”  The Calderon Process is separate from the Right to Repair Law (aka “SB 800”), which is another body of law that governs construction defects and required procedures for claims an HOA may have against a developer. The Calderon Act is generally designed to provide a fair way to resolve construction defect claims in an expeditious and cost effective manner in order to avoid litigation.  It requires the parties to follow a process in an attempt to resolve such disputes before litigation may be commenced.  Much of the Calderon Act was set to expire on July 1, 2017.  AB 1963 amends California Civil Code Section 6000 to extend the Calderon Act to July 1, 2024.  This continued requirement to follow the Calderon Process should help avoid lengthy and costly litigation for construction defect claims. Special thanks to Antonia Toomey for her assistance with this update. 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.

Last Thursday, Department staff provided the Planning Commission with an informational update on the City’s jobs-housing balance, providing quantitative data to assist policymakers as they consider the practical impacts of their weekly decision-making on local housing accessibility, economic growth, and transportation infrastructure. The presentation was the second in an ongoing series intended to brief the Commission on the Department’s data-gathering and research efforts to “unearth and examine how the City’s job, housing, and transportation framework has evolved over the past thirty years,” since the adoption of the Downtown Plan and Proposition M in the 1980s. Thursday’s discussion was replete with dense statistics and detailed tables, charts and graphics, containing few surprises for those who have been watching to City housing or jobs trends in recent years.  The following are a few of the key takeaways. San Francisco is producing housing at a rate that meets its goals from the 1980s and is on track to at least slightly lower its jobs-housing ratio by the year 2040 (projecting 1.60 jobs per housing unit in 2040, as compared to 1.73 jobs per unit now).  Over the past 30 years, we’ve exceeded the modest housing production objectives set in the Downtown Plan, with more than 2/3rds of all housing built since 1985 located in downtown and immediately adjacent areas. However, both the local population and job base have grown at a faster rate than housing production.   Since 1980, the City’s residential population and job base have grown steadily (+27% and +32% respectively) – a much faster rate than the increase in housing (+17%). San Francisco housing is also increasingly occupied by higher-wage earners.   The percentage of San Francisco workers in all income brackets less than 140% AMI who live in San Francisco has declined since 1990, with the greatest declines at the lowest brackets.  As staff points out, this means that the City’s housing stock “is increasing being occupied by a greater share of its higher wage workforce, and its middle and lower wage workforce is increasingly commuting into the City.” The Department’s analysis suggests that other Bay Area cities aren’t pulling their weight in regional housing production.  As planner Joshua Switzky explained, San Francisco is the only county in the region that has provided more housing every decade than was provided in the previous decade. Over the past 35 years, every other Bay Area county has provided significantly more job growth than housing units, with San Mateo adding more than three jobs per each added housing unit on average, and Santa Clara County providing approximately 2 new jobs per unit. And the data-gathering has confirmed some interesting statistics on the total balance of in- and outflow workers in San Francisco.  Over the past three decades, the overall percentage of San Francisco Jobs held by San Francisco residents has been fairly stable at over 50%.  However, San Francisco has seen a slight aggregate net decline in the in-commute into the City from San Mateo, Santa Clara and Marin counties, such that more San Francisco residents are traveling out of the City for work in Santa Clara county than are traveling in.  The Department attributes at least some of this imbalance to lack of housing production in sister cities as compared to their local job growth. The Jobs-Housing Balance Trends presentation was informational in nature, so no direct action was taken.  Time will tell how the Commission applies this data to their review of future development projects and policies, though some Commissioners expressed concerns that the City’s current jobs-housing ratio reduction goals aren’t sufficient, and urged adoption of a more aggressive strategy. The Department’s presentation materials and more detailed findings can be found online at Planning Commission – March 2, 2017, Supporting Documents 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, the formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.