​A recent California case illustrates the importance of clear indemnity clauses in leases to ensure proper apportionment of liability between landlord and tenant.  In Morlin Asset Management LP v. Murachanian, the Court of Appeal held that if a matter is not expressly and specifically covered in a lease indemnity, then there is likely no claim by the indemnified party in reliance on such indemnity, whether under equitable principles or under the lease itself (2 Cal.App.5th 184 (2016)). In Morlin Asset Management LP, a carpet cleaner fell and injured himself on the stairs in the common area of a building.  He was at the building because he had been hired by the tenant (“Tenant”) to clean the carpets within the leased premises.  The carpet cleaner brought an action against the landlord (“Landlord”), as the owner of the building, for negligence and premises liability.  Landlord filed cross-complaints against Tenant for equitable indemnity (alleging any injuries to the carpet cleaner were caused by the tenant), apportionment of fault and express indemnity pursuant to the lease.  The lease required Tenant to indemnify Landlord for any matter “arising out of, involving or in connection with the use and/or occupancy of the Premises by lessee”. Landlord argued that this accident was within the scope of the broad indemnity language and Tenant should reimburse Landlord for any damages that Landlord had to pay to the carpet cleaner.  Tenant contended that this accident occurred outside the premises and thus was not covered by the terms of the indemnity.  The Superior Court agreed with Tenant and granted its motion for summary judgment. Landlord appealed. On appeal, Landlord argued that the accident “arose from the tenant’s use of the suite” since it would not have occurred but for Tenant hiring the carpet cleaner to clean the carpets in the premises.  Landlord also pointed to a lease provision which exempted Landlord from liability for injury or damage to person or property “in or about the Premises”, as well as the rules and regulations of the lease which provided Tenant could not employ a contractor for work in the building without Landlord approval, which Tenant had not done in this case.  Though those lease provisions supported Landlord’s claim that Tenant had culpability in this case, the Court of Appeal noted that the lease contained a provision which gave the Landlord exclusive control and management of the common areas of the building (like the stairs), including the responsibility to keep the same in good condition and repair.  Therefore, Tenant had no control over the condition of the stairs, which were arguably in an unsafe condition.     Regardless of the other lease provisions, Landlord stated that the Court should construe the indemnity language liberally in favor of Landlord as the promisee.  Landlord cited to case-law where California courts gave a broader interpretation to the language “arising out of” in various kinds of insurance provisions.  The Court of Appeal distinguished this argument and explained that in non-insurance agreements (like a lease), indemnity language must be clear, explicit and construed strictly against the promisee.  Therefore, when reviewing the language strictly, the Court of Appeal found that the connection between Tenant’s use of the suite and the accident in the stairwell over which Tenant had no control was too remote and not within the parties contemplation when they entered into the lease. The Court of Appeal also reviewed Landlord’s claim for recovery under the premise of equitable indemnity.  A claim for equitable indemnity arises when one party has been ordered to pay damages to another party as a result of a third party’s wrongful acts.  The party ordered to pay damages then seeks recovery from the wrongful third party under principles of equity or fairness, rather than contract.  The Court of Appeal ultimately denied this claim citing to case-law which held that if there is an express contractual provision establishing a duty in one party to indemnify another, the extent of the duty must be determined from the contract and not from the independent duty of equitable indemnity.  Therefore, the indemnity language in the lease controls and governs the scope of what is covered, regardless of any fairness argument. This case is an important reminder to ensure indemnity clauses in leases are clear, specific and cover all aspects of intended liability between landlord and tenant.  Otherwise, a party may believe they are being indemnified for certain matters in a lease due to broader language and find out they are not in fact covered when a third party makes a claim. 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.

​On September 15, 2016, the Planning Commission considered a Planning Code Amendment that would add new requirements for green roofs in construction projects.  Currently, Title 24, which provides State standards for building energy efficiency, requires 15% of roof area of new buildings to be “solar ready”, which means 15% of the roof will be un-shaded by the proposed building itself and unobstructed by rooftop mechanical equipment.  Title 24 applies to all new residential and commercial buildings of 10 floors or less.  The Board of Supervisors previously supplemented the State law by requiring that the 15% of roof area set aside actually had solar panels installed on it. The proposed ordinance would allow for an alternative to the solar panel requirement.  Under the proposed ordinance, between 15% and 30% of roof space on most new construction will be required to incorporate solar panels, living (green) roofs, or a combination of both.  If the living roof option is selected, the builder will be required to replace the otherwise required solar panels on a 2:1 basis (2 square feet of living roof for every 1 square foot of solar panels otherwise required.) The City believes that green roofs such as grass and vegetation will reduce storm-water entering the sewer, reduce energy consumption, enhance biodiversity, sequester carbon, and capture pollution.  The City provides resources including a living roof manual, a living roof webpage, and a living roof map of San Francisco.  These resources are currently online at the following websites: 1. San Francisco Living Roof Manual 2. San Francisco Planning Department Living Roofs With regard to the cost to the builder, the City believes that the one-time installation cost will be largely offset by the avoidance of one-time stormwater management equipment costs that would otherwise be incurred.   San Francisco would become the first major U.S. city to impose such requirements on new roof tops.  The requirements will be implemented by the Planning Department.  If the Planning Commission approves the proposed ordinance, it will forward it to the Board of Supervisors for further review and action.  The Planning Department will review proposed projects for compliance with the Better Roofs Ordinance in Preliminary Project Assessments.  Additional informational materials are planned to be provided in a Better Roofs Project Guide and a Zoning Administrator Bulletin for assistance with implementation and compliance.  New Regulations on Signs Also on September 15, 2016, the Planning Commission considered a proposed ordinance that would supplement the rules and restrictions regarding signs.  In general, Article 6 of the Planning Code allows identifying signs that serve to tell only the name, address and use of the premises upon which the sign is affixed.  All proposed signs are subject to approval by the Planning Department.  In general, new advertising signs and billboards are not permitted.  General advertising signs that received valid permits in the past are grandfathered, and must show the permit number, the name of the sign company, and the permitted sign dimensions on the sign.    The definition of historic signs will be changed to include historic movie theater projecting signs and theater marquees, and any sign listed on or eligible for listing on the National Register of Historic Places, the California Register of Historical Resources, and any sign that is designated a City landmark or a contributor to a City landmark district, or is designated as significant under Article 11 of the Planning Code.  Historic signs are subject to their own separate set of regulations.    The proposed ordinance clarifies that “vintage signs” are defined as signs that depict a land use, a business activity, a public activity, a social activity, a historical figure, or an activity or use that recalls the City’s historic past.   Such signs shall be allowed to be restored, reconstructed, maintained, or technologically improved only by conditional use authorization of the Planning Commission.  In general, such signs must be at least 40 years old.   Once designated as a vintage sign, a sign may not be removed without conditional use authorization of the Planning Commission.  Similarly, a three dimensional vintage sign may be relocated to a new location only with conditional use authorization from the Planning Commission.  In some cases, vintage signs are required to be maintained on the property even if they advertise a business that left the property decades ago.  Historic signs, vintage signs, historic theater marquees, and historic theater projecting signs are generally exempt from the size and projection restrictions that would otherwise apply under the Planning Code. San Francisco has eleven distinct special sign districts, each with its own specific sign restrictions, which are found in the San Francisco Zoning Maps designated SS01 and SS02. 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.

​As we return from the summer recess for the Board of Supervisors and Planning Commission, we recap three of the summer’s significant planning policy proposals:  Central SoMa On August 11, the Planning Department made a presentation at the Planning Commission regarding the long-awaited update to the Central SoMa Plan. In broad terms, the Draft Plan proposes to rezone a large portion of SoMa to allow for future residential and commercial development, while protecting production, distribution, and repair (“PDR”) uses.  The Draft Plan will increase height and FAR, and  allow for the production of significant office space and housing. It will also increase development impact fees, including a new Central SoMa Impact fee, and provide for a Mello-Roos Community Facilities District. The Plan Area is smaller than that originally proposed in 2013, now bounded by 2nd Street, 6th Street, Townsend Street, and an irregular border to the north generally south of Folsom Street east of 4th Street and Howard Street, Clementina Street between 4th and 5th Streets, and Natoma Street between 5th and 6th Streets. The Draft Plan centers around the philosophy of “achieving neighborhood sustainability” through implementing regulations related to increasing affordable housing (targeting production of 33% affordable units), creating publicly-accessible open space, increasing environmental sustainability of sites, retaining neighborhood character, and protecting PDR uses. The Draft Plan has new bulk and “skyplane” controls that are applicable to new construction and significant additions.  The Draft Plan will include several “key development sites” that will receive significant height increases. Although those sites have been preliminarily identified, further information regarding additional requirements for the sites is expected to be released later this fall.  Transportation Demand Management (TDM) On August 4, the Planning Commission voted to recommend approval of the new TDM Program, which is expected to go to the Board of Supervisors in the fall. Under the Program, Development projects would be required to incorporate features that support sustainable transportation. It would bring together requirements currently found in different Code Sections, including those related to pedestrian conditions, automobile parking, bicycle parking, shower facilities, transportation marketing services, on-site child care, car share, unbundled parking costs, and on-site affordable housing, as well as new measures, to develop a comprehensive TDM program.  Projects are currently being requested to prepare a TDM Checklist that contains many of the measures considered for the TDM Program, but the program is not yet a condition of approval. If adopted, the TDM ordinance would add a new Section 169 to the Planning Code that would apply to most projects proposing construction of more than ten dwelling units or 10,000 square-feet of non-residential space, as well as those proposing a change of use of greater than 25,000 square-feet. Projects would be required to submit a TDM plan with the first development application, choosing a combination of measures to meet the total points required for a project. The program would also require monitoring and reporting throughout the life of a project. The way the program is currently structured, in order to meet TDM requirements, many development projects would have to significantly decrease parking or increase affordable housing to achieve enough points for a qualifying TDM package.  We will continue to track TDM as it moves towards adoption by the Board of Supervisors. In the meantime, many projects will be in a grey area in which TDM checklists (which may continue to change) are requested by the Planning Department during environmental review before the Program is actually adopted.   PDR Replacement In our June 27 update, we provided a summary of a PDR Replacement Program introduced by Supervisor Jane Kim that would require replacement of PDR, Institutional Community Use, and Arts Activity Use in many of the zoning districts in the City. On August 2, the Board voted to include the legislation on the ballot for the November 8 election, with Avalos, Breed, Campos Kim, Mar, Peskin and Yee voting yes, and Cohen, Farrell, Tang and Wiener voting no.  The initiative will go to the voters with a few important changes from the legislation as originally introduced. The replacement requirement would no longer apply City-wide. Instead, it would be limited to the Mission, Eastern SoMa, Western SoMa, and, once adopted, Central SoMa plan areas. The initiative also now contains a grandfathering clause for project converting less than 15,000 square-feet that submitted on Environmental Evaluation Application by June 14, 2016 and a partial grandfathering clause for projects converting at least 15,000 square-feet that submitted an Environmental Evaluation Application by June 14, 2016 (the partial grandfathering reduces the replacement ratio to .4 square-feet required for each square-foot converted). If approved, the following replacement amounts would be required for most projects: for SALI zoned property, one square foot of PDR, Institutional Community Use, or Arts Activity Use would be required for each square-foot proposed for conversion; for UMU, MUO or SLI zoned property, .75 square-feet would be required for each square-foot proposed for conversion; and for MUG or MUR zoned property, .5 square-feet would be required for each square-foot proposed for conversion. It is not clear how much the voters will connect with a PDR replacement ballot initiative, in contrast with the strong voter support for the affordable housing initiative in the June election. If the initiative fails, we may see alternative PDR protection or replacement legislation coming from the Board. Moreover, under the current initiative, PDR replacement requirements may be changed by a two-thirds vote of the Board. Therefore, what PDR regulation looks like going into 2017 could be impacted by the makeup of the Board after November’s election. 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

​This week in our pre-labor day update, we look at four very local tax issues that will be on the ballot in November. Real Property Transfer Tax Increase (Proposition W) The Board of Supervisors adopted a proposal sponsored by Supervisors Kim, Campos, Peskin, Mar, Avalos, and Yee to support a ballot measure that will increase the Real Property Transfer Tax on properties sold for at least $5 million. The Real Property Transfer Tax is currently imposed on any transaction that results in a “transfer” of real property in the City. The definition of a “transfer” is broad and includes certain transfers of corporate stock, partnership shares, or limited liability company interests, if the transfer would constitute a “change of ownership” under California law. If adopted, this measure would increase the Real Property Transfer Tax rate from 2% to 2.25% on properties with a value of at least $5 million and less than $10 million; from 2.5% to 2.75% on properties with a value of at least $10 million to less than $25 million; and 2.5% to 3% on properties with a value of at least $25 million. Approval of the initiative requires an affirmative vote of the majority of voters.  The actual financial impact of the transfer tax increase would be limited. For real property sales of $5 million, the additional tax would be $12,500, and for sales of $10 million, the additional tax would be $25,000. However, the transfer tax rates were mostly recently increased in 2010 (by 0.5% for transfers of $5M or more and by 1% for transfers of $10M or more). Some property owners consider the further increase of transfer taxes to be yet another burden on property ownership and doing business in San Francisco. City to Be Responsible for Maintaining Street Trees (Prop. E) The Board of Supervisors proposed a charter amendment sponsored by Supervisors Avalos, Weiner, and Mar that would transfer the responsibility for the maintenance of trees growing within the public right-of-way, or “street trees,” to the City. Currently, a property owner whose property is adjacent to a street tree is responsible for that tree and the sidewalk areas adjacent to it. Current law provides that a property owner is liable for injuries or property damage that result from that owner’s failure to maintain an adjacent street tree or sidewalk. If approved by a majority of the voters, the charter amendment would transfer responsibility of and liability for the maintenance of street trees to the City, establish the Street Tree Maintenance Fund to pay for the maintenance of street trees, and require an annual financial set-aside for the Fund. No parcel tax is associated with this measure. If approved, the City’s responsibility of street trees would begin on July 1, 2017 and would include street trees planted before and after that date. The amendment includes a “safety valve” in that the Mayor has the authority to terminate the charter amendment before January 1, 2017 if there is not sufficient budget capacity to cover the maintenance obligations. This charter amendment is likely to be well received by all property owners, especially those homeowners that have difficulty funding expensive tree repairs. SF Community College Parcel Tax (Prop. B) The San Francisco Community College Board of Trustees submitted a ballot measure that will increase and renew the local control parcel tax. The existing annual tax, approved by the voters of San Francisco as Measure A during the November 6, 2012 election, is $79 per parcel and would expire in 2021. If this ballot measure is approved by at least two-thirds of voters, the parcel tax will be increased to $99 per parcel, commencing July 1, 2017 and expiring in 2032. The proceeds of the parcel tax may only be applied to specific programs, like “attract and retain community college teachers” and “Keep school libraries open.” General Sales Tax Increase (Prop. K) The Board of Supervisors adopted a proposal sponsored by Mayor Lee and Supervisors Farrell and Weiner to support a ballot measure that would increase the sales and use tax by 0.75% for 25 years. Currently, the combined state and local sales and use tax rate is 8.75%, but a portion of the state component will expire on December 31, 2016. If adopted by a majority of the voters, this measure would increase the combined sales and use tax rate in the City to 9.25%. The funds raised by this increase are expected to off-set the set-asides proposed in Prop. J on the ballot for the proposed Homeless Housing and Services Fund and the Transportation Improvement Fund. While this sales tax increase may not directly impact real estate ownership, there is the perception that a further increase in the cost of doing business in San Francisco could dampen new investment and property values. 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.

​One of the significant land use policy shifts underway in San Francisco is regulation of Production, Distribution, and Repair (PDR) uses. PDR includes industrial and agricultural uses, ambulance services, animal hospital, automotive service station and automotive repair, wash and towing, arts activities, business services, cat boarding and kennels, catering service, commercial storage, livery stable, parcel delivery service, public utilities yard, storage yard, trade office, trade shop, and wholesale sales and storage uses. PDR uses can be found in many zoning districts, and are distinguished from PDR Zoning, which is a zoning category applying to a property as a whole that imposes a number of zoning regulations. PDR regulation has been a major issue in the Mission Action Plan (MAP) 2020 process underway at Planning, which is expected to result in legislation establishing additional zoning controls related to affordable housing and PDR in the Mission in the next few years. Currently, the Mission Interim Controls apply to require project sponsors to provide information regarding elimination of PDR uses, but do not prohibit such elimination. Despite the continuing policy discussion at the Planning Department and Commission, on June 14, Supervisor Jane Kim introduced a ballot initiative for the November election that would require conditional use approval for conversion of a PDR use. It would also require conditional use approval for conversion of an Institutional Community Use, which includes uses such as child care facilities, community and philanthropic services and religious institutions, and conversion of Arts Activity Use, which includes a range of arts uses. Between these three categories, a broad range of industrial, community and arts uses would be covered.  The new regulation would require replacement of the displaced use on the same property or in the same plan area. In the SALI, PDR, C-3-G or M zoning districts, 100% replacement of the existing PDR, Institutional Community Use, or Arts Activity Use to be converted or demolished would be required. In the UMU, MUO, MUG and MUR zoning districts, 75% replacement of the existing PDR, Institutional Community Use, or Arts Activity Use to be converted or demolished would be required.  For all other zoning districts where PDR, Institutional Community Use, or Arts Activity Uses are permitted, 25% replacement of such uses to be converted or demolish would be required.  Parcels zoned C-3-O or R, under the jurisdiction of the Port of San Francisco, or in Special Use Districts and Redevelopment Plan Areas would be exempt. In addition, the amount of replacement space could be reduced by required building entrances, maintenance, mechanical and utilities facilities, on-site open space, and bicycle facilities, but not by space used for non-car-share parking. Finally, as part of the conditional use process, the Planning Commission would have to consider the suitability of the replacement space for the use proposed for conversion. Projects that received final Planning Commission approval by June 14, 2016 would be grandfathered, but all projects in the pipeline would be subject to the requirements. We will follow the legislative process as it unfolds this summer and fall. In the meantime, there has been increased pressure on developers to include PDR, community and arts space in buildings that historically have housed those uses. Therefore, whatever the specific zoning controls put in place, we are likely to see more projects that include a mix of residential, retail and PDR uses.  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.

​Yesterday, the Board of Supervisors’ Land Use Committee held a robust (some would say acrimonious) hearing on the Inclusionary Housing Ordinance’s trailing legislation.  A few important amendments were introduced and debated. Ultimately, the legislation was continued to the committee’s next hearing on April 25th and may be voted on by the full Board the following day.  We provide an overview of the hearing for you here, but recommend watching the hearing on www.sfgovtv.org for anyone who wants to see the action themselves. For some background on where we stand, the charter amendment going to San Francisco voters in June allows the Board of Supervisors to adopt a new inclusionary housing ordinance, and sets “interim” rates until that new ordinance is adopted. Interim inclusionary percentages for projects adding 25 units or more would be set at 25% on-site/33% off-site/33% in-lieu fee.  At the hearing, sending this charter amendment to the voters, the Board also committed to adopting trailing legislation that addresses proposed projects in the development pipeline.  The legislation includes a number of different provisions which in broad strokes would increase affordability requirements based on when a project first filed its Environmental Evaluation Application, with some special rules and carve-outs based on factors such as a project’s proposed location and height.  That legislation was introduced a few weeks ago, went to the Planning Commission for review and comment, and then to the Board of Supervisors’ Land Use Committee yesterday.  As the legislation is currently in flux, the following is subject to change prior to adoption.  Highlighting the Supervisors’ descriptions of some of the more important amendments: 1. Timing: Still at Committee. The legislation did not get sent to the full Board.  It was continued to next week by a 2-1 vote, with Supervisors Cohen and Wiener supporting the continuance and Supervisor Peskin voting against.  It may be at the full Board by April 26. 2. No More Full Carve-Out for Mission NCT.  Pipeline projects in the Mission NCT are no longer carved out of the legislation’s graduated increased affordability requirements altogether.  Instead, they will be treated similar to projects in the UMU and SoMa Youth and Family zones, with an additional affordability bump above the general graduated increase. 3. Projects with Environmental Evaluation Applications Filed before 2013.  Projects that filed Environmental Evaluation Applications before January 1, 2013 would be fully grandfathered from the trailing legislation and increased affordability levels proposed in the ballot initiative. 4. Special Affordable Housing Impact Fees.  Some areas have special affordable housing impact fees (such as Market-Octavia).  Projects paying these impact fees can also count them towards their inclusionary housing obligation, if they elect to pay the in-lieu fee. This would help offset the increased affordability for projects in these areas that decide to pay the fee.   5. On-Site BMR Rental Projects.  Projects that have executed a Costa Hawkins agreement to provide on-site affordable rental units prior to the June 7, 2016 election would be completely exempt from the BMR increase.  We will continue to monitor the progress of this trailing legislation. 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 Commission to Consider BMR Grandfathering Ordinance this Thursday As we last reported, Supervisors Peskin and Kim have introduced “grandfathering” legislation at the Board of Supervisors that would reduce the 25%/33% BMR requirement set in June’s Charter amendment for projects that are not yet approved but have had an application on file since at least before January 1, 2016.  The Planning Commission will be considering the legislation this Thursday at noon in room 400 of City Hall. As the details of the grandfathering legislation have been absorbed over the past few weeks, two things have become clear.  First, the legislation would modestly increase the on-site BMR rate from 12% to a range of 13%-14.5% for projects with environmental evaluation applications filed prior to January 1, 2016.  Second, there are sizeable “carve-outs” from this grandfathering for projects in the following categories: – Located in the UMU zoning district and demolishing any existing PDR use; – Located in the Mission Street NCT district; – Located in the Youth and Family Zone Special Use District; – Are 120 feet in height or taller (these projects would be grandfathered if providing BMR units on-site; the off-site and in-lieu fee options would not be grandfathered and rather subject to the 33% rate) Planning Department staff has prepared a thorough analysis of the legislation, which can be found here:  http://commissions.sfplanning.org/cpcpackets/2016-003040PCA.pdf.  Staff also proposes a number of modifications to the legislation, including the removal of the carve-outs listed above.  These carve-outs would subject numerous projects to the increased BMR rates despite having an application on file for years just like other projects eligible for grandfathering. We recommend members of the development community send letters or attend the Planning Commission hearing to support the elimination of these broad carve-outs.  The Planning Commission will vote on Thursday on what revisions to the ordinance to recommend to the Board of Supervisors. Oakland Impact Fees Move Forward to Full City Council Last week, the Community and Economic Development Committee of the Oakland City Council considered draft legislation to establish development impact fees in the City.  After a 2+ hour public hearing, the committee voted to send the proposal to the full City Council for consideration.  The following is an overview of the current proposal. Residential Impact Fee  The residential fee will differ in three different geographic zones of the city:  (1) Downtown/North Oakland and Hills, (2) West Oakland, and (3) East Oakland, as follows: Somewhat different fees would apply to townhome and single-family home developments. An on-site affordable housing option is available to exempt projects from the bulk of these residential impact fees.  The exemption applies to projects that provide 10% of their units affordable to moderate income households (120% AMI), 10% of their units affordable to low-income households (80% AMI), or 5% of their units affordable to very-low income households (50% AMI).  Providing affordable housing at these rates will also qualify a project for the City’s density bonus program. Non-Residential Impact Fee  Non-residential impact fees would be phased in over the next five years.  The office fee will be phased in as follows: Permit filed prior to July 1, 2016:  No fee Permit filed July 1, 2016 – June 30, 2017:  $0.85/sf Permit filed July 1, 2017 – June 30, 2018:  $0.85/sf Permit filed July 1, 2018 – June 30, 2019:  $2.00/sf Permit filed July 1, 2019 – June 30, 2020:  $2.00/sf Permit filed July 1, 2020 or later:  $4.00/sf The date a building permit application is filed after all planning approvals have been granted is the date used for applying the new impact fees. The City Council is expected to take up the impact fee legislation in April.  We will continue to monitor the Oakland impact fee process as it moves forward to final approval. 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 we got our first look at what the grandfathering from the 25% BMR increase on June’s ballot would look like.  Here’s the scoop: 1.  If a project’s environmental application was submitted prior to 1/1/14, the inclusionary requirements are: 13% on site 25% offsite/in-lieu fee 2.  If the environmental application was submitted prior to 1/1/15, the inclusionary requirements are: 13.5% onsite 27.5% offsite/in-lieu fee 3.  If the environmental application was submitted prior to 1/12/16, the inclusionary requirements are: 14.5% onsite 30% off site/in-lieu fee 4.  If the environmental application is submitted after 1/12/16, the project will need to fully comply with the ballot initiative at 25% affordable (assuming it passes), broken out between 15% at very low income (55% of AMI for rental, 80% AMI for sale) and 10% at moderate income (100% of AMI for rental, 120% AMI for sale). 5.  Any project 120 feet or taller is not eligible for a grandfathered in-lieu fee and must pay a 33% fee. 6.  The following types of projects are not eligible for any grandfathering: Projects located in the UMU zoning district that propose to remove existing industrial/PDR space; Projects located in the Mission Street NCT zoning district; Projects located in the Youth and Family Zone Special Use District. Keep in mind that this is simply Supervisor Kim and Peskin’s proposed legislation.  It still needs to be approved by six members of the Board of Supervisors and signed by the Mayor. We will keep you posted as the situation develops. 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.

​At the 11th hour, a compromise was reached on affordable housing. But those interested in hard and fast numbers based on an independent study or specific details on application to pipeline projects will have to sit tight and wait at least a few more months.  The Board voted 11-0 to send Supervisors Kim and Peskin’s charter amendment to the voters in June. This proposed amendment allows the Board of Supervisors to adopt a new inclusionary housing ordinance, and sets “interim” rates until that new ordinance is adopted. Interim inclusionary percentages for projects adding 25 units or more would be set at 25% on-site/33% off-site/33% in-lieu fee, unless a project has “procured a final first discretionary development entitlement approval” and resolved all appeals.   The obvious concern for those wary of this charter amendment is that these interim rates would become de-facto permanent, with no feasibility study done to support those percentages. It appears this concern was at least partially addressed by a resolution also unanimously adopted by the Board yesterday evening.  The resolution committed the Board to adopt trailing legislation in mid-April that would address a number of topics of concern to the Mayor’s office and moderate supervisors. A copy of the adopted resolution was not immediately available for review so we cannot confirm specifics, but Supervisor Yee said it contained the following topics, among others: (1) a grandfathering provision to provide fairness to projects in the development pipeline; (2) completing a feasibility analysis by May 31 that would form the basis for new affordability percentages; (3) setting “middle income” at 100% AMI; and (4) providing for development agreements to allow deviations from inclusionary requirements. According to news reports, the resolution also calls for the Board to amend interim controls within three months of the feasibility analysis and incorporate its findings in the new inclusionary housing ordinance.  So another chapter in the affordable housing debate concludes, with a compromise but no final answers. We will continue to monitor the progress of this trailing legislation and the results of the feasibility study. Ultimately, San Francisco voters will get to decide if they think their elected officials made a good deal. Railyard Alternatives and I-280 Boulevard Presentation On Tuesday of last week, Gil Kelley from the San Francisco Planning Department’s Long Range Planning division made a presentation at the Potrero Recreation Center about the Railyard Alternatives and I-280 Boulevard project, which the City is calling RAB for short. The presentation discussed the first phase of this study that is currently underway, a technical feasibility analysis. It touched on development-related issues, but largely discussed potential new transportation options in SoMa, Mission Bay, and Showplace Square/Lower Potrero Hill. The RAB is supposed to evaluate a comprehensive, regional approach to transportation and land use alternatives in this area. Currently, four potential projects are being studied: (1) making I-280 into a boulevard; (2) determining how to best engineer Caltrain and High-Speed Rail into the Transit Center (via the DTX); (3) adding a loop track and/or East Bay extension from the Transit Center; and (4) reducing in size and/or relocating some of Caltrain’s activities at the 4th and King railyard.   Mr. Kelley acknowledged that the second and fourth projects would create opportunities for development or repurposing of residual land. The discussions associated with development opportunities were very conceptual. With regards to turning I-280 into a boulevard, the RAB is considering “boulevarding” a roughly 1.2 mile stretch, starting as far south as Mariposa. This could open up a stretch of residual land similar to the Central Freeway parcels along Octavia.  For the 4th and King railyard, the City is evaluating if there are ways to use this land more “efficiently.” Potential railyard functions could be relocated further south in the city or could be consolidated on the site, opening up land for reuse. The RAB study at some point will address the possibility of new infill development, roads to connect neighborhoods, open space, and other public amenities. But he offered no details on these topics and did not put a timetable on further study of the “tens of acres” of residual sites. The primary focus of Mr. Kelley’s presentation involved the transportation-only alternatives. The RAB will study value-engineering the DTX to make it more useful and efficient, reviewing construction methods, track capabilities (including handling both electrified Caltrain and the California High-Speed Rail), and realignments including running by or near Mission Bay. The City is also working with state and regional transportation agencies to evaluate a loop track at the Transit Center that could also open up an extension to the East Bay. A loop track would increase the Transit Center’s capacity. The City is just getting started on these long-range plans, and selecting a preferred project alternative is not estimated to occur until late 2018 or early 2019. 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.

​2016 has started with a bang as the City debates competing affordable housing initiatives proposed for the June 7 election by Mayor Lee and by Supervisor Kim. The Mayor’s proposal would require the Planning Department to conduct an economic feasibility study and make a recommendation to the Board of Supervisors within nine months of the effective date of the legislation, and then no less than every 24 months moving forward. The Kim proposal would increase the affordable housing requirement set by the City Charter from 12% to 25%, with 15% of units required to be affordable to lower income households (for sale units must be affordable to households of 80% AMI; rental units must be affordable to 55% AMI) and 10% of units required to be affordable to middle income households (for sale units must be affordable to households of 140% AMI and rental units must be affordable to 100% AMI).  The 25% requirement would be an interim control until new legislation is adopted by the Board. The development world has been watching closely to determine what affordable housing requirements will be moving forward, and whether a grandfathering provision will be added to allow projects already in the pipeline to proceed under current requirements. Last night, the Board of Supervisors finally debated these questions sitting as a Committee of the Whole.  Debate was intense, but the Board generally agreed on several issues. First, a higher level of affordable housing is appropriate. Second, a feasibility study would help the Board to determine the proper level of affordable housing moving forward. Finally, affordable housing policy should be implemented through Board action and not dictated by City Charter.  However, the Board did not agree as to next steps. Supervisor Kim favors moving forward with a ballot measure to modify the City Charter to require 25% affordable housing, while Supervisor Peskin suggested that the Board come to agreement as to alternate legislation prior to the June election, potentially withdrawing both ballot initiative proposals prior to March 1. Supervisors Yee, Cohen, Wiener and Tang stated that further study is necessary to determine the appropriate level of inclusionary housing and what grandfathering provision should be included. Supervisors Wiener and Tang also pointed out that while there has been significant publicity about large projects such as 5M providing higher levels of affordable housing – touting 40% as the new 12% – those numbers are misleading. Those projects received some level of public subsidy. In addition, the calculation of affordable units in those projects would not comply with the levels of affordability included in the current proposals, and therefore would not qualify as providing 25% affordable housing. Supervisor Cohen introduced an amendment to the Kim Charter Amendment that would push any changes to affordable housing off until the Planning Department can study the issue and come up with a recommendation, no later than December 31, 2016. That proposal failed.   In the end, the matter was continued to the March 1 meeting because at least six days must intervene between first hearing and a Board decision to submit an initiative to the voters. The deadline for submitting a Charter Amendment to the Board of Elections for the June 7 election is March 4. There will, no doubt, be considerable behind the scenes negotiations between now and the March 1 hearing, as any ballot initiative will need the support of six of the eleven members of the Board. We will continue to provide updates as this matter unfolds. 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.