​Recognizing the shifting development attention towards Oakland and the East Bay, Reuben, Junius & Rose is excited to announce the opening of its new outpost in Oakland.  Located in the Old Oakland neighborhood, the office is three blocks south of the 12th Street BART station and four blocks south of City Hall.  Reuben, Junius & Rose will continue to provide full service land use and real estate legal services in San Francisco and throughout the Bay Area, now with a footprint in one of the fastest-growing and most exciting markets in the region.  Come visit us in our new digs at 476 9th Street on the second floor.  All calls can still be made to our main number at (415) 567-9000. Oakland City Council Continues Deliberations Over New Impact Fees The City Council’s Community and Economic Development Committee held its second hearing on the proposed new development impact fees on Tuesday.  There was significant public comment and the council members spent significant time discussing various aspects of the proposal.  Ultimately, the item was continued to the committee’s February 23rd hearing.  At that time, staff will present a draft ordinance for the committee to consider, which could be considered by the full City Council at their March 1st hearing. The council members suggested that the following modifications to the program could be made: The ultimate residential impact fee would be $24,000 per unit after the three year phase-in; Projects would be required to commence construction within 12 months of filing their building permit application, otherwise the fee applicable at the time the 12 months expires would apply; this could not only have the effect of incentivizing construction sooner rather than later, but also could limit the ability of projects to avoid the impact fees by filing building permit applications prior to enactment of impact fees; Phase-in of the impact fees would begin September 1, 2016, increasing annually until the full fees are achieved (2018 for residential; 2021 for non-residential); Zone 3 (East Oakland) impact fees delayed by 1-2 years; We will continue to track the impact fee process in future updates. 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.

​In the ever-changing legal landscape in San Francisco, we often receive inquiries concerning ways to determine which regulations will apply to a proposed development.  In the face of proposed changes to regulations, ordinances and fees that could have a dramatic impact on the viability of a proposed development, many property owners and developers want some level of certainty that the rules will not change on them in the middle of the development process. One method to obtain a greater level of certainty concerning regulations that will apply to a project is through a Vesting Tentative Map (“VTM”).  A VTM is authorized under the California Subdivision Map Act (“Map Act”) (see Cal. Govt. Code 66498.1 – 66498.9) as well as the San Francisco Subdivision Code.  A VTM is intended to establish vested rights to proceed with a project in substantial compliance with the regulations in effect at the time the VTM application is determined to be complete by the local agency.  The lead local agency in San Francisco is the Department of Public Works (“DPW”). Under the San Francisco Subdivision Code, all the requirements of a standard tentative subdivision map application are still required.  A VTM application must also include additional plans and information, such as floor plans, a parking plan, landscaping plans, as well as civil engineering plans for proposed street improvements, grading and utilities.  Importantly, a VTM application must also include all primary project approvals and entitlements (e.g. Planning Commission approvals) that will be required for the proposed project. Once a VTM application is submitted to DPW and reviewed for sufficiency it will eventually be determined to be complete as of a certain date.  After processing of the completed VTM application has occurred and it has been reviewed and approved by various City agencies, the VTM will be approved by DPW.  Once the VTM is approved, it is only those local ordinances, polices and standards in effect on the date DPW determines the VTM application to be complete that may be applied to the development.  Thus, the primary operative date for the vested rights provided by a VTM is when the VTM application is determined to be complete. A critical question is what rules are “in effect” as of the date the VTM application is determined to be complete, especially when faced with proposed changes to the rules that may impact a proposed project.  Generally, for an ordinance, policy or standard to be in effect at the time the VTM application was complete, the developer must have constructive notice of the rule, or the ordinance, policy or standard must have been in existence or stem from an existing rule, before the VTM application was determined to be complete.  This is largely a factual determination, depending on the circumstances.  The critical issues center around whether some official action was taken, and/or whether the timing and notice of the proposed new regulation was legally sufficient to put a developer on notice of the new rules.  Given the right facts and timing, the VTM would protect a developer from subsequently adopted regulations. Under the Map Act, local agencies may also impose reasonable conditions on future permits and approvals.  What constitutes reasonable conditions is not clearly defined in the Map Act and may depend on the situation.  The rights vested by a VTM generally remain valid for two years, and may be subject to an extension. While there are exceptions that may limit the rights vested by a VTM, a VTM can offer a developer a valuable benefit by locking in the laws and rules that will be applied to a development.  The security provided by an approved VTM should allow a developer to expend resources and incur liabilities with a reduced risk of the project being frustrated by subsequent local regulations. Louis Sarmiento contributed to 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.

​A recent California case dealt with a very important issue to many San Franciscans, that of rent control.  Rent control affects many residential properties in San Francisco and is governed by the San Francisco Residential Rent Stabilization and Arbitration Ordinance (“Rent Ordinance”), which establishes limitations on rent and grounds for eviction.  The Rent Ordinance explicitly authorizes a Rent Board to promulgate rules and regulations to effectuate the intent of the Rent Ordinance.  In Foster v. Britton, the Court of Appeal analyzed whether a specific rent control rule was preempted by conflicting state law  and whether the Rent Board exceeded its authority in issuing such rule.  (242 Cal.App.4th 920 (2015)).  In Foster, the new owner of a residential building sent all of the month to month tenants a notice of new “house rules” (which included sharing the backyard equally, maintaining tenant’s own garbage service and keeping personal property inside your unit).  The noticed advised that the new “house rules” took effect 30 days after the notice was received by the tenant and that if the tenant disagreed with the rules, they could terminate their lease and vacate the premises.  One tenant, Foster, sued the landlord, Britton, and alleged that the new “house rules” conflicted with the terms of her lease (which guaranteed garbage service and the exclusive use of garden space, among others) and were a violation of Rule 12.20 issued by the Rent Board.  Rule 12.20 says in pertinent part that “notwithstanding any change in the terms of a tenancy pursuant to Civil Code section 827, a tenant may not be evicted for violation of a covenant or obligation that was not included in the tenant’s rental agreement at the inception of the tenancy, unless (1) the change in the terms is authorized by the Rent Ordinance or required by federal, state or local law; or (2) the change in the terms of the tenancy was accepted in writing by the tenant”.    Britton disagreed that Rule 12.20 applied here and relied on Section 827 of the California Civil Code which says that “a landlord may change the terms of a month to month lease after giving 30 days notice and that the new terms become part of the lease if the tenant continues to hold the premises after the notice takes effect”.  Britton alleged that Section 827 as a state statute preempted the conflicting local rule.   The Court set forth the standards for state preemption of local law which include the premise that the matter must be so particularly covered by state law that it has become exclusively a matter of state concern.  The Court also reviewed case-law which had upheld local rent control legislation against challenges based on state preemption.  In those previous cases, as long as the procedural protections of state law on evictions were not adversely impacted (for example, notice requirements), local law could legislate further restraints on the substantive restrictions to evict for rent control purposes.  Based on precedent and the fact that the Court determined that rent control laws were not exclusively a matter of state concern, the Court in Foster held that Section 827 of the California Civil Code did not preempt local Rule 12.20 because Rule 12.20 regulated substantive grounds for eviction and did not limit procedural protections guaranteed under state law. The Court also addressed the question of whether the Rent Board had exceeded its authority in publishing Rule 12.20 itself.  They analyzed whether (1) the regulation is within the scope of the authority conferred, and (2) whether the regulation is reasonably necessary to effectuate the purposes of the statute.  Section 37.9(a)(2) of the Rent Ordinance allows a landlord to evict a tenant who has violated a lawful obligation of tenancy.  The Court discussed that the grounds for eviction were essential to the efficacy of the Rent Ordinance, otherwise landlords would circumvent the rent limitations by evicting tenants in order to increase rents to market rate upon the next new occupant.  The Court in Foster held that Rule 12.20 “fills up the details” by clarifying that a “lawful obligation of tenancy” does not include unilaterally imposed “house rules”.  Therefore, the regulation is within the scope of the authority granted to the Rent Board and serves the purposes of the Rent Ordinance. Based on the decision in Foster, it seems that state courts will give local governments broader latitude with respect to their promulgation of rent control laws as long as any conflict with state law does not limit procedural protections guaranteed by the same.  Both residential landlords and tenants in rent control municipalities like San Francisco should be aware of this case and the possible implications to their leases.      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 January 14, 2016 the Planning Commission adopted revised Mission Interim Controls that planning staff has been working on over the past 7 months.  The Interim Controls will apply to all projects in the Mission District (that have not received entitlements by January 14, 2016, excluding projects with less than 25 dwelling units or 25,000 gross sq. ft.  This would capture all pipeline projects that have not been reviewed by the Planning Commission. (The boundaries of the Mission District are 13th and Division Streets to Mission Street, to Cesar Chavez, to Potrero Avenue, and back to 13th and Division Streets – except that the Mission Street boundary would include any parcel with a property line on either side of Mission Street.) Following is a table summarizing the adopted Interim Controls.  The information described below is intended to supplement the information currently required by the Planning Code for pending and future projects. 1. Loss of one or more rent-controlled dwelling unit. Projects must meet a majority (at least four) of the following criteria: * Free of serious, continuing Code violations; * Maintained as decent, safe and sanitary housing; * Does not convert rental to other forms of tenure; * Conserves existing housing to preserve neighborhood diversity; * Protects relative affordability of existing housing; * Increases permanent affordable housing stock; and  * Increases family-sized housing stock. 2. Medium Projects. Projects which provide either: * Net addition or new construction of between 25,000 and 75,000 gross sq. ft. (if non-residential), or  * Between 25 and 75 dwelling units. The application is required to submit the following additional information: * Housing Production:  Maximum allowable density, proposed density or project, and evaluation of project’s ability to effectively house future residents; * Affordable Housing Production:  Analysis of project alternatives and feasibility of additional affordable housing; * Housing Preservation:  Discussion of existing housing on site; * Tenant Displacement:  Disclosure of eviction and buyout history at the site; and  * Proximal Development:  Discuss proposed and recent projects within ¼ mile radius of the site. 3. Medium Projects that displace PDR – including institutional, recreation, arts and entertainment uses. In addition to the above, the following information will also be required if PDR displacement is proposed: * Relocation Assistance:  In non-PDR zoning districts, discuss last known use and relocation benefits provided to previous tenant; or  * Business & Community Building-Uses: If no relocation benefits were offered, discuss potential impacts to the community; and * Inventory of Similar Uses: Discussion of existing businesses within the neighborhood that are similar to the use being displaced; * Non-Residential Displacement: Discuss existing businesses and non-profit organizations that will be displaced by the project and within the last 12 months. 4. Large Projects. Projects that include the: Net addition or new construction of 75,000 gross sq. ft. (if non-residential) or more than 75 dwelling units. The applicant is required to submit the following additional information: * Demographic Changes: Discussion and evaluation of socio-economic characteristics and effects of the project on the neighborhood; * Economic Pressure: Discussion and evaluation of additional housing supply provided by the project and resulting indirect and direct displacement; * Housing Production: Maximum allowable density, proposed density and evaluation of projects ability to effectively house future residents (the additional net supply of housing units); * Affordable Housing Production: Analysis of project alternatives and feasibility of additional affordable housing; and * Tenant Displacement: Eviction and buyout history. 5. Large Projects that displace PDR – including institutional, recreation, arts and entertainment. In addition to the above, the following information will also be required if PDR displacement is proposed: * Relocation Assistance: In non-PDR zoning districts, discuss last known use and relocation benefits provided to tenant; or * Business & Community Building-Uses: If no relation benefits were offered, discuss potential impacts to the community; * Jobs & Economic Profile: Discuss economic and fiscal impacts and their benefits to area residents; * Available Space in the Mission: Discuss availability of vacant space to replace use type being lost; * Affordability of Community Building Uses: Assess affordability of community-building uses; and * Non-Residential Displacement: Discuss existing businesses and non-profit organizations that will be displaced by the project and within the last 12 months.     The Interim Controls will be in effect for 15 months commencing on Jan. 14, 2015.   Much of the required additional information required by the Interim Controls set forth above regarding affordable housing production, availability of space in the Mission, and displacement is already available in existing studies and reports maintained by the Planning Dept., and citations to the existing reports will be acceptable to meet the requirements.  Required information not contained in existing reports shall be based upon independent study by a qualified professional. To determine which projects are “Projects that replace PDR”, the Planning Dept. will look back a maximum of 3 years for PDR uses.  If another use has replaced PDR, or if PDR has been abandoned for 3 years or more, the project will not be considered to replace PDR.    The following projects will be exempt from the Interim Controls: 1. 100% affordable projects; 2. Residential and mixed-use projects that (a) provide at least 33% of the units as affordable for households of low and moderate income, or (b) provide a dedication of land to the Mayor’s Office of Housing for a project that will result in 33% of the units as affordable for households of low and moderate income; and 3. Production, distribution, and repair uses if exclusively PDR, or that are mixed-use and include PDR uses and meet either of the two criteria above.  New LPA and Conditional Use Requirements a. Loss of Rent-Controlled Units – any project that would result in the loss of one or more rent-controlled residential units shall require conditional use authorization. b. Medium Projects – any residential or mixed-use project that is between 25,000 and 75,000 gross sq. ft. of non-residential use or has between 25-75 units shall require a Large Project Authorization (LPA), unless the project is

​It’s a new year, and we are immediately reminded that the zoning environment in 2016 will look much different than in 2015.  After a year of waiting, the details of the highly-anticipated Oakland development impact fee proposal were released over the holidays.  The fees will apply to both residential and non-residential development, and will phase in over the coming years beginning in July of 2016.  Projects will be subject to impact fees based upon the filing of their building permit application.   Residential Impact Fee – Central/North Oakland and Hills The residential fee will differ in three different geographic zones of the city:  (1) Central/North Oakland and Hills, (2) West Oakland, and (3) East Oakland.  Only the fees for Zone 1 have been released.  The residential impact fee for multifamily development in Zone 1 would phase in over the next three years as follows: Permit filed prior to July 1, 2016:  No fee Permit filed July 1, 2016 – June 30, 2017:  $5,710 per unit Permit filed July 1, 2017 – June 30, 2018:  $10,710 per unit Permit filed July 1, 2018 or later:  $20,710 per unit Non-Residential Impact Fee – Citywide 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 office impact fee would apply in addition to the $5.44/sf Jobs Housing Linkage Fee (for office projects of more than 25,000 sf). Next Steps The City Council’s Community and Economic Development Committee will hold a public hearing on the new impact fees on January 26, 2016.  City staff will release details on impact fees in Zones 2 and 3 before then.  The staff report on Zone 1 impact fees can be found at City of Oakland – Citywide Impact Fee Update.  We will keep you posted as the fee proposal makes its way through the legislative 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.

​Supervisor Kim Proposes More Than Doubling of the Affordable Housing Requirement The land use environment in San Francisco is shifting rapidly in the final weeks of 2015.  Just weeks after a split November election that saw the demise of a development moratorium in the Mission and a flip to the progressives on the Board of Supervisors, Mayor Lee introduced an initiative to increase the affordable housing requirement at next November’s election.  And on Tuesday, Supervisor Kim countered that effort by sponsoring a ballot initiative of her own – one that could increase the affordable housing requirement in the June election. Supervisor Kim’s proposal would increase the affordable housing requirement from 12% to 25% for housing projects of 25 or more units.  15% of units would be 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).  Another 10% of units would be required to be affordable to middle income households (for sale and rental units must be affordable to households of 120% AMI; some units could increase to 140% if average of affordable units are affordable to 120% AMI).  It’s unclear how these changes would affect the affordable housing in-lieu fee. Technically, the ballot measure would authorize the Board of Supervisors to increase the affordable housing requirement to these levels, meaning the Board would have to act subsequent to its passage.  Any affordable housing increase would need the support of at least 8 Board members to avoid a Mayoral veto. The ballot initiative can qualify for the ballot with the support of six of the eleven members of the Board.  To make it on the ballot for the June 7 election, the Board needs to vote it through by February 26th.  With six to seven members of the Board already on record supporting an increase in the affordable housing requirement, the first two months of 2016 could be spent negotiating over the final terms of the measure.   We will be following this ballot measure closely, and will be reporting on it in 2016. Board of Supervisors Passes Increase in the Child Care Impact Fee The Board passed a measure this week expanding the scope of the existing child care impact fee.  Currently, a $1.27/sf fee applies to office and hotel projects of more than 50,000 square feet.  The ordinance passed by the Board of Supervisors this week would (1) reduce the threshold for office and hotel projects to 25,000 square feet; (2) increase the office/hotel fee to $1.57 per square foot; and (3) apply a new child care fee to residential projects (both dwelling units and group housing rooms).  For projects with less than 10 units, a $0.91/sf fee would apply.  For projects with 10 or more units, a $1.83/sf fee would apply.   The new fee was passed on first reading by a unanimous vote of the Board, so it is expected to ultimately pass.  This fee would apply in addition to the recently-passed transportation sustainability fee. 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.

​Affordable Housing Increase Proposed for November Ballot Who says the period between Thanksgiving and New Year’s is slow at City Hall? Both the Mayor and the Board of Supervisors are hard at work on a number of land use related issues, directives, and legislation. Arguably the biggest news is that Mayor Lee and Board of Supervisors President London Breed have called for a Charter amendment to increase the required amount of affordable housing in new market rate projects. First things first: there is a noticeable absence of specifics on numbers, including how high above the current on-site and off-site requirements the initiative would propose going and whether any grandfathering of projects in the pipeline will be included. Mayor Lee and Supervisor Breed are commissioning a housing working group consisting of the usual suspects: market rate and affordable housing developers, housing advocates, community leaders, and other City officials. This group is expected to meet within the month to start laying the groundwork for a consensus proposal to go on the ballot, likely in November 2016. Reading the tea leaves in press releases and quotes to media outlets, a broad framework of issues may be covered in the initiative. Quotes from Mayor Lee’s office indicate that the affordability component may involve not just low-income housing, but also middle income. There have been references to shortening the timeline for new housing development projects or providing other incentives such as increased density or raising height limits in exchange for higher affordability levels. Larger projects may have higher affordability requirements than smaller ones. (It’s worth noting that 5M and the Mission Rock projects, which voluntarily agreed to exceed the affordability requirements, each also needed significant site-specific upzoning and height increases, unlike most other development projects in San Francisco). And finally, San Francisco voters approved Proposition K in 2014 (by a vote of almost two to one), which established a city policy of having at least 33% of new units be affordable. There are at least three other proposals related to affordable housing making their way through the City right now. The first is the affordable housing density bonus program, which would bring the City into compliance with state law. The second would add a “dial” feature tying increased affordability to the maximum Area Median Income (AMI) level of the units, allowing higher AMI if a project increased its on-site affordability percentage. The third would loosen location restrictions on the off-site option. We will continue to track these proposals as well, including whether either or both of these are incorporated into the ballot initiative.  Board of Supervisors Rejects Sale of 30 Van Ness Avenue On Tuesday, the Board of Supervisors disapproved the $80 million sale of 30 Van Ness, a city-owned site at the corner of Van Ness and Market, to a private developer. The vote was 7-4, with President London Breed siding with Supervisors Kim, Avalos, Mar, Yee, Campos, and recently sworn in Supervisor Peskin to reject the deal negotiated by the Department of Real Estate. There were two primary grounds for denying the project: the City had initially proposed to sell the property for $87 million, and the terms of the agreement apparently did not satisfy some of the Supervisors that the developer would provide increased affordability levels. According to news reports, the property value dipped because the current building on the site requires approximately $60 million in seismic levels to keep it safe for City employees while a new ground-up project is making its way through the entitlement process. We will keep monitoring the progress of this site, both its potential sale and its redevelopment. All in all, it looks like the land use regulatory environment is going to get more challenging in San Francisco in 2016.  As always, we will keep you posted on the latest. 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.

​Maximum Impact Fees in Oakland Released; Fee Proposal Floated With modern zoning mostly in place (with the exception of the Downtown Plan process) and with the real estate market showing signs of supporting new development, the biggest question in Oakland land use is what the soon-to-be-adopted impact fees will look like.  With the fee consultant’s release of its nexus study approaching in December, the city finally released details on how much these fees may be.  A powerpoint presentation provided to a stakeholder working group has been made public.  We now know the maximum legal amounts for the three fees have been determined as follows: Affordable housing: Applies to residential development only $35,172 per unit (low-rise construction) $39,887 per unit (mid-rise construction) $50,804 per unit (high-rise construction)  Combined Transportation/Capital Improvements Fees $20,737 per unit of multi-family residential $19.50/sf office use $16.94/sf retail use The powerpoint emphasizes throughout that the maximum legal fee amounts are higher than the maximum feasible fee amounts that would be supported by new development.   The city has proposed to create three new zones for the residential affordable housing fee: generally, West Oakland, East Oakland, and everywhere else.  The fee for “everywhere else” has been proposed at a rate of $20,000 per new dwelling unit.  The fee is proposed to phase in, with a lesser fee going into effect on July 1, 2016 and the fee would increase up to $20,000 in one or more phases in the coming years. The city has proposed the transportation/capital improvements fee for office use at $4/sf, with a lesser fee going into effect on July 1, 2016 and the fee would increase up to $4 in one or more phases in the coming years. Whether these two fees will be the full extent of the impact fee program adopted next year is unclear.  The City Council’s Community and Economic Development Committee will hold a hearing on the nexus study and fee proposal on December 15, 2015, starting at 1:30 pm (City Hall, Hearing Room 1). The powerpoint presentation can be found at:  http://www2.oaklandnet.com/Government/o/PBN/OurOrganization/PlanningZoning/s/ImpactFee/index.htm. Pending Approval of the Transportation Sustainability Fee  Last week, the Board of Supervisors voted on legislation that would replace the existing Transit Impact Development Fee (TIDF) with a new citywide Transportation Sustainability Fee (TSF).  As we have reported before, the adoption of the TSF will result in several significant changes, including the expansion of the transportation impact fee to residential projects, which were exempt under the TIDF.  Several amendments to the TSF legislation were introduced and discussed at last week’s BOS hearing, and consequently the legislation was duplicated so that one part was approved by the BOS on November 3, 2015, and another part (with substantive amendments) was referred to the Land Use and Transportation Committee.   The duplicated file that was referred to the Committee included two substantive amendments: 1) change to the grandfathering provision for non-residential projects so that all non-residential projects that were submitted after July 21, 2015 would be subject to the full TSF, and 2) change whereby the amount of the TSF for hospitals would be determined based on the number of net new beds along with few other changes related to hospital uses.  No Committee hearing has yet been scheduled for these substantive amendments.  The portion of the proposed legislation that was voted on November 3rd was approved unanimously on the first reading, and is scheduled for the second and final reading for November 17th.  If passed on the second reading, the Mayor would have up to ten (10) days to sign the legislation, and the legislation would become effective thirty (30) days thereafter.  In other words, the new TSF legislation and fee is likely to become effective before the end of the current calendar year.   If finally passed and adopted, the TSF will apply to all residential projects with more than twenty (20) units and to non-residential projects that propose an addition or new construction of more than 1,500 gsf of PDR use or more than 800 gsf of other non-residential use, or a change of use to a land use category that is subject to a higher fee rate.  The legislation was approved with some grandfathering provisions so that all projects which were approved prior to the effective date of the legislation will be subject to the prior TIDF.  With respect to pending projects, i.e. those that submitted a development or environmental review application on or prior to July 21, 2015, TSF will apply in reduced amounts so that pending residential projects will be subject to 50% of the applicable TSF rate, and pending PDR and non-residential projects will be subject to the prior TIDF.  As proposed, the initial rate schedules are as follows: $7.74/gsf for residential projects with 21-99 units; $8.74/gsf for residential projects with more than 99 units; $18.04/gsf for non-residential projects with more than 99,999 gsf; $19.04/gsf for non-residential projects with more than 99,999 gsf; and $7.61/gsf for PDR projects.   Annual San Francisco Fee Increases  Development impact fees for San Francisco projects are calculated based on the rate schedule in effect at the time the “first construction document” for the project is issued.  The issuance of the “first construction document” refers to either the first building permit for the project or, in the case of a site permit, the first addendum to the site permit that authorizes construction of the project.  Most of the impact fees are subject to annual, inflationary increases, and an updated rate schedule typically becomes effective as of January 1 of each year, including January 1, 2016.  Those projects for which a site permit was issued recently, or is expected to be issued soon, should note that if the first construction document, i.e. typically the first addenda to the site permit, is not issued until after January 1, 2016, the Development Impact Fee Report (DFCU) issued by the Department of Building Inspection will be adjusted to reflect the fee rate schedule in effect on and after January 1, 2016

​Proposition C – the ballot measure aimed at regulating “indirect” lobbying – passed overwhelmingly in San Francisco on November 3, 2015, with nearly 75% of voters in favor. While the City’s Lobbyist Ordinance already regulates lobbyists who are paid to directly contact City officials, this new ordinance allows the City to further regulate “expenditure lobbyists” who are individuals, businesses, and organizations that urge others to directly contact City officials in order to influence local legislative or administrative action.   These new regulations are designed to promote open government and greater transparency in decision-making.  However, the new registration and disclosure requirements could have a chilling effect on public interest, participation, and advocacy efforts in San Francisco.  This is especially true for direct lobbyists and permit consultants who are already subject to reporting and disclosure requirements under the Lobbyist Ordinance (For a discussion about direct lobbyists and permit consultants, see “New Lobbyist Ordinance Amendments: Too Much of a Good Thing”.  With that said, San Francisco voters made clear their desire for additional oversight of lobbying activity in San Francisco. This ordinance will become operative on February 1, 2016.  Here’s what you need to know about the new regulations: Expenditure Lobbyist Qualification Threshold An expenditure lobbyist is an individual, business, non-profit organization, labor union or trade association that makes payments totaling $2,500 or more within a calendar month to solicit, request, or urge other persons to contact City officials in order to influence local legislative or administrative action.    A number of activities count toward the $2,500 threshold, including making payments for public relations, media relations, advertising, public outreach, research, investigation, reports, analyses, or studies.  On the other hand, a number of activities do not apply, including payments made to a registered lobbyist who directly contacts City officials, payments made to an organization for membership dues, payments made by an organization to distribute communications to its members, and payments made by a client to a representative to appear on the client’s behalf in a legal proceeding before a City agency.   Let’s consider a few scenarios.  Have you spent at least $2,500 within a month to transport speakers to Board of Supervisors meetings?  If so, then you would qualify as an expenditure lobbyist.  Have you spent at least $2,500 within a month buying advertising that urges members of the public to contact City officials in order to influence local legislative or administrative action?  If so, then you would qualify as an expenditure lobbyist.  Have you donated at least $2,500 within a month to nonprofit organizations in exchange for their direct lobbying activities?  If so, then you would qualify as an expenditure lobbyist.   Expenditure Lobbyist Registration and Reporting The new law requires expenditure lobbyists to register with the Ethics Commission within five business days after qualifying as an expenditure lobbyist, and pay an annual $500 registration fee.  Employees of nonprofit organizations are exempt from paying the fee.  At the time of registration, the expenditure lobbyist must provide information about its business, including the nature and purpose of the business and names of corporate officers, including those officers who are charged with authorizing the lobbying payments. Expenditure lobbyists are also required to file monthly reports with the Ethics Commission and disclose information about its lobbying activities.  The reports must include information about: The legislative or administrative action that the lobbyist sought to influence, including, if any, information about the resolution, motion, appeal, application, petition, nomination, ordinance, amendment, approval, referral, permit, license, entitlement, or contract; The total amount of payments made during the reporting period to influence the action; Each payment of $1,000 or more made during the reporting period, including the payment date, the name and address of each person receiving the payment, a description of the payment, and a description of the consideration for which the payment was made; and All campaign contributions of $100 or more made or delivered by the lobbyist, or at the lobbyist’s request, to a City official during the reporting period, a candidate for City office, a committee controlled by a City official or candidate, a committee primarily formed to support or oppose a City official or candidate, or a committee primarily formed to support or oppose a measure to be voted on only in San Francisco.  Expenditure lobbyists are also now required to disclose information about campaign contributions, including the contribution amount, the contributor’s name, the date on which the contribution was made, the contributor’s occupation, the contributor’s employer or, if self-employed, its business name, and the committee to which the contribution was made. Lastly, as with direct lobbyists who are already regulated by the Lobbyist Ordinance, this measure prohibits expenditure lobbyists from making gifts over $25 to City officials, influencing a City issue for the sake of personal employment, or evading the City’s rules and regulations through agents or employees. Noncompliance with these regulations and reporting requirements could result in late fees of $50 per day, administrative fines up to $5,000 per violation, and/or civil penalties up to $5,000 per violation. 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 August 21, 2015, we introduced the Planning Department’s Affordable Housing Bonus Program implementing the State’s density bonus law. [Density Bonus Program Unveiled]. The Program was formally introduced on September 29, 2015, and could be adopted before the end of 2015. The Local Affordable Housing Bonus Program would provide an incentive for project sponsors to set aside a total of 30% of residential units for onsite below-market-rate units to low- and moderate-income households. The most appealing benefit of the program is that it would allow projects to add an additional two stories above current height limits and remove density constraints. The City hopes that this will increase the number of affordable housing units, allow development of underutilized sites, and expand affordable housing for the middle income families that are increasingly squeezed out of the San Francisco housing market.  The program would apply to projects with 3 or more non-density bonus residential units in the following zoning districts:   Zoning District List To be eligible for the Local Affordable Housing Bonus Program, project sponsors must set aside a total of 30% of units onsite for low to moderate-income and middle-income households. For a project with 9 or fewer units, 30% of units must be affordable to middle-income households, defined as 120% of AMI for rental housing and 140% of AMI for ownership housing. For a project with 10 or more units, 18% of units must be affordable to middle-income households and 12% must be affordable to very low, low, and moderate income households as currently required under the City’s Inclusionary Affordable Housing Program. In addition, the overall project must provide at least 40% of all units as two bedroom units or larger, or any unit mix such that 50% of all bedrooms are provided in units with more than one bedroom. A project sponsor that qualifies may receive any or all of the following benefits: Form-based density. The density of an eligible project shall not be limited by lot area. Height.  An eligible project may be built up to 20 feet above existing height limits. Ground Floor Ceiling Height. An eligible project may receive up to an additional 5 feet in height at the ground floor to provide at least a 14-foot ground floor ceiling height. Zoning Modifications. An eligible project may use up to 3 of the following: Rear yard- reduction to 20% of lot depth or 15 feet, whichever is greater, with corner properties permitted to provide 20% of the lot area at the interior corner of the property as rear yard. Dwelling Unit Exposure- may be satisfied with windows facing an open area is at least 25 feet by 25 feet. Off-Street Loading – not required. Parking- up to a 75% reduction in residential and commercial parking requirements. Open Space- up to a 5% reduction in common open space. Additional Open Space – up to an additional 5% reduction in common open space beyond the first 5% reduction. Also included in the pending legislation is the 100 Percent Affordable Housing Bonus Program (which provides for up to three additional stories of development). In addition, projects not in the zoning districts covered by the Local Affordable Housing Bonus Program can still take advantage of the State Density Bonus Program, as described in our August 21 update. However, that program would subject them to a complicated scheme providing for a maximum density bonus of 35% and an additional two stories of height only where needed to achieve the density. It remains to be seen how much the Local Affordable Housing Bonus Program will impact projects in San Francisco, which are constrained not only by other provisions such as historic review and limitation on new shadows, but also political considerations in a city that in most areas has yet to embrace significant increases in building height, despite the ongoing housing crises.  The program is expected to be heard by the Planning Commission on November 5, after which it will be heard by the Land Use and Transportation Committee and then the full Board of Supervisors.  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.