Arbitration Clauses Continue to be Unenforceable in Construction Defect Cases A recent Court of Appeal decision has continued the march against the enforceability of binding arbitration in construction defect cases involving condominium projects and other common interest developments. In Pinnacle Museum Tower Association v. Pinnacle Market Development (US) (2010) 187 Cal.App.4th 24, the Court held that even though the arbitration clause was clearly displayed on the front page of the CC&Rs and in the condominium purchase agreements, it was not enforceable against the homeowners association. This was because the homeowners association only existed through the actions of the developer, so it could not effectively “agree” to arbitration and the associated waiver of the right to jury trial. In reaching this ruling the Court relied on the decision in Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, which held that waivers of jury trial rights in contracts were not enforceable if the waiver occurred before contract execution. The Court also found that the Legislature has provided a specific set of pre-dispute procedures that must be followed before litigation, and that the Legislature allowed the parties to determine if arbitration would be binding or non-binding. (SB 800 procedures.) Finally, the Court ruled that arbitration clauses would not be enforced in individual homeowner contracts because the provisions were unconscionable, unfairly one-sided, and did not provide sufficient notice to the buyers. The ruling in Pinnacle is consistent with a number of cases that have found arbitration clauses unenforceable against homeowners associations. Other courts have used the doctrines of unconscionability and inconsistency with California Civil Code Section 1298.7 (right of action for defect claims may not be precluded by an arbitration clause) to strike down arbitration provisions. Another case has disallowed judicial reference. Based on the many cases finding against developers and arbitration, it is difficult to imagine that any arbitration provisions would be enforceable without legislative or Supreme Court intervention. One interesting point is that the Court seemed to leave developers with an opening to create an enforceable arbitration provision. The Court stated that because the CC&Rs could be amended by the homeowners association (in this case, the arbitration provision was not allowed to be amended) and if the language in the CC&Rs stated that the homeowners association would be deemed to accept the arbitration provision unless it was rescinded by the homeowners association, then perhaps this would be enough to show meaningful consent by the homeowners association. The good news is that perhaps developers will receive some guidance and reconciliation of the different Court of Appeal opinions. The California Supreme Court granted review of Pinnacle on November 10, 2010. The two issues to be decided are (1) whether a homeowners association is bound by an arbitration provision in CC&Rs recorded before the association came into existence, and (2) did the Court of Appeal err by applying the unconscionability provision only to the arbitration clause, despite the requirements of the Federal Arbitration Act (favoring arbitration). Hopefully, the Supreme Court will give developers clear rules on whether CC&Rs can require arbitration of construction defect cases, since the Legislature has not done so. We will be tracking this decision. SF Assessor’s Office Accepting Informal Review Applications The San Francisco Assessor’s office will take applications for an “informal review” of homeowners’ requests for a property tax reduction. Owners of single family homes, residential condominiums, townhomes, or live-work units may submit an application to the Assessor prior to March 31, 2011. The Assessor will then perform an informal review to determine if the property value has declined. Taxpayers will be notified of the Assessor’s decision, and will retain the right to a formal appeal. Appeals may be filed from July 5, 2011 until September 5, 2011. Go to sfassessor.org for more information and forms. Update on Backlog of Real Estate Tax Appeals As we have talked about in prior updates, there is an extensive backlog of real estate tax appeals. There were approximately 6600 appeals filed for the 2010-2011 tax year. It is taking about 12-18 months for an appeal to be heard. The 2009 tax appeals are estimated to be completed around July of 2011. Once the 2009 appeals are completed, the Appeals Board will begin hearing the 2010 appeals. We understand that the Assessor’s office may be looking to help reduce this backlog by working on informal settlements of residential property appeals, which make up about 65% of all the appeals. If you would like to learn more about how these informal settlements work, or have other questions about tax appeals, please call Kevin Rose. 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, 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. Copyright 2011 Reuben & Junius, LLP. All rights reserved.    

New Supervisor Wiener To Set Public Hearing On Historic Preservation Process Citing recent efforts by local preservationists to landmark the North Beach Library and to place an Article 10 designation on the entirety of Golden Gate Park, new Supervisor Scott Wiener called for a public hearing on the historic preservation process in San Francisco. As reported by the Chronicle, Wiener expressed to the Board “We…need to embrace historic preservation while also recognizing that historic preservation is not the only policy goal for our city.” While historic preservation clearly has a place in a city with the size and rich history of San Francisco, historic preservation is increasingly being used by community activists and disgruntled neighbors as another tool to stop projects they simply don’t like. The attempted landmarking of the North Beach Library has been the starkest example of this trend to date. That building (considered by most to be a undistinguished, underutilized building) is proposed to be demolished to pave way for a new, state of the art library. Unfortunately for library supporters, the old building was subject to a months-long landmarking process that, if successful, would have effectively halted any new project at the site. The landmarking ordinance made it all the way to the Board of Supervisors, before being defeated by a 10-1 vote. Currently, the Historic Preservation Commission is considering a measure that would designate all of Golden Gate Park as a historic resource under Article 10 of the Planning Code. Such a designation would erect a substantial roadblock to new uses or improvements in the park. Supervisor Wiener’s hearing will be held at the Land Use Committee at some future date. We will report back when the hearing is scheduled. Independent Restaurants On Decline? Maybe Not In The Bay Area. The International Council of Shopping Centers (citing data from the NPD Group) reports in their January 28, 2011 newsletter that nationwide the recession has hit independently owned restaurants hard. The overall number of restaurants in the U.S. dropped 1 percent in 2010, with a loss of 5,551 establishments. But independent restaurants drove the decline, dropping by 2 percent during the same period. The number of chain restaurants remained unchanged. Restaurant traffic has been off as well during this period, slipping 1 percent versus the comparable period the year before. But that was better than the year-over-year decline of 3 percent for the year ending in November 2009. This may not be the case in San Francisco. Last May, Ayako Mie of the Mission Local wrote that the recession was actually spurring some restaurant innovation, especially in San Francisco’s Mission District where a number of new and interesting restaurant concepts were springing up. Check out his excellent article at http://missionlocal.org/2009/05/a-recession-time-to-open-a-restaurant-say-mission-district-entrepreneurs/. Oakland has also been a hotbed of new restaurant openings despite the recession. That said, restaurants, especially formula retail uses (i.e. chains), face a long and expensive permitting process in San Francisco. Virtually all formula retailers (restaurants, clothing shops, coffee shops, etc.) choosing to locate outside the city’s downtown core must seek a conditional use (CU) authorization. The CU requires a time consuming public meeting, application, and public hearing process that can take many months to complete. These requirements are triggered even if one restaurant is replacing another restaurant. Independents and mom and pop shops may also trigger a difficult CU process because of other neighborhood-specific controls, or because of neighborhood opposition (Discretionary Review, or DR). At these hearings, neighbors or other retailers on the street may object simply because they don’t like the restaurant being proposed (recall the Ike’s sandwich shop battle last year). City regulations make the tough slog for new restaurants even tougher. Is the City getting the message? Maybe. Also-freshman-Supervisor Mark Farrell introduced legislation this week that would lift the ban on restaurants in the Upper Fillmore district. If passed, the ordinance would allow new restaurants with a CU. So far it looks like the new faces at the Board have indeed brought some new ideas. Richard Johns Confirmed As New Historic Preservation Commissioner Over the objections of some in the preservation community, and with a close vote, Richard Johns was confirmed as a member of the Historic Preservation Commission by the Board of Supervisors Tuesday. Members of the preservation community had objected to Mr. Johns due to their conclusion that he did not have the requisite experience required by the City Charter. By a 6 to 5 vote, with Supervisors Chu, Cohen, Elsbernd, Farrell, Kim and Wiener in favor, the Board confirmed Mr. Johns, who will be a sitting member of the Commission at its hearing next Wednesday. 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, 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. Copyright 2011 Reuben & Junius, LLP. All rights reserved.  

The Planning Department has just announced a new pre-application process that would result in a three phase development review process for moderate- to large-sized projects. Starting February 1, all projects that propose the creation of 6 or more dwelling units or the construction of a new building or addition of 10,000 square feet or more of non-residential space must file a “Preliminary Project Assessment” application with the Planning Department and receive a response from the Department before an environmental evaluation or other development application is filed. The purpose of the PPA response letter is to provide project sponsors with up-front information on what approvals must be sought and feedback on design and other issues. The PPA application requires much of the same information provided in an environmental evaluation application, including building plans. The PPA application and a $4,427 fee must be submitted at the Planning Information Counter at 1660 Mission Street. The fee is credited toward the fee for the first project application filed. The Planning Department will issue a PPA letter to the project sponsor within 60 days of filing the application. Only then can a project sponsor file an environmental evaluation, entitlement or building permit application. The Planning Department states that the letter is “valid for a period of 18 months.” It is unclear what has to happen within this time: a project application is filed, environmental review is complete, or an entitlement is granted. The Planning Department’s guidance on the new three-phase development review process also states that a project description must be finalized during the environmental review phase. Further “[o]nce the project description is finalized, the applicant must file an entitlement application so that entitlement review can be coordinated with the environmental review.” The guidance goes on to say that an entitlement application must be filed prior to completion of the environmental review process. Again, the Planning Department states its purpose in reconfiguring the development review process is to provide project sponsors with important information up-front while allowing planning staff to coordinate early in the process. One possible outcome, however, is that the new PPA application is just going to add up to 60 days to the front end of the entitlement process. Our hope is that this new PPA application in fact does make the rest of the process more efficient. 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, 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. Copyright 2011 Reuben & Junius, LLP. All rights reserved.    

With the swearing in of four new Supervisors and the re-election of David Chiu as Board president comes the re-shuffling and appointments to the important Board Committees. For those that track land use and development issues in the City, the make-up of the powerful Land Use Committee is of interest. Supervisor Eric Mar has been named chair of the Committee, and new Supervisors Malia Cohen and Scott Weiner have been named to the remaining seats. The Land Use Committee of the Board of Supervisors is a critically important part of the land use process in San Francisco. The Committee is the “last stop” for virtually all land use and development-related ordinances that are considered by the Board of Supervisors. The Planning Commission typically holds public hearings on proposed land use ordinances after they have been introduced at the Board. After the Planning Commission hearing and recommendation, the ordinance is then sent to the Land Use Committee for at least one public hearing. Once a land use ordinance is passed out of the Committee and presented to the Full Board, the public comment process is essentially over. Matters are then voted on at the Board of Supervisors by the Full Board without further public testimony. The Committee represents the last opportunity for the public to comment on land use ordinances, and really the only opportunity for the public to comment directly to members of the Board of Supervisors during an open public hearing. The makeup of the new Committee should allow for some interesting debates going forward. The chair of the Committee will be Eric Mar, the supervisor from District 1 who is considered a progressive. The remaining two seats on the Committee go to two of the freshmen supervisors, Malia Cohen and Scott Wiener. Malia is the supervisor for District 10, the district with by far the most developable land and includes massive projects such as Hunters Point Shipyard and Pier 70. Scott Wiener, the new supervisor in District 8, rounds out the three-member Committee. While Scott’s district certainly doesn’t have the massive development potential of District 10, it is an area with a significant number of small and moderate size infill projects, like the recently-approved mixed-use project at 2001 Market Street (housing with a Whole Foods grocery store). So while Supervisor Cohen’s district will be home to some of the largest projects in the City, Supervisor Wiener’s district will be more representative of other infill battles more typical across the City. While both new Supervisors have been active in their respective communities (which by definition means having some involvement in land use matters), neither have significant planning or technical land use experience or backgrounds. Malia has a background in public policy. She earned a Bachelor’s in Political Science with honors from Fisk University, and was awarded a Coro Fellowship in 2001. She earned a Master of Science in Public Policy and Management from Carnegie Mellon University. She served as Assistant Executive Director of the Hunters Point Youth Park Foundation. She serves on the Board of Directors for Emerge CA, New Leaders Council, SF Conservation Corp and The Community Leadership Academy & Emergency Response Project. Scott has been a Deputy City Attorney in the San Francisco City Attorney’s Office where he was a litigator and represents San Francisco in court. He served as President of the Eureka Valley Promotion Association, the neighborhood association for the Castro/Upper Market. He co-founded Castro Community on Patrol, a neighborhood walking patrol comprised of volunteers dedicated to making the Castro and Duboce Triangle a safer place. Scott was a member of Mayor Newsom’s citywide Community Policing Advisory Committee. He served as treasurer and then co-chair of the board of directors of the San Francisco LGBT Community Center. 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, 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. Copyright 2010 Reuben & Junius, LLP. All rights reserved.    

Governor Brown Proposes Shuttering of “Hundreds” of Redevelopment Agencies Well our new Governor is already out of the gate, hinting this week at his plans to reshape state government. According to the Sacramento Bee, Brown’s basic plan would be to shift many state government responsibilities to local authorities. Included in the still-vague proposal is a potential move to eliminate “hundreds” of local redevelopment agencies, and shifting the tax revenue they receive to counties and schools. Considering that there are around 397 active redevelopment agencies in the state, this potential move could vastly reshape California’s planning and development landscape. This is definitely one issue to watch. You can find the Sacramento Bee’s report here: http://www.sacbee.com/2011/01/05/3299751/jerry-brown-pitches-a-shift-to.html New Historic Preservation Commissioner Nominated Richard Johns, a San Francisco attorney, was recently nominated by the Mayor to Seat 4 on the Historic Preservation Commission. If confirmed by the Board of Supervisors, Mr. Johns would replace James Buckley on the Commission. Proposition J, the measure that created the Historic Preservation Commission, requires that the commissioner filling Seat 4 on the commission must be a historian with specialized training or experience in North American or Bay Area history. Mr. Johns has had a long and diverse career, obtaining his bachelor’s degree in English from UC Santa Barbara in 1968 and his law degree from Hastings College of Law in 1971. His recent involvement in public and community service includes serving as president of the San Francisco Museum and Historical Society and the Mayor’s Task Force on the San Francisco Mint. Mr. Johns’ legal career has included providing legal services to Bay Area businesses and restaurants and representing developers and property owners in their real estate matters. Currently, Mr. Johns is serving as Chairman of the Liquidation Oversight Committee in the bankruptcy proceedings of Coudert Brothers, the oldest international law firm in America. Mr. Johns’ nomination was before the Board of Supervisors Rules Committee last Monday, but was delayed after being caught up in the brouhaha over the interim Mayor pick this week. If recommended for approval by the Rules Committee, the full Board of Supervisors would need to confirm his appointment. 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, 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. Copyright 2010 Reuben & Junius, LLP. All rights reserved.    

Major Oakland Rezoning Passes the Planning Commission Last night, the Oakland Planning Commission voted to recommend a major overhaul of the City’s residential and commercial zoning districts to the City Council. The Planning Commission’s action brings the 2+ year rezoning process to its final stage. The City Council’s Community and Economic Development Committee will hear the proposal at its February 8th meeting and the rezoning could be approved by the full Council by March. As currently written, Oakland’s General Plan and Planning Code contain numerous inconsistencies in how the city’s residential and commercial zones are regulated. This has led to an overly-confusing system of land use regulations and an inefficient entitlement process. The rezoning will resolve these issues by making the General Plan and Planning Code consistent and reducing the burdens of the entitlement process. The rezoning comes at just the right time, when the city is looking to attract new development and retailers, and to build on the momentum of new arts activities and restaurants that have set up shop in the city in recent years. While much of the rezoning consists of “cleaning up” the existing zoning, several areas of the city’s zoning are slated for substantive changes. Identified “grow and change” areas will benefit from increased density and an expansion of permitted uses. These areas include San Pablo Avenue, Telegraph Avenue south of Highway 24, the MacArthur corridor, Martin Luther King Way south of Children’s Hospital, Broadway south of 51st Street, International Boulevard and East 12th Street. Height limits are being established on certain major corridors in order to better relate future growth to the surrounding neighborhood. New design standards will also apply to future development. There are too many specifics of the new rezoning to include in an email update. Please contact us if you have any questions. We’ll keep you posted as the rezoning approaches the finish line. Oakland Keeps A’s Ballpark Hopes Alive Within weeks after her surprise election as Mayor of Oakland, Jean Quan kept the city in the game to retain its beloved Athletics. Quan quickly signaled her support for a city-funded EIR for a new 39,000-seat ballpark at the Victory Court site, adjacent to the Oakland estuary. On Tuesday, a City Council subcommittee voted to fund the EIR, and the full City Council is expected to approve the move next Tuesday. Odds-makers may be betting on San Jose, but if constructed on the Victory Court site, the ballpark would be the centerpiece of redeveloping the waterfront area south of downtown. The revitalized Jack London Square is adjacent to the site’s west, and the major mixed-use Oak to Ninth project is just to the east of the site. The site will also benefit from the planned improvement to the Lake Merritt channel, which connects the lake with the estuary. The improvements will create boat and fish access through the channel and upgrade paths so that walkers and bikers will be able to follow the same route on land. Momentum may be building behind Oakland’s bid for the ballpark. San Jose has missed a recent deadline to put a measure on the March ballot to approve the use of downtown land for a ballpark. Recent reports have also indicated that Oakland’s Redevelopment Agency is in much better financial shape than San Jose’s. It’s been a year since Bud Selig predicted the highly anticipated report on Major League Baseball’s decision on the ballpark was to become public. Those interested in the outcome have learned not to hold their breath at this point. But City officials express confidence that Oakland is still in the running. And, according to the East Bay Express, it would take three-fourth’s of MLB owners to overcome the Giants objections over the potential move to San Jose. Kudos, Oakland, for staying in the game. 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, 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. Copyright 2010 Reuben & Junius, LLP. All rights reserved.      

Zoning Along Van Ness Avenue Getting Attention from Planning Commission and Board of Supervisors Two ordinances are making their way through the legislative process this month that would change the way commercial uses are regulated along Van Ness Avenue. The first, introduced by Supervisor Alioto-Pier, would require that neighborhood notice be provided for most new entertainment uses established along Van Ness between Broadway and Golden Gate Avenue. The notice would give neighbors the opportunity to request that the Planning Commission review the proposed use before it is established. The Supervisor introduced this legislation in response to concerns surrounding “The Heights” nightclub, which she reports has generated 42 calls to the Police Department recently, including one for a gun issue. The club had opened without any notice to the neighborhood. As originally proposed the ordinance would have required conditional use approval by the Planning Commission for all new entertainment uses. However, in response to Planning Commissioner comments and others in the arts and entertainment community, the CU requirement was removed and replaced with a less onerous process. The second ordinance would change how commercial uses are controlled in RC districts. RC zoning is the underlying zoning district for the majority of Van Ness Avenue. The existing use controls in RC districts are a bit of a mess. Currently, uses that are principally permitted in the nearest Neighborhood Commercial (NC) district are principally permitted on the ground floor and permitted with conditional use approval on the upper floors (don’t worry, we can barely understand it either). This has led to unexpected results on the Van Ness Avenue corridor, with the Polk Street NC district as its closest neighbor. For example, because new full service restaurants are only permitted with conditional use approval in the Polk NC district, they are not permitted in most parts of the Van Ness corridor. This type of restriction simply makes no sense along a corridor that is expected to grow into its own new neighborhood in the years ahead. Yesterday, the Planning Commission approved changes that would apply NCT-3 district controls on commercial uses in RC districts, including along Van Ness Avenue. This is a huge improvement. The NCT-3 district permits a broad array of commercial uses, and will make it much easier to establish new commercial uses along the Van Ness corridor. The ordinance will now go to the Board of Supervisors Land Use Committee on Monday. Affordable Housing Program Amendments Expected to Pass on Tuesday Two amendments to the city’s Affordable Housing Program are expected to be finally passed by the Board of Supervisors next Tuesday. The first, a major overhaul of the program in response to the Palmer state court decision, would largely make permanent the interim controls that have been in place since early this year. Those controls set the default option for complying with the program as the payment of an affordable housing fee, in most cases calculated based on 20% of the number of units proposed in a housing project. A project sponsor can also choose to provide for-sale below market rate units on-site or off-site, which in most cases must make up at least 15% and 20% of the total units proposed, respectively. A project sponsor can choose to provide rental below market rate units on-site or off-site only under certain circumstances, such as when the project receives public assistance or the project sponsor enters into a development agreement with the city. The overhaul also provides some flexibility in the program so that the Planning Commission can approve future modifications to the administration of below market rate units that are unable to resell, due to current market conditions. The second amendment to the Affordable Housing Program provides an exemption for student housing projects. If passed, the amendment would exempt qualified student housing projects from the requirement that a certain number of the new units be provided at below market rates. The amendment should pave the way for future student housing in the city, desperately needed in response to the new or expanded university campuses proposed by UCSF, San Francisco State, and UC Hastings. Thanks again to SFHAC for their leadership on this important change in law. November Election Results Certified; Transfer Tax Increase to go into Effect This Tuesday, the Board of Supervisors certified the local results of the November 2010 elections. The results provided no last minute surprises. However, the certification was relevant with regard to the effective dates of passed propositions, which go into effect 10 days after the Board certifies the election. As a result, the transfer tax increase on real property sales of $5 million or more will go into effect on December 17. 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, 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. Copyright 2010 Reuben & Junius, LLP. All rights reserved.  

Student Housing Reform Nears The Finish Line…. After being approved by the Planning Commission and the Board of Supervisors Land Use Committee, student housing reform legislation just needs a vote at the full Board and a signature by the Mayor. As we’ve reported before, the reform legislation would recognize “student housing” projects and would exempt them from the Planning Code’s affordable housing requirements. The current policy of applying affordable housing requirements on student housing projects has come under scrutiny lately, due to the fact that student housing is inherently different than traditional housing, and that student housing in many cases is already affordable, due to student financial aid and other factors. The Housing Action Coalition has been a key force behind this important legislation. Its passage would mean that student housing would be easier to build in the city – and more affordable. City to Develop Standards for New Medical Use Development Last Tuesday, the Board of Supervisors passed on second reading an ordinance that seeks to guide future medical use development in the City. As has been reported in the press recently, the may become a major additional hurdle for the proposed CMPC campus. The ordinance directs the Planning Department and the Department of Public Health to develop a Health Care Services Master Plan over the next year. The plan must analyze a number of aspects of medical services in the City, including the capacity of existing health care providers, the geographical distribution of those providers and the difficulty of access to health care services from different areas of the City. The plan will also make recommendations to promote the equitable and efficient distribution of health care services in the City. Once the Health Care Master Plan is adopted, future projects consisting of changes of use to medical use occupying at least 10,000 square feet and expansions of existing medical uses of at least 5,000 square feet would be required to file an application with the Planning Department to confirm consistency with the plan. The Planning Department would administratively issue a determination of consistency or inconsistency. If a determination of inconsistency is issued, or a determination of consistency is issued and appealed within 15 days, the Health Commission will hold an informational public hearing and the Planning Commission will hold a public hearing where it must hold a vote on whether to approve or disapprove a determination. During the legislative process, the applicability of the consistency requirement was narrowed from all medical institutions seeking land use approvals to projects meeting the thresholds discussed above. The ordinance leaves broad discretion to the Planning Department to apply these new requirements. It is unclear at this point how much information a health care provider would need to provide in its application for consistency. In addition, it is unclear if “expansion” includes only physical expansions of existing buildings, or if it also includes an expansion of an existing health care provider to a different building in the City. Consistency determinations will not be required until January 2, 2013 at the earliest. The Mayor still may veto the ordinance by next Monday. We’ll let you know if he does. New Legislation Would Create Annual Energy Audit Requirement for Non-Residential Buildings Under legislation that was introduced at the Board of Supervisors last week by the Mayor and Supervisor Bevan Dufty, non-residential buildings of at least 10,000 square feet would be required to conduct a comprehensive energy efficiency audit at least once every five years. In addition, owners of these properties would also have to file an annual report with the City’s Department of the Environment, detailing certain energy benchmark information for the past year. Under the legislation, the Department of the Environment would also be required to publish an annual report, that would include, among other things, information provided in the annual energy reports of individual buildings. If enacted, the legislation would require buildings of greater than 50,000 square feet of non-residential use to submit their first report by October 2011, buildings with 25,000 to 49,999 square feet of non-residential use to submit their first report by April 2012, and buildings with 10,000 to 24,999 square feet of non-residential use to submit their first report by April 2013. Some buildings would be exempted from the energy audit and reporting requirements, including buildings less than five years old, buildings receiving the EPA ENERGY STAR label from the US Environmental Protection Agency and buildings that are LEED certified under the Existing Buildings Operation and Maintenance system. The legislation is at the Land Use Committee now, and will likely not be considered before the new year. Email us if you’d like a copy of the 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, 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. Copyright 2010 Reuben & Junius, LLP. All rights reserved.    

Well, it’s not officially over yet, as the Department of Elections has not certified the results, and the Board of Supervisors has not acknowledged the certification. But for all practical purposes, the votes have been counted and these final two extremely tight races have drawn to a close. A couple of weeks ago, we provided you with the bios of the winners in District 6 and District 8, Jane Kim and Scott Wiener. Today, we do the same for Mark Farrell and Malia Cohen. Mark Farrell – District 2 This race was the closest of all, with a mere 270 votes separating Janet Riley and Mark out of a total 27,989 ballots cast. That puts Mark at 50.62% of the total after just two rounds of Ranked Choice Voting, enough to be the next Supervisor for D-2. Mark Farrell was born and raised in the City, going to school at Stuart Hall and then Saint Ignatius. After graduating from both Loyola Marymount and the University of Pennsylvania Law School, he returned to San Francisco. Mark has been an attorney for three years, and an investment banker for five years.  As an attorney he represented pro bono clients, assisting both 501(c)(3) non-profit organizations as well as representing political asylum applicants in front of the Department of Homeland Security. As an investment banker, he founded his firm’s first internship program for inner-city high school students. He is involved with the Jordan Park Improvement Association and serves on the Board of Directors at San Francisco SAFE and Plan C. Mark also serves on the Advisory Board of the Marina Earthquake Monument. Malia Cohen – District 10 This was by far the most wide open race, with 21 candidates participating, and 19 (yes 19…) rounds of RCV before Malia Cohen rose to the top with 52.6% of the vote. Out of more than 19,669 ballots cast, 4,173 was all Malia needed to break the 50% barrier. Such is the strangeness that is ranked choice voting. The runner up was Tony Kelly with 3761 votes. Malia Cohen is a former member of the Corporate Strategy and Communications team for the Federal Reserve Bank of San Francisco. Currently, Malia is a Managing Partner with Power Forward Consulting, a public affairs, media and policy consulting firm. Power Forward helps businesses and nonprofits create public policy. Prior to establishing Power Forward Consulting, Malia served as Chief Legislative Aide to a member of the San Mateo County Board of Supervisors (her website does not indicate which Supervisor).  She served two years with the executive staff of San Francisco City Hall. Malia held key posts including: Executive Assistant to the Mayor, Executive Assistant to the Mayor’s Chief of Staff, and Policy Analyst for the U.S. Department of Transportation. She has also served as Assistant Executive Director of the Hunters Point Youth Park Foundation. Recently, Malia ended a two-year term as a delegate to the California State Democratic Party Convention. She serves on the Board of Directors for Emerge CA, New Leaders Council, SF Conservation Corp and The Community Leadership Academy & Emergency Response Project. Malia earned a Bachelor’s in Political Science, with honors from Fisk University, and was awarded a Coro Fellowship in 2001. She earned a Master of Science in Public Policy and Management from Carnegie Mellon University. We Finally Have a Seventh Commissioner Any concerns some Supervisors may have had over the nomination of Rodney Fong to the vacant Planning Commission seat seem to have faded before the Board of Supervisors hearing this afternoon. By a unanimous vote, the Board confirmed his nomination to the Planning Commission. Fong is expected to sit at the next Planning Commission hearing, on December 2. The Planning Commission has been operating with only 6 members since August. 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, 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. Copyright 2010 Reuben & Junius, LLP. All rights reserved.  

Transfer Taxes Increase Again Despite the sluggish real estate market, on November 2 the voters enacted another real estate transfer tax increase by approving Measure N. This increase was limited to transactions that involve a purchase price of $5,000,000 or more. Below is a summary of the existing and new transfer tax rates. The increases will be effective 10 days after the Board of Supervisors certifies the November election, which is expected to occur in early December 2010. Sales price     Old rate     Current rate      New rate < $250k            0.50%      0.50%              0.50% $250k – $1M      0.68%       0.68%              0.68% $1M – $5M         0.75%       0.75%              0.75% $5M – $10M       0.75%       1.50%              2.00% $10M+              0.75%       1.50%              2.50% As a reminder, transfer taxes also apply to long term leases (35 years or more). There are exceptions for foreclosures and transactions that do not involve a change of beneficial ownership. Please contact Kevin Rose if you have questions about transfer taxes. Planning Commission Nominee Fong Faces Questions, Support at Board Subcommittee Yesterday, the Board of Supervisors Rules Committee held a public hearing on Port Commission President Rodney Fong’s nomination to fill the vacant seat on the Planning Commission. The hearing began with several minutes of questioning by Supervisor Campos. The Supervisor’s main concern was that Mr. Fong’s competence and leadership would be sorely missed on the Port Commission at a time when a number of important projects, including the possible hosting of the America’s Cup, are being implemented. Campos questioned Mr. Fong on whether his background made him a good fit for the Planning Commission. Mr. Fong responded to many of these questions by citing his experience in the real estate industry and on the Port Commission. Specifically, Mr. Fong cited his work on the Fisherman’s Wharf Public Realm plan, currently working its way through the Planning Department. In response to a question from Mr. Campos on whether he would have to recuse himself on any cases that may be before the Planning Commission, Mr. Fong said he may only have to do so on less than “two handfuls” of cases. Local ethics law requires Planning Commissioners to recuse themselves from cases involving property within 500 feet of a property they have some economic interest in. A number of members of the public spoke effusively in support of Mr. Fong’s nomination, including Planning Commission President Ron Miguel, Redevelopment Commission President Rick Swig, San Francisco Bicycle Coalition Acting Director Renee Rivera, San Francisco Housing Action Coalition Director Tim Colen, San Francisco Convention and Visitors Bureau President Joe D’Alessandro, and San Francisco Chamber of Commerce Senior Vice President Jim Lazarus. Port Director Monique Moyer testified that she would only be happy if Mr. Fong went to one of two places: the Planning Commission or the Board of Supervisors. In the end, Supervisor Alioto-Pier made a motion to recommend approval of Mr. Fong’s nomination to the full Board of Supervisors. While saying he was “still open to this nomination,” Supervisor Campos was not yet ready to vote to recommend the nomination. Since there were only two members of the Committee present, Alito-Pier and Campos agreed to send Mr. Fong’s nomination to the full Board without a recommendation in support or in opposition. Mr. Fong’s nomination is scheduled to be heard at the Board of Supervisors’ hearing next Tuesday, November 23. Short Sale Protections Confirmed for Home Owners A new bill signed by the Governor in September makes state law consistent with most people’s expectations when they dispose of their home by a “short sale.” A short sale occurs when a homeowner sells his or her property for less than the amount owed on the existing deed of trust, with the lender’s consent. Previously, there was no law that prevented the lender from pursuing the balance of the loan, since the lender had not initiated a foreclosure. Although such lawsuits were rare, the risk of liability remained. New Code of Civil Procedure Section 580e now specifically precludes such lawsuits by the first lender, so long as (1) the property is a dwelling of not more than four units, and (2) the lender’s written consent was given. The statute specifically reserves the lender’s right to pursue an action for fraud or waste by the borrower, and does not preclude lawsuits by secondary lenders. Borrowers should be aware of the income tax consequences of a short sale. While most residential short sales or foreclosures are excluded from the typical state and federal income tax rules that make forgiven debt taxable, there are limitations. For example, the foreclosed property must be the taxpayer’s principle residence, the debt must be for the acquisition (not a refinance), and the dollar amount of the exclusion is limited. Qualified tax professionals should be consulted before finalizing a short sale or using a foreclosure as a business strategy. Please contact Kevin Rose if you have questions about this amendment for short sales or any other foreclosure related matters. 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, 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. Copyright 2010 Reuben & Junius, LLP. All rights reserved.