Between 1979 and 1988, building owners who converted their properties from apartments to condominiums were required to include BMR Units in their project. These Condominium Conversion Program BMR Units are price-restricted under San Francisco Subdivision Code Sections 1341 and 1385 for households of low or moderate income, depending on how the property was originally designated. Ordinance No. 320-08 (the Ordinance) passed last year, amended the San Francisco Subdivision Code related to the Condominium Conversion BMR Program (the Program). The Ordinance was intended to clarify the rules applicable to existing BMR Units in the Program, and to provide updated standards for BMR units purchased on or after the effective date of the Ordinance. The Ordinance also provides a way for BMR Units in certain older conversion projects to be released from the Program, so that the unit becomes a market rate unit. This article will focus on the rules applicable to existing BMR Units in the Program, and the options for release from the Program. The Ordinance is administered by MOH, and much of the information in this Update is taken from their website (“http://www.sfgov.org/site/moh_page.asp?id=117961”). The Ordinance provides that current owners of individual BMR Units may elect to stay in the current Program under the rules for pre-legislation owners, or may select one of the options listed in the Ordinance, including release from the Program. Original Subdividers have two exclusive options under the Ordinance. The various options are summarized below. Owner Categories The Ordinance divides owners into four categories: pre-affidavit owners, pre-legislation owners, post-legislation owners and original subdividers. The definitions of each owner category are summarized below. Pre-Affidavit Owners. Owners who purchased or acquired their BMR unit before December 1, 1992 are called “Pre-Affidavit Owners.” Pre-Legislation Owners. Owners who purchased or acquired their BMR unit before January 18, 2009 (the effective date of the Ordinance) are called “Pre-Legislation Owners.” Post-Legislation Owners. Owners who purchased or acquired their BMR unit on or after January 18, 2009 (the effective date of the Ordinance) are called “Post-Legislation Owners.” Owners in this category will be automatically enrolled in the updated Condo Conversion BMR Program and are subject to the requirements for Post-Legislation Owners. The options below do not apply to Post-Legislation Owners. Original Subdividers. Owners, or their successors in interest, who owned an apartment building at the time of conversion to condominiums and have continued to rent their units under Subdivision Code Section 1341 are called “Original Subdividers.” Available Options under the Ordinance A. Pre-Affidavit and Pre-Legislation Owners Option 1: Continue to be Governed as a Pre-Legislation Owner (Stay on the Current Program) Only Pre-Affidavit Owners and Pre-Legislation Owners are eligible for this option. If an owner chooses to stay on the current Condo Conversion BMR Program, the BMR Unit will continue to be regulated by the provisions in the Ordinance that relate to units acquired prior to the effective date of the Ordinance. An owner does not need to do anything to remain in the current Condo Conversion BMR Program. Any BMR Unit for which the City and owner have not finalized an agreement under one of the other options by January 18, 2011 will automatically remain part of the current Condo Conversion BMR Program and subject to the provisions in the Ordinance for pre-legislation owners. Option 2: Agree to be Governed as a Post-Legislation Owner (Opt Into the Updated Program) Only Pre-Affidavit Owners and Pre-Legislation Owners are eligible for this option. If an owner chooses to opt into the updated Condo Conversion BMR Program, the unit will be subject to all of the requirements applicable to post-legislation owners If an owner opts into the updated Condo Conversion BMR Program, the base price of the BMR Unit will be increased one time to the value printed in the Ordinance. This may enable the owner to sell the unit at a higher price. However, the BMR Unit will become subject to restrictions of the Program, including rental, resale and other restrictions. Option 3: Pay a Fee and be Released from the Program Only Pre-Affidavit Owners are eligible for this option. If an owner chooses to pay the fee, the unit will be permanently released from the Program. The fee is determined as the lesser of: 1) the fee printed in the Ordinance, or 2) 50% of the difference between the fair market value and the BMR price at the time of repayment. If an owner is unable to pay the fee immediately, a loan may be available from the City in the form of a City Lien. Call or email us if you need more information on this Option. B. Original Subdividers Option 1: Demonstrate a 20-year Affordable Rental History and be Released from the Program Only Original Subdividers are eligible for this option. If an owner chooses to demonstrate that any or all of that owner’s BMR units have been rented within the Program’s guidelines for 20 years, those units will be permanently released from the Program. An owner must follow required procedures to demonstrate that the owner has complied with the affordable rental requirements. A rental history must be compiled for each BMR Unit the owner wishes to have released from the Program. Option 2: Pay a Fee and be Released from the Program Only Original Subdividers are eligible for this option. If an owner chooses to pay the fee for any or all of the BMR units, those units will be permanently released from the Program. The details are similar to the fee payment discussed above. Note that there will be one Fee and Release Option Agreement to cover all of an owner’s BMR units. If an owner selects the lien option for some or all of that owner’s units, the owner will be required to record a separate Promissory Note and Deed of Trust for each unit. Conclusion The Mayor’s Office of Housing (MOH) implements the Program, and reviews and processes all applications under the Program. To select any of the options described in this article, written requests must be

In 1965, Oakland adopted its zoning regulations, which control land use and development throughout the city. 45 years later, many of those same regulations are still in effect. Needless to say, the city has changed dramatically since then, leaving the existing regulations out of date. The regulations do not reflect best zoning practices, such as encouraging high density housing near public transit and pedestrian-friendly design in retail corridors, they are unclear and subject to interpretation, and, most importantly, they are inconsistent with the city’s general plan. In 1998, Oakland adopted a new Land Use and Transportation element to its General Plan, providing a vision for development for the 21st century. However, the city’s zoning regulations were not updated along with the general plan. Numerous inconsistencies exist between the two documents, which has led to a lack of clarity of land use regulation for residents, property owners, businesses and developers. As a result, the Planning and Zoning Department began a process of analyzing and rewriting the zoning regulations. New zoning regulations for open space were adopted in 1999, for housing/business mix districts in 2005, for industrial districts in 2008 and the central business district in 2009. The next round of rezoning, covering the city’s residential and commercial zoning districts, covers the largest area of the city yet. The department has been holding public meetings since 2008. Wednesday night, the Zoning Update Committee, a sub-committee of the Planning Commission, held the first of a series of public hearings that will ultimately result with the rezoning of these districts. The department’s rezoning proposal currently consists of the following significant changes: New zoning districts. The general plan currently identifies 4 residential zoning districts and 3 commercial zoning districts while the existing zoning regulations identify 12 residential and 12 commercial districts. Each of the districts in the zoning regulations are currently matched with a “best fit” general plan zoning district, which controls uses and development. The proposed zoning regulations would create new zoning districts that will parallel the zoning districts in the general plan, thereby eliminating the need to crosscheck the two documents to determine the land use controls for a property. Each new zoning district is broken down further into different density categories. This simple revision will go a long way in making the zoning regulations more comprehensible. Increased density in “growth and change” areas. The general plan identifies certain neighborhoods and corridors as “growth and change” areas, where increased density and intensity of uses will encourage future growth. The rezoning proposal attempts to lay the groundwork by increasing the permitted density and the uses in some of these areas. Height limits along major corridors. Areas along commercial and transportation corridors will now be regulated by a new height and intensity map rather than the zoning district they are located in. The purpose of this was to control the size and scale of development in a way that more closely takes into account the surrounding building context. Design standards. In various new residential and commercial districts, the rezoning proposal includes new design standards. Examples of standards include minimum ground floors of 15 feet, restrictions on parking egress and ingress along the front of a building, and required amounts of transparency on the ground floor façade. The hearing on Wednesday was mostly informational, with department staff presenting an overview of the rezoning and a short public comment session. One issue that will likely be contentious during this process is the rezoning of the area around Broadway and 51st Street, where the Safeway and Rockridge Shopping Center are located. The rezoning proposes to cap height limits a 75 feet at the corners of the intersection, tapering down to 60 feet and below heading north and south on Broadway. Several neighborhood groups commented at the hearing and at a public meeting the department conducted that this rezoning would be out of line with the character of the neighborhood. This will likely be just one of a number of specific areas that will get a closer look at the Zoning Update Committee’s upcoming meetings. Department staff announced future hearings on the rezoning at the committee on June 23 and July 14. There will likely be 3 to 5 hearings at the committee before it goes to the full Planning Commission and on to the full City Council. The entire process is expected to take from 3 to 5 months to complete. San Francisco Supervisors Seek to Reorganize Rent Board Meanwhile, back across the Bay, eight members of the Board of Supervisors introduced a charter amendment that would reorganize the structure of the Rent Board. The Rent Board has the authority to interpret the Rent and Eviction Control Ordinance, conduct rental arbitration hearings and mediations and investigate reports of wrongful eviction. The Rent Board’s legally-required membership includes two landlords, two tenants, and one member who is neither a landlord or tenant. All are appointed by the Mayor. The charter amendment would change the makeup of the Board to include three tenants, two landlords, and two neutral members. The Board of Supervisors would appoint three members, the Mayor would appoint three members, and the Mayor and Board President would have to agree on the final member. Over the past year, several members of the Board of Supervisors, most visibly Supervisor Avalos, pushed for a reform of the rent control ordinance that would have significantly altered the ordinance in a pro-tenant direction, at the expense of landlords. The Board passed the ordinance, only to be sent to the Mayor’s desk to be vetoed. This new charter amendment appears to be another attempt to wrest some control over the Rent Board, and therefore the application of the rent control law, from the Mayor. If approved the Board of Supervisors, the amendment would be on the November 2, 2010 ballot. 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 leases,

Discretionary Review Reform: Take Two The Planning Department is developing a scaled-back proposal to reform the discretionary review (DR) process, one that does not require approval of the Board of Supervisors. The proposal, outlined in several public meetings held at the Planning Department over the past few weeks, would continue the review of all DR requests by the residential design team. The review would be driven by the DR review checklist approved by the Planning Commission last year. If the residential design team concludes that the project requested for DR is an exceptional or extraordinary circumstances or poses an emerging policy issue, the case will be brought to the Planning Commission, for a full DR hearing. If the project does not rise to this level, a preliminary hearing will be held by the Planning Commission where both the project sponsor and DR requestor will have the opportunity to present their case. A minimum of three commissioners can vote to hold a full DR hearing if they believe the case merits it. The major distinction between these two tracks is that Planning Department staff will not prepare a full report for what they believe to be unjustifiable DR requests. This would have an immense impact on staff resources, as even simple DR cases can take up as much as 40 hours of staff time to analyze and prepare a report. The proposal was met with intense opposition during the first outreach meeting, which should be expected at the upcoming Planning Commission hearing on the proposal. The proposal, which was scheduled to be heard by the Planning Commission today, is proposed for continuance to June 17. Since it requires no approval from the Board of Supervisors, it would only need to be approved by the Planning Commission to go into effect. The last effort at DR reform was tabled at the Board of Supervisors Land Use and Economic Development Committee. Mayor’s Development Stimulus Package Finally Passes After a seven-month legislative process, the Board of Supervisors voted 10-1 to pass the development stimulus after its final reading yesterday. Beginning July 1, project sponsors will be able to defer 80 or 85 percent of a project’s development fees until the first certificate of occupancy is issued. If a project is located within one of the city’s area plans (such as Eastern Neighborhoods, Market and Octavia or Balboa Park) 80 percent of fees can be deferred and if located outside these areas 85 percent of fees can be deferred. The remaining 15 or 20 percent is required to be paid at the time the first building or site permit is issued. 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 leases, purchase and sale agreements, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work. Copyright 2010 Reuben & Junius, LLP. All rights reserved.        

Reuben & Junius LLP attorney Stephen R. Miller has just published an article on commercial green leasing in the prominent Environment Law Reporter, one of the country’s most-cited environmental law journals, which is published by the Environmental Law Institute in Washington D.C. The article, “Commercial Green Leasing in the Era of Climate Change: Balancing Risks, Burdens, and Incentives,” is available free of charge at “http://ssrn.com/abstract=1600422.” The article’s review of model leases available in the United States and throughout the world, including Australia, Canada and the United Kingdom, provides a global view of how real estate markets-both public and private-are navigating the dilemma of meeting climate change mandates through leases. Green leasing is especially important since commercial office space is one of the largest sources of greenhouse (GHG) emissions, energy use, and resource consumption. The overwhelming majority of commercial office space is leased, which means that how commercial leases address issues of GHG emissions, energy use, and resource consumption will be an increasingly important issue in the next decade. Long-term leases negotiated today must anticipate coming regulatory and market shifts to meet the demands of the private parties involved in properly allocating green buildings’ risks, burdens, and incentives. Done right, such a lease also has the potential to play a substantial role in reducing climate change: one study estimated that the energy cost reduction in the typical office building could be as high as 50%. Not only does that provide a substantial social equity component in addressing a global problem, it could also provide a substantial marketing benefit, as well as carbon credits that could be redeemed in anticipated cap-and-trade programs. Such a lease may also put the parties in a better position to address the increasing number of green regulations being passed on a regular basis by municipalities. The article points out that effective green leasing is not simply a matter of adding one or two provisions here or there in a lease, but rather, is an overlay on the entirety of the leasing enterprise. In addition to providing substantial background information on regulatory and market-driving factors to green leasing, the article provides insight into such issues as: whether a third-party rating system, such as LEED, should be integrated into a lease how to build a green negotiating team understanding today’s green leasing market, and anticipating tomorrow’s green leasing market; and drafting a green lease In reviewing various approaches to drafting green leases, the article touches on issues such as: cooperative or top-down approaches to implementing green leases drafting an operations plan for green buildings housekeeping in green buildings allocating operating costs in green buildings tenant improvements and alterations in green buildings work letters and contractor obligations for green buildings drafting tenant handbooks for green buildings cooperation among tenants in multi-party buildings in achieving environmental objectives green insurance and endorsements remedying a green breach and green arbitration or mediation allocation of carbon credits in any future cap-and-trade system future changes to third party green building rating systems, such as LEED The article’s global approach to the issue of green leasing makes clear that there is no one right approach to drafting a green lease; rather, green leases need to be tailored to the particular green building, particular parties involved, and the particular regulatory environment where the building is located. If you would like to discuss green leasing issues further, feel free to contact Stephen R. Miller, who is also available to discuss these issues with your team. 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 leases, purchase and sale agreements, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work. Copyright 2010 Reuben & Junius, LLP. All rights reserved.    

New Development Stimulus Proposal Aired at Housing Action Coalition Summit The HAC held its annual summit Wednesday morning which focused on the difficulty of providing housing for middle-income families in the city. During the discussion period, panelist Brad Paul, a longtime housing and community development consultant involved in the early years of the Tenderloin Neighborhood Development Corporation, raised a concept that has been talked about quietly among housing advocates in recent months: set a transfer tax on sales of all real property throughout the city while reducing the affordable housing fees on new projects. This could stimulate the housing industry and increase overall funding for the city’s affordable housing stock at the same time. Most people would agree that providing affordable housing is an obligation that all of society shares. Today, the burden of that obligation is borne almost exclusively by new development through affordable housing fees, fees that contribute to the high sales prices of new homes in the City. A fairer approach would be to spread the City’s obligation to provide affordable housing so that both new and existing property owners must make an equal contribution. This citywide transfer tax would do just that. A citywide transfer tax could be set at less than 1% and likely still provide more funding than current affordable housing fees on new development. It would also stabilize the city’s affordable housing fund, which is highly sensitive to rises and falls in the market (as it is tied directly to the number of new development starts). Supervisor David Chiu – a panelist at the HAC summit – stated he was “very interested” in discussing this idea further. This is a commonsense proposal that will increase the amount of affordable housing in the city while spreading the burden amongst all residents, and should be pursued by city officials and those involved in the development community. Development Fee Deferment Clears Committee Hurdle; BMR Fee Reduction Removed Last Monday, the Board of Supervisors Land Use and Economic Development Committee approved an amended version of the development fee deferment ordinance, sending it on for consideration by the full Board. The final version would make all development fees (including affordable housing fees) due before the first site or building permit is issued, but would allow deferment of most of the fees to be due at the issuance of the first certificate of occupancy (including temporary ones). Under the committee-amended version, for projects located in recently adopted plan areas with impact fees (such as Eastern Neighborhoods, Market & Octavia, Rincon Hill, Balboa Park, etc.), 20% of the all of the development fees would be required to be paid up front, before the building permit is issued. For projects outside of plan areas, 15% of all of the development fees would be required to be paid up front. The original concern with the fee deferment proposal was that there would be no early funds for public improvements, and the committee felt a lower down payment was needed outside of these plan areas where the funds would not go to immediate public improvements. The 33% BMR fee reduction proposal, however, was not moved forward. The proposal would have reduced the affordable housing fee by 33% in exchange for a project sponsor subjecting a project to a 1% transfer tax on all future sales which would go into the citywide affordable housing fund. The committee expressed concern about how long it would take to recoup the reduction in affordable housing fees. Mayor Newsom to Introduce Ordinance to Help Finance Development Fees In related news, last week Mayor Newsom announced his intention to introduce legislation next month that would help developers finance city development fees. The legislation would likely be similar to the recently-enacted GreenFinanceSF program, which helps finance energy efficiency upgrades. A city-wide Mello-Roos district would be created, allowing the developer of a project located anywhere in the city to opt-in to the district. The developer would receive a loan from the city, or Mello-Roos bonds would be issued, to pay the development and impact fees (but not affordable housing fees). The loan/bonds would be paid off through a special tax to be paid with property taxes, and amortized over a period of time. This would provide a mechanism for a developer to pay off development fees over a longer period of time, freeing up funds to be spent on actual development and construction costs. We’ll keep you posted on each of these proposals. 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 leases, purchase and sale agreements, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work. Copyright 2010 Reuben & Junius, LLP. All rights reserved.      

Last week, Supervisor Michaela Alioto-Pier introduced a new ordinance that would limit the time period in which negative declarations and categorical exemptions could be appealed to the Board of Supervisors. This is an important opportunity to reform the city’s inefficient CEQA appeal process, which currently places unjustifiable costs on project sponsors and places unnecessary burdens on the Board of Supervisors. The Way It Is Now The California Environmental Quality Act provides that any environmental impact report or negative declaration approved by the Planning Commission or categorical exemption issued by the Planning Department must be appealable to an elected body. In San Francisco, that is the Board of Supervisors. However, San Francisco’s Municipal Code currently only limits the appeal period for EIRs – which must be appealed to the Board of Supervisors within 20 days after the Planning Commission has certified the document. Negative declarations and categorical exemptions, however, can be appealed at any time up until a proposed project has been approved and all appeals of the project have been extinguished. This has resulted in the following situations: – A project entitlement is approved by the Planning Commission at the same time a negative declaration is adopted. A project opponent can appeal the entitlement approval to the Board of Supervisors or the Board of Appeals, a process which can take more than two months to complete. Before a final action on the entitlement appeal, the opponent can then appeal the negative declaration, which can take several more months to resolve. – A categorically exempt project that otherwise requires no Planning Commission approval is taken to the Planning Commission on Discretionary Review. After being approved by the Planning Commission, the project sponsor spends several months to over a year preparing detailed architectural and building plans. Finally, the Department of Building Inspection issues a building permit. A project opponent can then file a second appeal of the building permit to the Board of Appeals within 15 days. Even if the Board of Appeals upholds the building permit, the project sponsor is still at risk of having the categorical exemption for the project being appealed and overturned – possibly over a year after obtaining Planning Commission approval at a discretionary review hearing. One problem with the current situation is that it undermines one of the primary purposes of CEQA – to provide public officials with an adequate environmental review document for a project as early as possible in the entitlement process in order to inform their decision. In the second scenario above, the categorical exemption appeal is heard by the Board of Supervisors after all project approvals and appeals have occurred. At that point, it has very little usefulness in informing city officials’ decision on a project. Another problem is that the current situation is fundamentally unfair. It provides project opponents with more than one bite at the apple to stop a project. Any problems with an environmental document should be raised within a reasonable period of time after it is approved or issued. Allowing an entirely new appeal process to begin after one appeal process on the same project has completed is an inefficient use of the Board of Supervisors’ time and exacts an unfair costs on all project sponsors – from developers to single-family homeowners. The Reform Proposal The proposed ordinance would set a 20-day appeal period for negative declarations and categorical exemptions. This would ensure that any potential appeals of these environmental documents would occur within a reasonable, and limited, period. For negative declarations, the appeal period would start when the Planning Commission approved the document. For categorical exemptions on projects that require Planning Commission or Zoning Administrator approval, the appeal period would start when the Planning Commission or Zoning Administrator approved the project or requested variance. For categorical exemptions that do not require Planning Commission or Zoning Administrator approval, the appeal period would start when a permit for the project is issued (or when the Planning Commission takes action on a project through the discretionary review process). Just these changes would solve the issues in the above scenarios by forcing project opponents to file a timely appeal of an environmental document before an appeal of a project approval has run its course. The ordinance would also prohibit appellants from maintaining an appeal on behalf of other individuals or entities without express written consent. This would avoid individual appellants taking advantage of an appeal fee waiver meant only for neighborhood organizations. The ordinance would also make the statute of limitations of a judicial appeal start at the date of project approval, not the Board of Supervisors’ later disapproval of the appeal. Further Recommendations While we believe the proposed CEQA Appeal Reform is a tremendous step in the right direction, it could be even better. The ordinance should make clear that the 20 day appeal limitation also applies to community plan exemptions. Second, the legislation should clarify when the CEQA Notice of Determination (NOD) and Notice of Exemption (NOE) should be filed by the City. The filing of the NOE and NOD start the running of statutes of limitations for CEQA challenges in court. There is considerable confusion surrounding this issue on many projects, as a result of the often overlapping appeal periods and timelines. This seems like the right time to fix this problem as well. CEQA Appeal Reform is another opportunity, similar to Discretionary Review Reform, to significantly improve the entitlement process in San Francisco. Interested parties should make their voices heard at future public hearings in support of the ordinance. The ordinance will likely be heard first by the Planning Commission, then by the Board of Supervisors Land Use and Economic Development Committee before going to the full Board. Please contact us if you would like a copy of the ordinance. 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 leases, purchase and sale agreements,

Oakland Planning Commission Adopts Green Building Standards Last night, the Oakland Planning Commission voted unanimously to adopt new green building standards that apply to private development, a culmination of nearly three years of work by the Planning Commission and staff. Agency staff has been meeting with stakeholders periodically during the development of the standards, which resulted in their widespread support – developers, community groups, historic preservationists and architects all spoke in favor of the measures. Depending on the category and scope of a proposed project, one of two industry-standard green building rating systems would be applied. Build It Green is a residential green rating system developed by a non-profit to be specifically applied in California. Leadership in Energy and Environmental Design (LEED) is a national green rating system that applies to both residential and commercial projects developed by the U.S. Green Building Council. Both include checklists, with each checklist item earning a project a certain number of points. Both systems require a project to attain a certain point total to become certified at one of the system levels. The checklists focus on categories such as site location, water and energy efficiency, material types, and indoor environmental controls. The new green standards will apply to: all new residential construction new non-residential construction of 5,000 square feet or more residential additions or alterations of 1,000 square feet or more (although green rating systems for additions to 3+ unit buildings are not yet available) non-residential additions or alterations of 5,000 square feet or more all new mixed-use construction (except non-residential areas under 5,000 square feet) landscape plans of 500 to 25,000 square feet   The Commission also tailored some aspects of the green building standards to meet the unique needs of the city. Finding that LEED may be too strict and discourage small commercial development, projects proposing new construction, additions or alterations of non-residential buildings of up to 25,000 square feet must comply with an Oakland-specific Small Commercial Checklist. Also, in order to discourage demolition of historic buildings, buildings that are proposed to replace historic buildings with a local historic rating of A, B or C must obtain higher levels of compliance. According to the U.S. Green Building Council, buildings account for 72% of all electricity consumption in the nation and green building operating costs are as much as 9% less than traditional buildings. A 2003 report by the California Sustainable Building Task Force estimated that the up front costs of constructing a building that is LEED certified are about 2% of construction costs. The green building standards will be voluntary until January 1, 2011, when they will become compulsory. The green building standards now go to the Oakland City Council for final approval. Email us if you would like a copy of the ordinance. SF Board of Supervisors Committee Approves New Lighting Standards for Commercial Buildings On Monday, the Board of Supervisors Land Use and Economic Development Committee approved amendments to the Building Code that would require all non-residential buildings (and non-residential areas of mixed-use buildings) to meet energy-efficient lighting standards by December 31, 2011. Specifically, new 4-foot and 8-foot linear fluorescent bulbs must have a mercury content of no greater than 5 mg and 10 mg, respectively. In addition, each lumenaire that utilizes a 4-foot or 8-foot linear fluorescent bulb must either emit 81 lumens per watt or be controlled by an occupancy sensor control device. The ordinance exempts lighting on equipment and display cases. While the ordinance states that failure to comply by the December 31, 2011 deadline will constitute a public nuisance that may be abated by the city, Cal Broomhead, Energy Program Manager at the Department of the Environment, testified that enforcement will consist of the city’s refusal to approve any future electrical permits until the building comes into compliance. Further, Mr. Broomhead testified that building owners or tenants will not have to replace working, non-compliant bulbs. Since such a requirement would in fact not be energy efficient, these bulbs must only be replaced once they burn out. The ordinance will now go to the full Board of Supervisors for final passage. Financial assistance is available for these upgrades. Go to “http://www.sfenergywatch.com/” for more details. Email us for a copy of the new legislation. 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 leases, purchase and sale agreements, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work. Copyright 2010 Reuben & Junius, LLP. All rights reserved.    

New Green Landscaping Ordinance Expands Existing Greening Requirements of the Planning Code Last Tuesday, the Board of Supervisors enacted Mayor Newsom’s Green Landscaping Ordinance, thereby placing new requirements on a range of property owners in the City. For homeowners in most residential districts (excluding RC districts), any construction resulting in a new building, a new dwelling unit, a new garage, or additional parking are now required to dedicate 50% of the area of the required front setback to “permeable surfaces,” i.e., those surfaces that allow stormwater to be absorbed into the soil. In addition, 20% of this front setback area must be covered with plants. Street trees must now be planted by property owners in all zoning districts whenever a new building is constructed, there is a 20% increase in building size, a new dwelling unit is created, a garage is constructed, or additional parking is added. For those sites where street trees cannot be planted due to physical constraints, a fee of at least $1,489 per street tree must be paid to the City. New landscaping requirements apply to sites where “vehicular areas” are modified. Vehicular areas include unenclosed parking spaces, parking lots, gas stations, car washes, car repair shops and loading areas. When such areas are larger than 25 feet along a public right of way, “ornamental fencing” must be installed along the public right of way. This requirement is triggered when vehicular areas are created or expanded by 20%, 4 new parking spaces are created or significant excavation and replacement takes place. Other new landscaping requirements apply as well. Let us know if you would like a copy of the ordinance. Planning Commission Considers New Policy for Car Share Spaces In recent years, the Car Share movement has been booming nationally. After being established in the U.S. just over 10 years ago, there are now estimated to be 388,000 car share members driving 7,500 car share cars provided by 27 car share organizations nationally. Unsurprising to anyone who walks the streets of San Francisco these days, much of the growth of car share has taken place right here. There are hundreds of car share spaces in the City. Against this backdrop, the Planning Commission decided to review its car share requirements and policies last week. Currently, car share spaces are only required in a handful of zoning districts, mostly in South of Market. In addition, car share spaces are only required in residential projects with 50 or more units or in non-residential projects with at least 25 traditional parking spaces. That being said, the Commission has not been timid about trying to require additional car share spaces for certain projects. Without a clear policy of when car share spaces requirements will be increased, though, this could lead to arbitrary results. There has also been concern from property owners about voluntarily providing car share spaces in their lots, due to the Commission’s reticence of approving new projects that would eliminate these car share spaces. This has led to an environment where owners are in fact disincentivized from providing these spaces voluntarily. The Planning Commission is considering a new policy where it would only require one-to-one replacement of removed car share spaces that are required by the Code or a previous approval when the structure on the project site is not being demolished. When a new project is proposed that would redevelop the site and remove a car share space, no replacement is required and the removal will be considered within the review of the entire project. In addition, no replacement will be required when removing a car share space when no project is proposed – i.e. the removal of voluntarily-provided car share spaces is permitted as of right. The new policy would also give the Commission some discretion to require car share spaces in a project approval above what is required by the Planning Code. In “exceptional circumstances,” the Commission can require up to 1 more space than is required. More can be required for projects with more than 400 dwelling units or non-residential projects that provide 140 or more parking spaces. The policy cites as examples of “exceptional circumstances” projects that provide parking in an amount greater than what is permitted by the Planning Code or where the size and scope of a project would create a specific traffic impact on the surrounding neighborhood. The Zoning Administrator has also drafted new guidelines for car share spaces which would make converting a traditional parking space to a car share space permitted as of right when the existing parking supports residential uses or when non-residential parking is provided in an amount greater than what is required in the Planning Code. The conversion of a required non-residential parking space would have to be approved by the Zoning Administrator. The item was continued to June 10 for further consideration. We’ll keep you posted. Let us know if you would like a copy of the ordinance. Housing Action Coalition’s Annual Housing Forum to Focus on Middle Class Housing in the City The Housing Action Coalition will hold its 2010 annual forum, Crisis and Opportunity: New Housing Solutions for SF’s families and Middle Class, on May 5. Speakers include: • Jeffrey Lubell, Executive Director, Center for Housing Policy Washington D.C. • Supervisor David Chiu, President of the SF Board of Supervisors • Brad Paul, Housing and Community Development Consultant • Lydia Tan, Senior Vice President, BRIDGE Housing • Christopher Meany, Partner,Wilson Meany Sullivan • Moderated by Tim Colen, HAC Executive Director The HAC’s forums are always interesting and enlightening, and this year’s topic is of increasing concern to the housing development community in San Francisco. This event is worth your time and money! Wednesday, May 5, 2010 7:30 – 8:30 am: Registration and Breakfast 8:30 am – 8:45 am: Welcome and Introductions 8:45 am – 10:00 am: Panel Discussion Yerba Buena Center for the Arts 701 Mission Street, San Francisco, CA The cost is $20 for HAC members; $30 for the general

Of late, the City’s massive budget deficits and cuts to transit operating budgets have dominated the headlines. However, the American Reinvestment and Recovery Act has breathed new life into one major transit project in downtown San Francisco. This week, we’ll give you an overview of the revenue measures the City is considering to cover the multimillion dollar deficit in MUNI operations, and on the Transit Center project, which is moving forward in spite of the City’s budget woes. Municipal Transportation Agency – Revenue Measures Likely To Go On Ballot The SFMTA is San Francisco’s all-purpose transportation agency that oversees parking, traffic and transit operations. This year’s projected multimillion dollar deficit has sent the City scrambling to find new sources of revenue to avoid painful cuts in MUNI service. Some of these new revenue proposals — especially those to increase parking meter rates, install new meters, and extend their hours — have received the lion’s share of press coverage. However, these are not the only measures being considered. The SFMTA Board is also looking at several revenue measures that could be placed on the November 2010 ballot. These include: An increase in the hotel occupancy tax from 14 percent to 15 percent, which would raise $11 million annually. An increase in the payroll tax from 1.5 to 1.75 percent, which would raise about $55-$60 million each year. A proposal to raise the tax on commercial parking garages from 25 percent to 35 percent, which would generate about $20 million per year. A $200 parcel tax on each residential and commercial parcel in San Francisco. A sales tax increase of 0.5 percent that could generate up to $65 million in new revenue. This would take the City’s sales tax rate to 10.5 percent, the highest in the state. An increase in the vehicle license fee from 1.5 to two percent, which would generate about $33 million in annual revenue. The deadline for submittal of measures for the November ballot is June 15, 2010. Ballot measures to increase the sales tax or vehicle license fees would have to be submitted to the voters by the Mayor or Board of Supervisors. The SFMTA may submit any of the other revenue measures directly to the voters without approval of the Mayor or Board of Supervisors. Any measure submitted directly by the SFMTA requires a 2/3 vote to be enacted, whereas a lower threshold for approval may suffice for measures submitted by the Mayor or the Board of Supervisors. At their meeting yesterday, several members of the SFMTA Board spoke favorably of the parking tax increase, because it could be approved by a simple majority of voters if placed on the ballot by the Board of Supervisors and is therefore more likely than the other measures to succeed. However, all options remain on the table and are likely to be considered again by the SFMTA Board in May. Transit Center Update The proposed Transit Center is a $4.2 billion multimodal transit facility that will replace the Transbay Terminal on Mission Street. The Transbay Joint Powers Authority (“TJPA”) is a special body comprised of local elected officials and representatives from several transit agencies. It is responsible for overseeing the construction and operation of the facility. If all goes as planned, the Transit Center will eventually serve nine transportation providers and 45 million passengers annually. It will anchor major new office and residential districts with 5.4 acre rooftop park and new retail on Natoma and Minna Streets. As with any major public infrastructure project, financing is complex and comes from a multiplicity of sources. The Transit Center is no exception: its construction is to be funded through a combination of federal and state funds, as well as revenues derived from the sale of surplus properties formerly occupied by overhead ramps for the Embarcadero Freeway. The Transit Tower, a proposed 1200 foot tall building on the Transit Center site, was also supposed to generate approximately $300 million in construction funding. The sharp decline in the real estate market in 2007 jeopardized the funding stream for construction of the Transit Center and led to speculation that construction could be delayed for many years. The TJPA put the Transit Center project on hold in mid-2009 as it waited for the federal government to review applications for stimulus funds. In early 2010, the federal government granted a $171 million loan to the TJPA and awarded $400 million in stimulus funds. With funding in place, the TJPA is now poised to proceed with the $1.2 billion first phase of the Project, which is scheduled for completion in 2015. This will include: demolition of the existing Transbay Terminal and Bay Bridge bus ramps; utility relocation, construction of the new terminal and Bay Bridge bus ramps. The new terminal will include a “train box” for future CalTrain service. However, construction to extend the tracks from CalTrain’s 4th & King Station will be carried out in the second phase of construction. According to the construction schedule, demolition, shoring and excavation is slated to start this Spring. Utility relocations are already underway. The temporary terminal at Howard and Main Streets is expected to open for business in May, and demolition of the existing terminal should commence in July. Demolition work will proceed in three overlapping phases over approximately ten months: Phase 1 – Demolition of bus ramps east of Fremont Street (Weeks 1-12) Phase 2 – Terminal demolition (Weeks 5-30) Phase 3 – Demolition of bus ramps west of Fremont Street (Weeks 27-40) Because the demolition works will span over city streets, there will be intermittent street closures on several major streets, including Folsom, Harrison, Fremont, Beale and First Streets. Most will be limited to evenings and/or weekends, but there will be intermittent weekday closures as well. Utility relocation is already underway and will continue until the end of the year. The TJPA has released schematics of planned utility upgrades that may be of interest to those that own property nearby. Excavation and shoring wall construction

Narrowly-Focused Eviction Protections Extended to Tenants of Foreclosed Properties On March 25, Mayor Newsom signed into law an amendment to the city’s eviction protection ordinance that would provide greater protection for tenants of foreclosed rental properties. Prior to the amendment’s passage, the eviction control ordinance allowed landlords to evict tenants only when the purpose of the eviction fell within 15 “just causes,” such as the failure to pay rent, a breach of the lease, having an owner move into the unit, or to perform substantial rehabilitation on the unit. However, these protections did not apply to buildings built after 1979. In response to the increase in foreclosures due to the current economic climate, this amendment was enacted to protect tenants living in buildings constructed after 1979 to be protected from evictions by owners who acquire the buildings through foreclosures. Specifically, the amendment prohibits an owner who acquires a post-79 building through foreclosure from evicting a tenant without meeting one of the 15 just causes until the tenant’s lease expires. Once the lease is up, the tenant can be evicted for any reason. The new owner must also meet heightened notice requirements in order to evict a tenant. The enactment of the amendment brings a contentious, nine-month long lawmaking process to a close. Last summer, Supervisor Avalos proposed an ordinance that would have expanded the “just cause” eviction restrictions to all post-79 buildings, regardless of whether the property had been foreclosed upon. A number of heated public hearings were held by the Land Use and Economic Development Committee in November and December, with dozens of rental property owners and tenants’ advocates testifying on the measure. After it was clear that the Mayor was going to veto the broad amendment and that the Board of Supervisors did not have the votes to overturn the veto, Supervisor Avalos and the Mayor found common ground with this narrowly-focused solution. Please let us know if you would like a copy of the eviction control amendment. Affordable Housing Program Fixes Passed by Planning Commission The Planning Commission recommended approval of amendments to the City’s Affordable Housing Program last week, in response to last year’s Palmer state court decision which held that city ordinances requiring a certain percentage of newly-constructed rental units be rented to low-income tenants was prohibited by state law. San Francisco’s affordable housing in-lieu fee, supported by a nexus study, may avoid any conflict with state law (at least that is what the City is saying). The amendments set a baseline requirement that project sponsors of all new residential buildings – ownership or rental – must pay the existing in-lieu affordable housing fee for 20% of its units. Project sponsors can then choose to provide on-site or off-site below market rate units if they fall into any of the following three categories: 1. The below market rate units will be ownership units; 2. The project receives any public funding; or 3. The project sponsor enters into a development agreement with the city which calls for the provision of on-site or off-site below market rate units. While area plan-specific affordable housing fees will still apply, the amendments do not make clear how the increased affordable housing requirements in the Urban Mixed Use zoning district in the Eastern Neighborhoods Plan will be applied, although the Planning Department is likely to impose an affordable housing in-lieu fee based on the percentage of off-site below market rate units that are required in the district. Also, the requirement that 50% of on- or off-site BMR units in the Rincon Hill Area Plan be rental units has been eliminated. The amendments now go to the Board of Supervisors Land Use and Economic Development Committee, on its way to a vote by the full Board. Board of Supervisors Adopts New Historic Districts in the Market-Octavia Area On Tuesday, the Board of Supervisors adopted twelve new historic districts in and around the area of the Market-Octavia Area Plan. This is the first tangible results of the historic survey that was called for by the Plan. These new districts will have the effect of heightening environmental review on projects located within them. Most likely, project sponsors of projects located within these new districts will have to submit a Supplemental Information Form for Historical Resource Evaluation to the Planning Department along with any environmental evaluation application. If a project is associated with a property identified as a contributing resource, more historical review will likely be required before a project is approved. Please let us know if you would like to see the staff report outlining the new districts. Next week, the Board of Supervisors will consider an ordinance updating height limits along Market Street, generally between 14th and 16th Streets, which is also associated with the greater Market-Octavia Plan. Don’t get too excited, though: the rezoned section of Upper Market Street will include modest height increases of some parcels and some significant height reductions of others in order to create a close-to-uniform height limit of 60/65 feet (with a few 50/55 feet parcels) along this stretch of Market Street.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 leases, purchase and sale agreements, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work. Copyright 2010 Reuben & Junius, LLP. All rights reserved.