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.        

This week, we look across the bay to update you on the latest happenings in Oakland. Oakland is about half the size of San Francisco, with an estimated population of 404,000 as of 2008. In this update, we will take a look at the demographic trends of the city, the public’s investment in improving it, and the Community and Economic Development Agency’s efforts to improve the city’s regulation of development. Census Numbers Show Upward Momentum The comparison of Oakland demographics using U.S. Census Bureau statistics between 2000 and 2008 quantify the gains the city has made in recent history. During that time: • Median household income has increased from 40,055 to 48,596 (a 21% increase) • The number of individuals in poverty has dropped from 76,489 to 64,378 • Residents with graduate or professional degrees has increased from 33,700 to 38,170 (a 2.5% increase) • Median value of an owner occupied unit has increased from $235,000 to $541,900 (a 130% increase) • Median gross monthly rent has increased from $696 to $1,036 (a 49% increase) Admittedly, these numbers all pre-date the national economic crisis of 2008, but the clear trend is that Oakland is on the rise. Oakland Recognizes its Potential Even in tough economic times, Oakland is making serious infrastructure investments to encourage the city’s continued upward momentum. In 2008, property owners in the uptown and downtown districts voted to subject themselves to a special tax to create two new “community benefit districts.” The effects of these new taxes are already readily visible. Uptown and downtown streets are being cleaned up and beautified, community “ambassadors” walk the streets to provide information and added security to residents and visitors, and new bars, restaurants and theaters seem to be opening weekly. Starting in June, the City of Oakland will begin offering a new, free shuttle service along Broadway, from Jack London Square to Grand Avenue. The shuttle will run every 10 minutes on weekdays between 7 a.m. and 7 p.m. The shuttle service will further enhance the central business district as the anchor of business and entertainment activity in Oakland. In December, Mayor Ron Dellums finally reaffirmed Oakland’s desire to keep its Major League Baseball Athletics in the city by proposing three different sites in and around Jack London Square for a new baseball stadium. Dellums’ offer included a pledge to compile the necessary parcels and pay for parking and infrastructure, while the A’s would be responsible for constructing the stadium. An MLB study of the potential new stadium sites throughout the East Bay for the stadium is expected in the very near future. Finally, Oakland hasn’t forgotten about its public space and residential neighborhoods. In 2002, voters approved Measure DD, a $200 million bond measure to fund park and waterfront improvements along the estuary between Oakland and Alameda and around Lake Merritt. Improvements include parks, trails, bridges, a recreation center, historic building renovations, land acquisition, and creek restoration. A new website provides a map and information on just 25 of the projects completed, currently underway, and planned for the future. “http://www.waterfrontaction.org/dd/dd_map.htm” The list goes on and on. All of these efforts demonstrate Oakland’s awareness of its potential and its willingness to act in order to build upon the momentum it has gathered in the last decade. And the city’s General Plan and zoning regulations are also undergoing some critically-needed upgrades to ensure the city is ready to take advantage of the next market upswing. Improvements in the Entitlement Process In 1998, after five years in the making, Oakland adopted a new General Plan, which is intended to guide development of the city through 2015. Mandated by state law, the general plan provides a “big picture” view of where the city is and where it is headed. Oakland’s general plan adopted cutting-edge “smart growth” policies of the time. Transit-oriented districts were identified around transportation nodes where higher density and mixed use development was encouraged. Oakland’s neighborhoods and activity centers were identified, with an emphasis on improved, pedestrian-friendly design and access features. The general plan identifies the seaport, downtown, the waterfront, the Coliseum area and the airport as “showcase corridors,” where the bulk of Oakland’s transformation and growth would occur. In many ways the general plan has successfully guided Oakland’s growth. Transit hubs such as Fruitvale, downtown, uptown and West Oakland have all seen a surge in new housing development. Residents’ sense of place is largely defined by the neighborhood they reside in. Temescal’s turnaround was even written up in the Wall Street Journal recently. Oakland’s zoning regulations, however, still largely date from the 1960’s. Needless to say, the general plan and zoning regulations don’t exactly work well together. State law requires consistency between the two documents, forcing the Oakland Planning Commission to adopt extensive regulations in order to apply them with consistent results. The general plan established at least 15 zoning districts and the zoning regulations have at least 54 separate zoning districts. Since the general plan supersedes the zoning regulations, one must first determine if a use or proposed development is permitted in the general plan district it is located in. Next, one must determine if the use or development is permitted in the zoning regulations district it is located in. Currently, there are numerous conflicts between the general plan and zoning regulations, which require a project sponsor to obtain conditional use permits, variances, rezonings, and general plan amendments. Fortunately, the city’s Community and Economic Development Agency has been working to achieve conformity between the general plan and zoning regulations. In 2006, the Planning Commission and City Council adopted new zoning regulations for Housing-Business Mix districts. In these zoning districts, no longer will project sponsors need to confirm whether their use or development is permitted by the general plan – now the zoning regulations are in conformity with the plan, so the zoning regulations are all one needs to check. Rezoning of the industrial and the downtown zoning districts have also been completed, again meaning that the zoning regulations

Grandfathering Deadline Quickly Approaching For Eastern Neighborhood Projects While it seems like just yesterday the Board of Supervisors approved the Eastern Neighborhoods plan, rezoning a large swath of San Francisco, the deadline for projects that were “grandfathered” by the plan to obtain Planning approval is rapidly approaching. The EN Plan placed new zoning restrictions, a new impact fee, and heightened affordable housing requirements on projects within the plan area. Projects for which a planning application had been submitted prior to April 17, 2008 are exempted from certain requirements of the plan, depending on how early the application was submitted. The Planning Department has compiled an easy-to-read guide to determine the exemptions for a particular project, located at “http://www.sf-planning.org/Modules/ShowDocument.aspx?documentid=1431”. Unfortunately, the grandfathering doesn’t last forever. The Zoning Administrator issued an interpretation last May, requiring grandfathered projects to obtain Planning Commission or Department approval by January 19, 2011. For projects that require Planning Commission or Zoning Administrator approval, such approval must be obtained by this date. For projects only requiring a building permit, the building permit must be signed off by Planning staff by this date (Section 311/312 notice must occur before then as well). If approval is not obtained before this date, the grandfathered status is lost, and all current zoning regulations, increased affordable housing requirements and the EN impact fee will apply. Once Planning Commission or Department approval is obtained, building permits must be obtained for the project within three years of the approval. Due to the length of time to obtain entitlements in San Francisco, we recommend all project sponsors of grandfathered projects that wish to take advantage of that status to pursue entitlements now. For more information, contact John Kevlin at jkevlin@reubenlaw.com. Discretionary Review (DR) Reform Bites the Dust After coming close to reaching a compromise, the Board of Supervisors’ Land Use and Economic Development Committee effectively killed discretionary review reform at its March 8 hearing. The Committee tabled the reform legislation with no expectation of calling another hearing in the near future. The Committee’s action ended the most recent attempt to fix the discretionary review system. The DR process originally was a check on “exceptional and extraordinary” projects in residential neighborhoods, but today there is widespread abuse of the process that allows individuals to demand a Planning Commission hearing for any project, regardless of the merits of the DR claim. The Planning Department has spent the past two years reaching out to neighborhood groups, crafting the legislation, and shepherding it through the legislative process. One of the major challenges with pushing DR reform is that there is no organized constituency to push in favor of it. While anti-reform neighborhood activists and community groups turned out in full force to oppose the changes, only a smattering of architects and other land use professionals turned out to fight for past and future small property owners who have or will be caught up in this byzantine process. Even with the full, well-researched support of the Planning Department and the Planning Commission, the Land Use Committee was unwilling to act. For now, DR Reform is dead. Earthquake Retrofits Incentivized by New Ordinance Yesterday, the Board of Supervisors passed an ordinance intended to spur voluntary retrofits of soft-story, wood-frame buildings by their owners. The ordinance, sponsored by the Mayor and Supervisor Campos, would not require owners to retrofit their buildings. The incentives for voluntary seismic retrofits of soft-story, wood-frame buildings include waived fees for the following services: o Planning Department permit review o Department of Building Inspection permit review o Fire Department permit review o Department of Public Works minor sidewalk encroachment permits …and also makes it a City policy that agencies expedite permits for these retrofits. The City Controller has estimated that, on average, the waived fees will consist of $591 for a single family home and $1,961 for a multi-family home – a reduction of only 2.7% of the total cost of an average retrofit. Unsurprisingly, the Controller has concluded that this legislation will not significantly increase the number of voluntary retrofits in the city. Stay tuned, however, as Mayor Newsom has reiterated as recently as last month his determination to make seismic retrofits mandatory in the city. 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.      

An overview of the hearing process – it’s not as bad as you think! I recently represented a client at a hearing in front of the Assessment Appeals Board to challenge the assessed value of San Francisco real estate. Before the hearing, I noticed that all of the other hearings that day had been cancelled or postponed, a phenomenon that I have seen before. Although the Appeals Board does not keep statistics for why appeals are cancelled, I believe that many taxpayers cancel or delay the hearing for one of the following reasons: The perception that they will not receive a fair hearing before the Appeals Board; Fear that the process is complicated, and will require extensive preparation; or Misunderstanding about how the hearing will work. These concerns are exaggerated, and most owners would benefit by pursuing their appeal. Failure to pursue the tax appeal means that the owner will not receive any consideration of their view that the property’s taxable value is too high. If the appeal relates to the new value after acquisition or construction, then the tax liability could result in thousands of dollars lost. Even if the appeal is a one year “Proposition 8” decline in value appeal, the property owner may be foregoing an opportunity to save money. For every $100,000 in decreased value, the owner could save about $1,400 per year in taxes. These days every dollar counts. As to the fair hearing issue, in my experience, the taxpayer has always received fair consideration of their appeal. The Appeals Board is comprised of people that have other full time jobs – they are not city regular employees. The law requires that the Appeals Board be real estate professionals like brokers, accountants, attorneys or appraisers. I have found Board members to be quite reasonable and receptive to taxpayers, and not automatically deferential to the Assessor’s position. The following is a brief overview of the commercial tax appeal hearing process, from the pre-hearing issues through the actual hearing. Before the Hearing It typically takes about 6-8 months for a hearing to be scheduled. The taxpayer is entitled to one postponement as a matter of right, provided that the request is made at least 14 days prior to the hearing date. Further postponements are subject to the discretion of the Appeals Board. If the appeal is not heard within two years after the filing date, then the applicant’s opinion of value is deemed to be correct, and will be entered on the tax roll. If the taxpayer does not show up to the hearing, then the appeal will be dismissed, and the decision is final, unless the applicant can convince the Appeals Board that there was good cause to miss the hearing, which is a tough thing to prove. Negotiation with the Assessor’s Office It is common for the taxpayer and the Assessor to have no contact prior to the hearing. In some cases, the Assessor will demand that the taxpayer provide extensive information about the property under Revenue & Tax Code Sections 441 & 470 – leases, construction costs, expenses, and other financial information. Although the code obligates the owner to provide certain financial information, there is no penalty for failing to do so, other than the Assessor’s right to postpone the hearing to review any documents submitted by the owner. As a means to force compliance, the Assessor typically threatens to ask the Appeals Board to dismiss the appeal if the information is not provided by the Assessor’s deadline. There is no such provision in the code for a deadline, or the dismissal of the appeal. If the Assessor does not contact the owner prior to the hearing, some owners request a meeting with the Assessor’s office in the hope of reaching a negotiated agreement, like in the litigation process. In my experience, for commercial properties, these meetings have a limited chance of success, although in some cases the Assessor has agreed to reduce the property’s enrolled value. There is really no motivation for the Assessor to negotiate a deal with the owner. Given the City’s bleak economic condition, the Assessor aggressively challenges most requests for a decrease in taxable value, even if the requests have merit. Owners should be careful during such meetings about what information they provide to the Assessor – it will certainly be used against them at the hearing. However, there is no harm in talking with the Assessor to see if they will discuss a reasonable compromise, but the taxpayer should carefully consider what information to provide during these discussions. In contrast, some counties, like Contra Costa County, have voluntarily initiated a program to reasonably reduce taxpayer’s assessable values, if justified. Whether this decision was due to a desire to be “fair”, or to strategically avoid administrative costs or more aggressive requests, the difference in approach is significant. The owner has the right to request that the Assessor provide information that the Assessor used to determine the property’s taxable value. (R&T Code Section 1606). However, the owner must, along with this request, also provide the Assessor with its supporting facts and documents. There are no other requirements that the owner provide information to the Assessor prior to the hearing. Except in complicated appeals involving possessory interests or construction matters, in most cases it is clear what information the Assessor has in its files – often the purchase price or finished construction cost from years ago. In these cases, it may not be worth the effort to request this information. The Hearing The hearing itself is a low-key affair. Typically, there is no one in the room other than the three members of the Appeals Board, the clerk and one or two representatives from the Assessor’s office. Both the taxpayer and the Assessor’s office will have the opportunity to present their case and refute the other side’s arguments. There are no formal rules of evidence. The taxpayer may provide oral testimony, and present any documentary evidence that it wishes the

After a year and a half of research, analysis, community outreach and drafting, the Board of Supervisors’ Land Use and Economic Development Committee may be on the verge of approving true Discretionary Review (DR) reform. Supervisor Eric Mar introduced a package of amendments at the Land Use Committee’s hearing on February 22 which were developed by a group of stakeholders and generally are intended to allay the concerns of neighborhood groups of losing their right to have a hearing before the Planning Commission for DR cases that they file. Currently, anyone can file a DR application for any building permit that doesn’t otherwise require Planning Commission approval, and get an automatic hearing. One of the most important aspects of DR Reform would empower a DR review team composed of Planning Department planners to review DR filings and their associated building permits to determine whether the case is “exceptional and extraordinary.” If they are, they will be heard by the Planning Commission, if not, they will not be heard. The proposal would give DR filers that were not approved for a hearing the ability to have the Planning Department reconsider its decision, and if that results in the same outcome, to appeal the decision to the Board of Permit Appeals. The reform would also require that all DR cases that justify a hearing before the Planning Commission have that hearing within 90 days of the DR filing. The Mar amendments would add several protections for neighborhood groups, including: • Maintaining the status quo for neighborhood groups, meaning DR cases that they file are entitled to an automatic hearing before the Planning Commission; • Individual DR filers, who would be required to gain approval from the DR review team to get a hearing before the Planning Commission, can still obtain a hearing before the Planning Commission with the support of two Planning Commissioners; • Individual DR filers are assured a hearing before the Planning Commission if their DR case is related to a policy or emerging planning issue that the Planning Code and Residential Design Standards do not address. In our view these are reasonable changes that still leave the bulk of the proposed DR reform in place. First, DR cases filed by neighborhood groups make up a small percentage of the total number of DR cases filed. Limiting automatic DR hearings to neighborhood groups should significantly reduce the number of inappropriate DR filings, where a single neighbor is using DR to block, delay or otherwise oppose reasonable projects that the Planning staff finds consistent with both the Code and the Residential Design Standards. However, the Planning Department needs to develop guidelines to ensure that neighborhood groups are legitimate, in order to protect from groups being formed solely for the purpose of opposing a single project or from individual members of established groups acting on their own. Second, allowing individual DR filers to get a Planning Commission hearing with the support of two Planning Commissioners even after being denied by the DR review team would still protect against frivolous DR cases. Most DR cases are decided by unanimous or close to unanimous decisions of the Planning Commission, so a frivolous DR case would likely not be able to garner the two signatures. There is some discussion of reducing the number of Planning Commissioners who could initiate an individual DR hearing to one. This is simply not good policy. If an individual DR filer does not have the approval of the DR review team and can’t garner the support of two out of seven Planning Commissioners, it likely has no merit. Finally, DR filings related to new or emerging policies and land use issues should go to the Planning Commission, which is the policy-making body of the Planning Department. We also support the Planning Department’s position that no extra time should be given to individuals who file DRs on behalf of neighborhood groups to get the backing of the neighborhood group. One of the core aspects of DR reform is to get a project sponsor a hearing at the Planning Commission within 90 days from the date of the DR filing. The legitimacy of a DR filing on behalf of a neighborhood group can generally be determined through an affidavit requirement and individual planners’ attention to this issue. The Mar amendments to the DR reform package represent a reasonable compromise in a city that is woefully short on compromise these days. They would make the DR process more efficient while simultaneously reducing DR abuse and protecting legitimate DR rights. We commend Supervisor Mar and his office for putting in the difficult work to craft this amendment package, but also encourage him and other results-oriented Supervisors to take this ball and run with it. DR reform is a hot-button issue that will never get 100% support from all interested parties. These Supervisors should enact this compromise and set an example of how good city government works. Another hearing will be held at the Land Use Committee on Monday, March 8, and a final vote is expected at the committee within a few weeks after. As always, we will keep you posted of future developments of DR reform. 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.    

There’s no doubt that historic preservation is politically popular in San Francisco: residents recently approved Prop J to create the Historic Preservation Commission (HPC), and grant it sweeping powers. But there were already solid protections in place. When people voted on Prop J, they probably didn’t know much about the California Environmental Quality Act (CEQA), which was the existing complex mechanism for dealing with historic resources, and how CEQA and the new Prop J represent alternate universes of regulation. CEQA and Prop J both try and protect historic resources, but they do it in very different ways, ways that were left un-reconciled by Prop J. CEQA incentivizes preservation of historic resources by offering a “safe harbor” for property owners that limit changes to historic properties. Owners that chose this safe harbor, by satisfying what are known as the Secretary of Interior Standards, are exempt from CEQA, and are theoretically not subject to further costly review. So the City and the preservation community get what they want (more preservation) and the owners get what they want (expedited review). That at least is the policy; in practice it usually is not that straightforward for the property owner. CEQA is in reality a complex, expensive and time consuming process. And it was in place long before Prop J. Unfortunately, owners of many small properties more than 50 years old cannot make changes to their structures without going through what can be an arduous CEQA process. Now we have Prop J. That measure created a powerful new commission to oversee the implementation of existing Planning Code provisions designed to protect historic resources. Those parts of the Planning Code have been in place for decades, and the Planning Department staff and the Planning Commission had been doing a good job implementing them. Now the HPC has that job, and it is not yet clear how much more difficult it will be to make CEQA and the new HPC work efficiently together. This uncertainty is heightened by the fact that the HPC was granted many new powers, including the power to review CEQA documents for any projects that might have an “impact on historic or cultural resources.” Why did Prop J happen? This week we look way back and provide a very brief history of the historic preservation movement in an effort to place Prop J in a larger context, and comment on the future of the process in San Francisco. How Did We Get Here? A Brief History of Historic Preservation There are generally considered to be three phases to the historic preservation movement. The first phase began in the 19th century when nation-states began preserving landmarks as a means of preserving national identity. The iconic American nineteenth century preservation effort was that of George Washington’s Mount Vernon estate by the Mount Vernon Ladies Association. The Association purchased the home and two hundred-acre estate with contributions solicited from women in every state, thereby preventing a planned development on the site. The second phase is typically defined as the call-to-arms following the demolition of New York’s Pennsylvania Station in 1963 and the destruction of large swaths of inner cities in accordance with post-World War II urban renewal programs. This phase saw the rise of the most visible and institutionalized aspects of the historic preservation efforts-federal, state and local historic preservation laws. The most important of these new laws was the National Historic Preservation Act of 1966 (NHPA). The use of these laws was accelerated after Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978), in which the U.S. Supreme Court upheld New York City’s landmarks law that sought to prevent Penn Central’s owners from building a skyscraper on top of the existing Beaux Arts Grand Central train station. Penn Central established, for the first time, that historic preservation regulations were not only a legitimate use of the police power, but they were also not subject to compensation as a taking, so long as certain parameters were met. Since Penn Central, historic preservation has exploded. The National Park Service estimates more than one million individual buildings or sites have been listed in the National Register since its creation in 1966. One million. Clearly, we aren’t just preserving Mount Vernon anymore. And it is this third wave of historic preservation-the one in which we now live-where the real conundrum of historic preservation starts to arise. As Carol M. Rose wrote in the Stanford Law Review, “The phrase ‘historic preservation’ is so elastic that any sort of project can be justified-or any change vilified-in its name. In a sense, every event is ‘history,’ and it is a cliché among professional historians that views of ‘historical significance’ alter considerably with shifting social interests. . . .” At this extreme, a prominent proponent of historic preservation, Dolores Hayden, has encouraged that historic preservation should, “celebrate the history of their citizens’ most typical activities-earning a living, raising a family, carrying on local holidays, and campaigning for economic development or better municipal services.” But by the time we get to Hayden’s level of analysis-and in San Francisco we are surely there-almost anything that means anything to anybody has standing as a historic resource. Since the definition of what it means to be “historic” has expanded to mean anything that might have a history-including mere evocations of nostalgia or even kitsch-the very notion of “historic” has lost any outer boundary. This is the preservation world in San Francisco today. Which brings us back to Prop J. Under Prop J, the HPC was granted the ability to review any project that might have an “impact on historic or cultural resources” as that phrase is used in the California Environmental Quality Act. Without getting too deep into CEQA, that broad phrase could mean almost anything is within the HPC’s grasp. Coupled with a the larger cultural rise of history indistinguishable from nostalgia, and the HPC’s broadening itself into the realm of “cultural resources,” the HPC seems to have the power to consider

Budget Woes Trickle Down to Planning Department Plugging the city’s $575 million budget deficit in 2009 was painful enough. Late last year, the Mayor’s budget director announced that the 2010 budget deficit would be $522 million. And the city can’t expect another $60 million in federal stimulus dollars this year. The city’s budget woes have now made their way to the Planning Department, which has been presenting proposed budgets to the Planning Commission over the past few weeks to figure out how to fill a current $4.7 million department budget deficit. The Department is facing an expected 30 percent reduction in General Fund revenues from the city. Today the Department presents it final recommendations to the Planning Commission. While the Department’s proposals project confidence in dealing with the deficit, many assumptions are made to help fill the hole, including an increase in the volume of applications filed (2.5%), in the amount of costs recovered through general advertising sign enforcement ($423,608), and in fees collected due to the economic recovery (2.5%). The Department cites as a mixed-blessing the recent increase in code compliance through the Administrative Penalty Program: increased compliance also means decreased abatement fees. After all of the above number-crunching, though, a deficit of $1.47 million remains, and the Department sees a reduction in labor costs as the only place left to squeeze out a few remaining dollars. In addition to greater fee increases, the Department suggests wage decreases, Department closure days, shortening the work week and reduced work schedules. Layoffs of planners will hopefully be avoided. However the Department ultimately chooses to reduce labor costs, it has already proposed a reduction in staff hours for each division. The Neighborhood Planning Division, which provides services such as application review, public information and code enforcement, will be reduced by 7.72 full-time employees (“FTE”). The Citywide Planning Division, which maintains the General Plan and administers Area Plans, will be reduced by 6.39 FTE. Major Environmental Analysis, which prepares and reviews all environmental documents, will be reduced by 4.95 FTE. Overall, these three divisions will be reduced from 124.7 to 105.64 full-time employees, a 15% reduction. This will unfortunately mean less staff hours to service the many projects that the Department continues to process even during this downturn. Hopefully, the Planning Department will be able to balance its budget with the least amount of pain – to its employees and the public – as possible. Street Frontage Controls May be Expanded to New Zoning Districts Today, the Planning Commission will hold a hearing on a proposed ordinance that would expand the street frontage controls, which were significantly strengthened by the Eastern Neighborhoods rezoning, to apply to a number of new zoning districts. The purpose of these controls was to provide a more pedestrian-friendly experience at the street level of buildings in commercial districts – in other words, to make the streets more engaging and interesting for people to walk through. Currently, these controls only apply to Neighborhood Commercial, Downtown-Residential and Eastern Neighborhoods Mixed Use districts. The ordinance would apply these controls to Commercial, Residential-Commercial and the Van Ness Special Use districts. Generally, the controls require that: • “Active uses” (allowing transparent walls) occupy ground floors • 60% of ground floor facades be transparent • Parking ingress/egress be limited to 1/3 of the façade • 25-foot setbacks for parking uses on the ground floor • Ground floors with non-residential uses be a certain height, depending on the zoning district The ordinance would also eliminate the requirement in Residential-Commercial districts that proposed projects taller than 40 feet obtain a conditional use authorization, expand the requirement for upper-story setbacks to RC and NC districts, and expand the requirement for mid-block alleys in large lot developments to Commercial districts. The Planning Department is also recommending several public comments be adopted, including further expanding the street frontage controls to South of Market Mixed Use districts, Chinatown districts and C-M districts and allowing lobbies to be considered an “active use.” We’ll keep you posted as this ordinance makes its way through the legislative process. City Preparing for Crackdown on Vacant Building Owners Who Haven’t Registered SF Public Press is reporting that the Department of Building Inspection, in response to a low rate of compliance with the recent vacant building registration ordinance requiring owners to register and pay a $765 annual fee, is considering increasing the annual fee to $6,885. While the ordinance does not authorize a fee increase of this type, this likely means that DBI is considering assessing fines of $6,885 to owners of vacant buildings who have failed to register them. If all presumed vacant building owners paid the $765 fee, it would total $3 million for the city. DBI’s website has all the information vacant building owners need to comply with the ordinance, which the city appears serious about enforcing: “http://sfdbi.org/index.aspx?page=449” Shadow Initiative Aftermath Many San Franciscans breathed a sigh of relief a little over a week ago when Supervisor David Chiu pulled from the ballot his initiative to ban all new developments that would create any new shade on public parks, which would have effectively shut down the Transbay Transit Center, along with a number of other developments. Few have likely thought about it since, or where we go from here. As part of the deal the Mayor struck with Chiu to pull the initiative, a task force will be created to study the issue further. John King had a great column in the Chronicle earlier this week pondering what might come of it. “http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/15/BA171BVJQ8.DTL” 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.        

In this installment of our Housing Element series, we focus on a new objective of the proposed 2009 San Francisco Housing Element. You’ll remember from our last update on this subject that the Planning Department is in the process of updating its Housing Element, as is mandated by state law. The purpose of developing and adopting a Housing Element is so each city and county will “consider economic, environmental, and fiscal factors and community goals set forth in [its] general plan and [will] cooperate with other local governments and the state in addressing regional housing needs.” The 2009 Housing Element contains a new objective (Objective 10), which states that the city should “ensure a streamlined, yet thorough, and transparent decision-making process.” We see this as a positive step – as a city, we would be recognizing that our entitlement process needs to be improved, which would provide justification for future changes to the system. Changes to make the process more efficient and faster could lead to lower housing costs, which is a major goal of the housing element. While we are hopeful, there have been many unsuccessful attempts to improve the process in recent years. While a high-level statement in the Housing Element is helpful, everyone that is part of the entitlement process and wants to see change must re-double their efforts. We consider below two attempts at recent reform, as well as the elephant in the room: the unwieldy, unmanageable and increasingly obstructionist CEQA process. Discretionary Review Reform Later this month, the Board of Supervisors’ Land Use and Economic Development Committee will hold its fourth hearing on the proposed amendments to the discretionary review (DR) process. Reforming the DR process would go a long way towards stream-lining the permitting process for small projects. DR, which is normally initiated by a member of the public or a community organization, requires the Planning Commission to hold a hearing on any building permit before it is issued. This hearing is required if requested, even if the project complies 100% with the Planning Code and guidelines. At the hearing, the Commission holds a vote to effectively approve, modify or disapprove a project. This means that the Planning Commission has on its calendar every week disputes between neighbors about things like how far back into the rear yard someone’s addition extends, or if a third story is allowed for a new home. These may in fact be important issues to those involved, but they don’t belong at the Planning Commission. They need to be resolved by the Planning Department in some other way. Even though the City Attorney’s office opined in 1954 that DR is “a sensitive discretion and one which must be exercised with the utmost restraint,” there were 230 publicly-initiated DR cases in 2004 alone, and 126 in 2008. In addition to all the other problems this causes, the ease and frequency of filing of DR cases significantly slows the entitlement process and increases its uncertainty, which, in turn, increases the cost of housing. The most promising aspect of the DR reform package, with the best chance of streamlining the process, is the elimination of the automatic hearing of DR cases before the Planning Commission. Currently, every DR case is entitled to a hearing, no matter how frivolous the complaint is. This adds time and cost to the development process and, most importantly, adds the uncertainty of a public hearing and vote. The DR reform package would empower staff to review each DR case for its compliance with the Residential Design Standards. If the project substantially complies with the Code and the Standards, the DR case will not be heard by the Planning Commission. In a test run of staff’s recommendations over the past year, the Planning Commission has agreed with staff on whether a hearing should be held 95% of the time. While not perfect, this staff review will significantly streamline the entitlement process, which would still allow appeals of staff decisions to the Board of Appeals. We’ll keep you posted on upcoming hearings at the Board of Supervisors regarding DR reform. Certainty in Zoning Proposed Policy 10.2 of the Housing Element would set as city policy the need to reduce other discretionary processes such as the conditional use approval requirement. Just like DR cases, conditional uses add uncertainty to the entitlement process and can unnecessarily increase the cost of constructing new housing. The city sought to achieve a relaxation of conditional use requirements in its recent Eastern Neighborhoods rezoning. Many of the new zoning districts created by the rezoning made standard housing projects permitted as of right, a major improvement on the industrial districts they replaced, which permitted housing only as a conditional use. However, the Eastern Neighborhoods rezoning fell short of the goal of truly streamlining the entitlement process for housing. A new Planning Commission review process was created for certain “large” projects, including those creating 25,000 square feet or more of new space. Such a low threshold ensures that most new housing projects will require review by the Planning Commission, defeating the purpose of making residential uses permitted as of right, just as the City was trying to do the right thing by making housing easier to build. Housing developers should be given a clear set of zoning rules to follow, and not be subject to unpredictable public hearings for housing projects that fulfill many of the goals of our Housing Element. Along that vein, proposed Housing Element implementation measures 69 calls for the Planning Code to “clearly specify development that is principally permitted, and limit conditional use requirements.” CEQA Streamlining The CEQA process was born out of the environmental movement in the early 1970s with a simple and direct mandate: before doing anything that could have a major effect on the environment, we should gather the relevant information so that the public and the decision-makers are able to consider all the facts when making decisions about physical changes in our environment (i.e. development projects). What was