Local Stimulus Plan Yesterday, the Mayor’s Office of Economic and Workforce Development yesterday sent a memorandum of its “development stimulus package” to the Board of Supervisors. If passed, the Legislation will: Change the timing of impact and in-lieu fee collection. All impact fees would be due at issuance of the first “construction-ready building permit”, e.g. site permit addendum. If a “deferral fee” is paid, fees could be deferred until issuance of the first certificate of occupancy. It consolidates all development and impact fees into Art. 4 of the Planning Code and provides for a single appeal process to the Board of Permit Appeals. Create an opportunity for a citywide Mello-Roos District to finance infrastructure-related development fees. This would provide low-cost financing for fees, which could ultimately be passed along to the buyers of a project. Unfortunately, state law limits the use of M-R funds to infrastructure only, i.e. affordable housing fees can’t be financed. Note, the mayor’s proposal would provide Board of Supervisors approval for the M-R district, but actual formation of the district requires $250K in funding. The City is looking for a private party to cover these costs. Reduce affordable housing fees for some projects. Allows a 33% reduction in affordable housing fees if developers record an NSR (deed restriction) subjecting all future sales to a 1% transfer fee that would be dedicated to an affordable housing trust fund. We will be tracking this proposal as it makes its way through the process. Please email us if you would like a copy of the full text of the OEWD memo. Signs, Signs, Everywhere Signs (At Least On Two Blocks of Mid-Market…) We all know about the problems that the mid-Market Street area is facing, and the numerous attempts to restore the area so that our marquee thoroughfare is something we can be proud of. Well the latest plan to improve mid-Market is picking up steam. Picture New York’s Broadway or London’s Piccadilly Circus along the two blocks of Market Street from 5th to 7th Street. Proposition D will be on the ballot this November, and, if passed by voters, will permit new general advertising signs, wind signs, video signs and signs with moving parts along this portion of Market Street. Twenty or forty percent of the revenues of these new signs, depending on whether the building they are located on are devoted to an arts activity, will be deposited in a local district benefit fund, to be put towards a new youth arts education program and a new arts ticket booth at Hallidie Plaza. While attempts to ease restrictions on signs in San Francisco normally go nowhere, Prop D has picked up support from six supervisors so far. The City Democratic Party and key activists are also supporting the measure. The San Francisco Chronicle has a longer article at “http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/29/MNHB19S8JA.DTL” and if you are interested in reading the text of Prop D, just email us. Owners of Vacant Properties: Put Up or Pay Up! A city ordinance that would place substantial requirements on owners of vacant properties was enacted by the Board of Supervisors this summer. The ordinance requires an owner of such a property to register it with the Department of Building Inspection, pay an approximate annual fee of $765, maintain the property’s exterior and interior, secure the property, and potentially pay insurance on the property. Vacant properties are only exempt from the new ordinance if (1) the owners are pursuing repairs, rehabilitation or construction under a valid building permit or (2) if it meets all current codes and is being actively marketed for sale or rent. You can find a copy of ordinance 194-09 at “http://www.sfgov.org/site/bdsupvrs_index.asp?id=97091.” 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.  

Reuben & Junius is sponsoring Constructing Green Building’s Legal Foundation: Regulatory Approaches and Practical Solutions for a Sustainable Future to be held Wednesday, September 23, 8:00 am – 11:00 am, UC Hastings Law, 200 McAllister, Alumni Reception Center. Almost overnight, green building has gone from a fringe movement to the center of the development world. Nationally, 14% of U.S. cities with populations of more than 50,000 have green building programs, and the number of counties with green building programs has grown nearly fourfold since 2003. But what are the legal implications of this rapid rise of green building regulations? And what are the risks for those in the development community who are forging ahead in new directions? This conference seeks to sort through these questions in a meaningful and practical way. For more information: “http://www.uchastings.edu/event/2009/09/green-building-conference.html.” The conference is free to all. An RSVP to “info@reubenlaw.com” is requested, though not required.    

Zoning Administrator Issues First Determination of Eligibility Under the Eastern Neighborhoods “Legitimization” Program As we have discussed in previous updates, the Eastern Neighborhoods (EN) plan created a new “legitimization” program that allows for land uses that were permitted prior to the EN rezoning but did not have the proper permits, and that are now not permitted due to EN rezoning, to be “legitimized” to receive the proper permits. Each legitimization applicant must obtain a determination of eligibility for the program from the Zoning Administrator (ZA), and the first one was issued this week. The ZA issued a determination of eligibility for an office use at a property in a newly-zoned Urban Mixed Use zoning district (UMU). The property was formerly located in an M-1 zoning district, which permitted office without restrictions, and was rezoned to the UMU zoning district, which limits the property to a single floor of office space. The applicant provided a business registration, lease agreement and a former Planning Commission approval to support its case for eligibility. This first determination letter provides a good example of a situation where it may be valuable to a property owner or tenant to lock in an office use that does not have proper permits and is no longer permitted under EN rezoning. Green Building Insurance for Architects & Engineers Arrives The insurance world is catching up to architects and engineers engaged in green building. Argo Insurance Group, based in San Francisco, has started offering liability insurance, underwritten by Lloyd’s of London, for architects and engineers covering both traditional and also “green” designs. Highlights of the coverage include: an exclusive green design endorsement; full retroactive coverage for past acts; computer aided drafting; mold and pollution; and punitive damages. Will other insurers follow suit? You can learn more about the policy at: “http://www.argoinsurance.com/page.php?p=architects_and_engineers” Trial Run of Market Street Traffic Restrictions Set to Go Into Effect September 29 The Chronicle reports this week that much-anticipated traffic restrictions on Market Street will go into effect on September 29. The six week trial will consist of banning eastbound traffic on Market Street, beginning at Sixth Street. Drivers will be encouraged to take a right at Tenth Street, and will be forced to turn at Eighth Street. Eastbound drivers entering at Seventh Street will be forced to turn at Sixth Street. Up next: public art displays in storefronts, and concerts and outdoor seating in the closed-off streets. Read more at: “http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/10/MNNI19KOK8.DTL” San Francisco Housing Action Coalition (SFHAC) Housing Hero Awards SFHAC’s 7th annual Housing Hero Awards ceremony is at the Yerba Buena East Gardens on Wednesday, September 23 from 5-7 pm. Join SFHAC as they honor Planning Commission President Ron Miguel, Christina Olague and the rest of the 2009 SF Planning Commission. Every year SFHAC recognizes exceptional individuals in the City with the Housing Hero Award for their commitment to helping build and promote housing solutions for ALL San Franciscans. For more information: “http://archive.constantcontact.com/fs095/1102573120180/archive/1102676936847.html” To register: “http://www.sfhac.org/housinghero2009.php” or contact Kate Lefkowitz at “kate@sfhac.org.”    

Reuben & Junius, LLP is pleased to invite you to Constructing Green Building’s Legal Foundation: Regulatory Approaches and Practical Solutions for a Sustainable Future, a conference to be held at UC Hastings College of Law on Wednesday, September 23 from 8 – 11 am. The conference has been organized by Reuben & Junius attorney Stephen R. Miller and is sponsored by the firm. What are the legal implications of green building’s rapid rise? Almost overnight, green building has gone from a fringe movement to the center of the development world. Nationally, 14% of U.S. cities with populations of more than 50,000 have green building programs, and the number of counties with green building programs has grown nearly fourfold since 2003. In California, at least 18 local governments have implemented green building ordinances in addition to State green building guidelines. This change has good reason: the Air Resources Board estimates that 22% of California’s greenhouse gas emissions are from buildings, and thus reducing the State’s carbon footprint will rely heavily on changing the way buildings are built, as well as how they are operated. The development community is showing a clear interest in rising to the challenge, with over 101,000 persons worldwide certified as LEED Accredited Professionals and almost 15,000 in California alone. But what are the legal implications of this rapid rise of green building regulations? How does green building fit into California’s other environmental laws? And what are the risks for those in the development community who are forging ahead in new directions? This conference seeks to sort through these questions in a meaningful and practical way useful to attorneys, but also architects, contractors, designers, and all others in the development and regulatory communities. The first one-hour panel will focus on questions of how green building relates to other environmental laws and goals. Key issues here may include the use of third-party rating systems (such as LEED and GreenPoints) by local governments; whether green building plays a role in the California Environmental Quality Act; preemption and non-delegation issues with regard to federal and state statutes; and how green building regulations will relate to California’s global warming mandates, such as AB32, and existing energy regulations in Title 24. The second one-hour panel will focus on how developers, architects, and contractors integrate the changing realities of green building into the development and ownership process. This includes allocation and mitigation of risk, as well as allocating the costs of green building in contracting, leasing, and other aspects of the development cycle. MCLE credits available The event is free and open to all. Two MCLE credits will be provided for attorneys. Please let us know you will attend by responding to “info@reubenlaw.com”, and also noting whether you will request MCLE credit. Conference schedule 8:00 – 8:15 – Breakfast / registration 8:15 – 8:30 – Introductory remarks 8:30 – 9:30 – Panel 1 – Regulatory Approaches to Green Building 9:30 – 9:45 – Break 9:45 – 10:45 – Panel 2 – Real World Legal Issues of Green Building 10:45 – 11:00 – Concluding remarks When and Where Wednesday, September 23 8 to 11 am UC Hastings Law Alumni Reception Center 200 McAllister Street Panel Speakers Regulatory Approaches to Green Building Verne Ball, Bingham McCutchen. Mr. Ball is an associate with Bingham McCutchen. He advises clients on matters related to land use, environmental compliance and litigation. Thomas A. Enslow, Adams Broadwell Joseph & Cardozo. Mr. Enslow is a 1995 graduate of U.C. Berkeley School of Law (Boalt Hall). His practice focuses primarily on California Building Standards Law, the California Environmental Quality Act and government agency law. Mr. Enslow’s clients include IAPMO (publisher of the Uniform Plumbing Code, the Uniform Mechanical Code and the forthcoming Green Plumbing and Mechanical Code), the Coalition for Safe Building Materials, the California State Pipe Trades Council, Sierra Club California, the Consumers Federation of California and the Grassland Water District. Mr. Enslow was one of the lead attorneys for Amici Curiae in the case Plastic Pipe and Fittings Assn. v. California Building Standards Commission (2004) 124 Cal.App.4th 1390, in which the Court held that CEQA applies to the approval of building standards regulations that may impact the environment. Sandra Goldberg, California Attorney General’s Office. Ms. Goldberg is a 1988 graduate of UCLA School of Law. She worked at the California Attorney General’s Office, Environment Section, for 9 years, handling hazardous waste penalty cases, Superfund litigation and other environmental matters. She then worked as Staff Counsel for the California Coastal Commission for 6 years. In 2006, Ms. Goldberg returned to the Attorney General’s Office, Environment Section, where she now works on climate change, renewable energy, and hazardous waste matters. Moderator: Stephen R. Miller, LEED AP, Reuben & Junius. Mr. Miller is a 2006 graduate of UC Hastings College of Law, and also holds a Master in City Planning from UC Berkeley. He practices environmental and land use law, and regularly advises clients on green building matters. He recently published an article, “Enforcement of Local Green Building Ordinances Integrating Third-Party Rating Systems” in the California Real Property Law Journal (July 2009). Real World Legal Issues of Green Building Nicholas Merrell, LEED AP, Watt, Tieder, Hoffar & Fitzgerald. Mr. Merrell is a 2005 graduate of George Washington University Law School. He represents general contractors, designers, sureties, and owners on a wide variety of disputes, such as terminations for default, preparation of delay and disruption claims, fraudulent billing cases, advising government contractors on ethics compliance programs, licensure issues for both contractors and engineers, claims under prompt payment statutes and labor compliance disputes, as well as green building issues. Aleka Skouras Eisentraut, LEED AP, Wendel Rosen Black & Dean. Ms. Eisentraut is a real estate and business attorney whose practice includes transactional and land use matters with a focus on green leasing, LEED certification and climate change policy. She recently completed the CEB Green Leasing chapter (co-authored with her colleagues Dan Myers and Gregg Ankenman), was a green leasing panelist at the State Bar Conference,

The Opportunity In these challenging economic times, real estate owners are looking for creative ways to cut operating expenses. Reducing real estate taxes is one means to do so. Every year, property owners have the opportunity to appeal the taxable value of their real property, a process commonly known as a “Proposition 8 Appeal”, named after the California statewide proposition. This law, codified in Section 51 of the California Revenue and Tax Code, provides for the right to request a temporary reduction in the taxable value of the property due to economic conditions, damage, or other factors. For each reduction in value of $100,000, the property owner could save between $1,000 and $2,000 for that tax year, depending on the tax rate for the applicable county. Since many property values have experienced steep declines, the savings could be significant. The Process In San Francisco, the tax appeal process is started by filing an Application for Changed Assessment, in the form provided by the Assessment Appeals Board. There is a filing fee of $30 per application. Once the application is filed, the Assessment Appeals Board will set the case for a hearing, usually 6-9 months after the application is filed. In some cases, the property owner will be able to work out an agreement with the Assessor’s office before proceeding to the hearing. Other counties have similar procedures. If the appeal is successful, or a settlement is reached, then the property value for the tax year that was appealed is reduced. The owner would then receive a refund for any property taxes that were paid based on the previously assessed value. (Unfortunately, the taxpayer must pay the taxes at the old rate in order to avoid interest and penalties.) This new value would only be good for the tax year that was appealed. The following year, the property value automatically increases to the original base year value, plus the permitted inflation factor (no more than 2%). The owner must file a new appeal every year to take advantage of the property’s decline in value. Deadlines The Proposition 8 appeals must be timely filed, or the opportunity is lost. The deadline for San Francisco properties is September 15, 2009. Other bay area counties have the following deadlines: Alameda: September 15, 2009 Contra Costa: November 30, 2009 Marin: September 15, 2009 Sacramento: November 30, 2009 Santa Clara: September 15, 2009 Sonoma: November 30, 2009 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.    

New Dwelling Unit Demolition Legislation Would Require One-for-One Replacement Yesterday, Supervisor Mirkarimi introduced a bill at the Board of Supervisors that would limit the Planning Commission’s discretion in approving dwelling unit demolitions. The bill would prohibit the Planning Commission from approving a project calling for the demolition of structurally-sound dwelling units unless they are replaced on a one-for-one basis with new dwelling units of similar affordability. The replacement units could be provided on- or off-site. The bill would also require the Planning Commission to find its approval consistent with at least a majority of the existing dwelling unit demolition criteria listed in the Planning Code. The bill would not affect dwelling unit mergers or conversions, meaning the Planning Commission would still have the discretion to approve of such a project without requiring a one-for-one replacement of dwelling units. We’ll keep you posted on the bill’s progress through the legislative process.   Planning Department Issues Annual Land Use Index Are you ever in need of an area land use map and don’t know where to find it? Well, the Planning Department is attempting to make life a little easier for you by issuing its annual land use index. The index compiles the city’s multitude of land use maps and organizes them by category: Housing, Commerce and Industry, Recreation and Open Space, Public Facilities, flood maps and population density. You can find the land use index here: http://www.sfgov.org/site/uploadedfiles/planning/Codes/General_Plan/Land_Use_Index_7-16-2009.pdf. It’s a large file, so give it some time to download.   Market Street Automobile Restrictions Gain Momentum Reclaiming urban streets from automobiles has gotten a lot of attention lately, especially in light of the pedestrian-ization of Broadway in New York City. Not to be outdone, a San Francisco County Transportation Agency report was released in July that includes a proposal to begin implementing changes that would reduce automobile traffic on Market Street within months. Transportation Options for a Better Market Street analyzes existing conditions on Market Street and proposes several staged recommendations for reducing automobile traffic. The report concludes that in most locations on Market Street, cars are not the primary mode of transportation, accounting for only 13%-21% of person-trips. However, the report continues, private automobiles cause significant delays, especially by blocking buses from reaching boarding islands or in the right lane when attempting to take a right turn. The nearest-term recommendation in the report is to make right turns mandatory for eastbound automobiles at Eighth Street. This would create a traffic-restricted corridor in the eastbound lanes east of Eighth Street that could be studied to determine the effectiveness of traffic reductions on Market Street. The report states this could be implemented in the next 3-6 months. Future steps include restricting left turns onto Market Street from Hyde Street (effectively ending eastbound automobile traffic between Seventh and Eighth Streets) in the next 9-18 months and considering more global changes to Market Street traffic to coincide with a major repaving effort to begin in 2013. You can find the report here: http://www.sfcta.org/content/view/426.   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.  

In San Francisco, neighborhood commercial zoning (“NC Districts”) have been around since 1987. These zoning controls attempted to clarify various desirable and undesirable uses within the naturally occurring neighborhood commercial strips throughout the City. These zoning districts run along some of the busiest streets in the City (Geary Boulevard and Van Ness Avenue, for example), as well as some of the more “neighborhoody” streets like Union Street, 25th Street, and Chestnut Street. There are also a vast number of very small NC Districts that cover a single intersection or one block. After 20 years of these zoning controls being in place, the Planning Department has recently released a paper, “NC@20”, that takes a look back and what has worked, and a look forward to changes that need to be made to clarify and modernize the rules. The paper is a well done and insightful review of both the history and evolution of NC zoning controls, and includes a variety of interesting facts and figures. For example, over the 20-year period from 1987 to 2007, the report indicates that applications in NC Districts seeking to convert residential uses to non-residential uses had just a 52% Planning Commission approval rate – the lowest of all conditional use application types. Applications for commercial outdoor activity areas and extended hours of operation were also not well received by the Planning Commission, being approved at rates of 58% and 63%, respectively. It is also interesting to note that almost half of the conditional use applications filed City-wide from the period 1987 to 2007 (a total of 3,010 applications) were filed in NC Districts. This is an interesting statistic in light of the fact that only 6% of the City is zoned NC. The report examines a variety of trends in different NC Districts. There are interesting nuggets throughout the report, from the obvious (the NC-3 District had the most conditional use applications of any other commercial district with 349 filings), to some more surprising results (the 24th Street – Mission NCD had the highest percentage of CU approvals of any NCD, with 37 total CUs applied for, all but three of which were approved). The report also comes to some sobering conclusions that would be of no surprise to shop owners and property owners in NC Districts. The report recommends that changes should be made “to the overall permitting process so that it is more intelligible, predictable and rational.” The staff goes on to state that current NC District controls “while making the entitlement process extremely comprehensive, have also led to redundancy and excessive process without clear need. Specifically, the entitlement process is complex, time-consuming, expensive and ultimately uncertain. The cumbersome nature of the process inherently favors large businesses which have financial backing such that they can endure a lengthy and uncertain permitting process.” As a rough barometer of the level of permit complexity, in 1987, at the onset of the NC controls, 97% of all permits in NC Districts were processed over-the-counter. In 2007 that figure had declined to just 30%. “Very few independently operated small businesses can afford to pay rent for substantial periods of time while waiting for lengthy neighborhood notices, public hearings, and approvals keyed to multiple agencies before opening their doors for business. As a result of this process and associated uncertainties, the City has actually discouraged small business from locating in our NC districts. In doing so, we have come to the aid of chain stores by precluding local competition.” (NC @ 20, at page 52.) The Department also soberly opines on the obvious abuse of the Section 312 process (which requires notices for use changes in NC Districts) being used by competitors to keep out competition. The staff acknowledges that these types of DRs and the associated delay and threat of multiple appeals is often enough to force applicants to modify their plans or abandon their project entirely. Such is the nature of competition in San Francisco. We encourage the Planning Department to continue their work on updating and modernizing the NC Controls. Some things still work, but a lot doesn’t. Healthy neighborhood commercial districts are the heart of the City. We need zoning controls that encourage small businesses to come to these areas without fear of being put out of business by the process before they even get a chance to open their doors. To see the complete report, go to: http://www.sfgov.org/site/uploadedfiles/planning/projects_reports/NC20_Draft_For_Public_Reivew_web.pdf 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.    

Throughout the Bay Area and state, subdivisions and condominium projects have been delayed during the housing slump due to developers’ difficulty obtaining construction financing. Many such projects have stalled in the middle of the mapping and entitlement process, before the project’s map has been recorded. Delayed maps are at risk of expiration, with the potential loss of vital project approvals and permits. In recognition of these critical issues, the California legislature passed a new law to enable developers to extend the life of tentative maps and related state agency approvals until the credit markets thaw and construction financing may be secured. Tentative Map Extension Assembly Bill 333, enacted on July 15, 2009, automatically extends for 2 years any existing unexpired tentative map or vesting tentative map that would have otherwise expired before January 1, 2012. To be eligible for the extension, a map must have been valid on July 15, 2009, and set to expire before January 1, 2012. The 2 year extension is in addition to any other extensions provided under state law or local ordinance. For those maps extended by last year’s similar state measure, AB 333 will provide an additional 2 year extension. See Cal. Govt. Code Section 66452.22. Related State Agency Approvals Also Extended Important for those projects receiving other state agency approvals, such as a San Francisco Bay Conservation and Development Commission (BCDC) Permit or California Coastal Commission (CCC) Coastal Development Permit, the new law also extends for 2 years related state agency approvals for those projects that extend their maps under AB 333. Local City & County Approvals Not Included AB 333 only applies to tentative maps, vesting tentative maps and related state level approvals. The new law does not extend local city or county approvals or permits. Conditional Use Permits, Variances, Special Use Permits, building permits and other local approvals remain subject to local regulations with respect to expiration periods and available extensions, if any. In San Francisco, the Planning Commission has recently signaled that many local project approvals are eligible for extension, and such requests will be reviewed favorably. The Trade Off For those projects utilizing the 2 year map extension under AB 333, there are a few tradeoffs. In order to offset any potential adverse impacts on local cities or counties from multiple extensions of tentative or vesting tentative maps, AB 333 modifies Cal. Govt. Code Section 65961 by (i) reducing from 5 years to 3 years the period of time after recordation of a map during which a city or county is prohibited from imposing new conditions on a building permit if such conditions could have been imposed as conditions of the previously approved tentative or vesting tentative map, and (ii) eliminating the prohibition on a city or county imposing new local fees upon the issuance of a building permit. 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.    

Real estate development ventures often begin with the formation of a limited liability company (“LLC”). This entity structure has the benefit of protecting its members from personal liability “under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the limited liability company, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being a member of the limited liability company.” California Corporations Code (Corp. Code) § 17101. Unfortunately this liability shield is not an iron-clad protection from liability. As the country has struggled through the current economic crisis, real estate developments that may have been viable when conceived are no longer feasible. Increasingly, in an effort to recover their losses, LLC members have begun pointing a finger at fellow members claiming that they have breached their fiduciary duties or engaged in fraud or other misdeeds. The accusing member in effect seeks to establish that, as a result of another member’s misdeeds, he or she should be allowed to hold the other member personally liable for the losses of the LLC. While the limited liability statute may protect against third-party creditor claims, it does not protect against claims that a member has breached his or her fiduciary or contractual obligations to the LLC. If management is vested in the LLC’s members, each of them is subject to all duties and obligations of managers as set forth in the California Corporations Code (the “Code”). Corp. Code § 17150. The fiduciary duties a manager owes to the LLC and to its members are those of a partner to a partnership and to the other partners. Corp. Code § 17153. These duties include the duty of loyalty and the duty of care. Corp. Code § 16404. Specifically, a member owes the following duties to the LLC: • To account to the LLC and hold as trustee for it any property, profit, or benefit derived by the member in the conduct and winding up of the LLC business. • To refrain from dealing with the LLC in the conduct or winding up of the LLC business as or on behalf of a party having an interest adverse to the LLC. • To refrain from competing with the LLC in the conduct of the LLC business. • To discharge his or her duties to the LLC and the other members under the Code or under the operating agreement and exercise any rights consistently with the obligation of good faith and fair dealing. According to the Code, a member’s duty of care to the LLC and the other members in the conduct and winding up of the LLC business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law. Further, a member does not violate a duty or obligation under the Code or under the operating agreement merely because the member’s conduct furthers the member’s own interest. However, when a member of an LLC diverts LLC funds or assets to another project, fails to provide required accountings of LLC assets to the other members, or treats the LLC assets as his or her own, it is possible that a court may find that member liable for losses sustained by other members of the LLC as a result of such conduct. There are simple ways to help avoid personal liability attaching to a member of an LLC in the context described here, including maintaining the separation of LLC accounts and assets from personal or other project accounts and carefully drafting LLC governing documents to specify each member’s rights and obligations. 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.

Final Members of Historic Preservation Commission Confirmed At long last, the San Francisco Historic Preservation Commission has a full membership. Yesterday, the Board of Supervisors confirmed the Mayor’s most recent nominees, James M. Buckley and Andrew Wolfram, for the final two vacancies on the Commission. James M. Buckley has a Ph.D. in architecture from the University of California at Berkeley. Mr. Buckley worked at the BRIDGE Housing Corporation for twelve years, ultimately becoming its vice-president. In 1998, he left BRIDGE to found his own non-profit housing development organization, Citizens Housing Corporation. Citizens has completed a range of impressive and unique projects since its founding, including the first LEED-certified residential building in Northern California, a reuse of barracks at the Alameda Naval Air Station as transitional units for homeless individuals, and a reuse of the Christian Science Church on Haight Street as apartments for very-low-income seniors. Mr. Buckley has also taught courses at San Francisco State and UC Berkeley. Andrew Wolfram is a licensed architect and is currently a senior associate at Perkins + Will. His focus has been on the preservation and adaptive reuse of significant historic buildings. He has worked on a number of well-known Bay Area projects, including the Ferry Building renovation, the Presidio Archaeology Center, the UC Berkeley Hearst Memorial Gymnasium renovation, and was the lead designer of the master plan for the Slow Food Nation event at the Civic Center. Mr. Wolfram is also the president of the Northern California chapter of DOCOMOMO US, a national organization dedicated to raising awareness of significant works of modern architecture and design. The Historic Preservation Commission meets on the first and third Wednesday of every month, at 12:30 p.m. in room 400 of City Hall. Early Test of Planning Commission’s Approach to Expired Conditional Use Entitlements On Thursday, June 25, the Planning Commission held an informational hearing on a conditional use authorization that had expired almost one year ago. This was the first expired CU to come before the Commission since it held hearings in February and March of this year regarding entitlement extensions. Those hearings ended with a somewhat unclear decision on CU extensions, stating a Commission policy of exercising “judicious leniency” in reviewing non-Prop M and non-DTR projects that are 100% affordable housing, LEED Gold certified or sponsored by the city. The Commission was silent on extension requests for projects outside those narrow categories. At the June 25 hearing, the Commission agreed that the project should go forward, since it was clear the project sponsor was actively pursuing the development, by spending money on consultants, upgrading the building and communicating with the Planning Department and, importantly, he was ready to commence construction. It is unclear how the Commission would respond to a project with an expired entitlement that does not have this type of fact pattern. Several commissioners did note that they liked the idea of bringing entitlement extension requests before the Planning Commission for an informational hearing. Probably the biggest takeaway from the hearing was that the Zoning Administrator indicated that, going forward, he will simply approve an extension and inform the Commission if it has been less than a year since it has passed. If the project is controversial, he may only be willing to approve the extension and inform the Commission within six months after an entitlement expires, and after that time has passed a hearing would be required. All projects, however, will be brought back before the Commission if their entitlements have been expired for around a year or more. Again, these were just statements made by the Zoning Administrator during this Planning Commission hearing. While not official policy, it does give some insight as to how the Planning Department will approach these cases in the future. City Taking a Closer Look at Vacant Lots The spotlight has been shined on the issue of vacant lots in the city – especially those where large projects have been approved but the economy has put a halt to any actual development for the foreseeable future. Many are probably already aware of this John King column in Monday’s San Francisco Chronicle, outlining what other cities have done and suggesting greenery be planted in these lots. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/06/MNAP189P39.DTL. The Chronicle ran this article yesterday, surveying a handful of local designers’ visions for beautifying some of these lots. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/07/MNUG18GIBE.DTL The city also has some new tools at its disposal to deal with vacant lots. The Board of Supervisors passed the Community Preservation and Blight Reduction Act last fall, giving the Department of Public Works a new enforcement tool to prevent blight in vacant lots. The Act defines “blight” broadly, including (1) properties not kept substantially clean from vegetation or garbage, (2) unpainted buildings or buildings with significant paint peeling, (3) properties with structural deterioration or significant graffiti, and (4) properties with non-common appliances or machinery in its outdoor area. The Act provides an abatement procedure to cure blight, which provides the property owner with notice of the violation, gives them 30 days to complete the cleanup, and authorizes fee charges in the case the violation is not cleaned or repaired. The Department of Public Works has already begun to use this new enforcement tool. It looks like owners of vacant lots may have to pay more attention to them while they wait out the downturn. 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.