In response to Mayor London Breed’s recent Executive Directive, titled “Housing For All,” on May 4, 2023, the San Francisco Planning Commission voted to recommend that the Board of Supervisors approve a package of Planning and Building Code amendments intended to spur reinvestment in the City’s commercial core. (See earlier post regarding the Mayor’s Executive Directive here.) The proposed legislation, referred to as “Commercial to Residential Adaptive Reuse and Downtown Economic Revitalization,” would affect all of Downtown and much of Union Square and SoMa.

If adopted by the Board of Supervisors, the legislation, sponsored by Mayor Breed and Board President Aaron Peskin, would:

• Facilitate residential uses Downtown. The package of amendments includes various legislative changes intended to facilitate residential uses Downtown.
  • Conversion of Downtown non-residential buildings to residential use. This amendment would create a new defined term “Commercial to Residential Adaptive Reuse,” which is “to change the use of an existing Gross Floor Area from a non-residential use to a residential use pursuant to Section 210.5.” It would add a new Section 210.5 to the Planning Code for “Commercial to Residential Adaptive Reuse Projects” that 1) are located in a C zoning district that is east of or fronting Van Ness/South Van Ness Avenue and north of Townsend Street, 2) would not increase the existing building envelope by an amount equal to more than 20% of the existing building Gross Floor Area, 3) would not add more than one vertical story, and 4) do not seek a density bonus under the State Density Bonus Law. For qualifying projects, certain development controls would be waived, including those for rear yard, lot coverage, open space, and dwelling unit mix, among other changes. To incentivize potential project sponsors to take action as soon as possible, applications for Commercial to Residential Adaptive Reuse Projects must be submitted by December 31, 2028.
  • Streamlined administrative approval for projects in the C-3 district. For projects in the C-3 district, a Planning Code Section 309 hearing would no longer be triggered for projects adding more than 50,000 gross square feet of floor area. The height triggers for a Section 309 Planning Commission hearing also would be increased from 75 feet, such that a Planning Commission hearing would be required for new construction that would exceed 120 feet in height, and for vertical additions that would cause a building to exceed 120 feet.
  • Modify height exemptions. For rooftop features listed in Planning Code Section 260(b)(1), the vertical portion of those features to which the height exemption would apply would be increased from the top 10 feet to the top 16 feet of the features where the height limit is 65 feet or less, and from the top 16 feet to the top 20 feet where the height limit is more than 65 feet. In the C-3, CMUO, and Central SoMa MUR/MUG districts, rooftop restaurants and bars that do not exceed 16 feet in height also would be exempt.
• Economically revitalize Downtown. These amendments would generally add flexibility and relax existing use restrictions in the Downtown area, and include:
  • Adding Flexible Workspace as a new defined use, and permitting Flexible Workspace where ground floor commercial uses are required.
  • Removing size limitations applicable to single retail uses in the C-3 district to allow larger retailers.
  • Allowing for pop-up uses as temporary uses in certain portions of the C Districts.
  • Principally permitting Life Science and Laboratory uses in the C-2 district, and Senior Housing and Residential Care Facilities in the C-3 district.

At its May 4th hearing, the Planning Commission proposed recommended modifications to the legislation to the Board and the Mayor for their consideration.

The Planning Commission also voted to recommend that the Board of Supervisors adopt a companion piece of legislation sponsored by Supervisors Matt Dorsey and Ahsha Safai. That legislation would exempt the residential Gross Floor Area of Commercial to Residential Adaptive Reuse Projects from all development impact fees, except for inclusionary housing requirements.

We will continue to monitor these pieces of legislation and the City’s other housing plans and Downtown revitalization efforts.

In a decision partially published on November 30, 2022, Save Lafayette v. City of Lafayette[1], the First Appellate District Court of Appeal upheld the City of Lafayette’s approval of the Terraces of Lafayette (the “Project”), a 315-unit housing development project, 20% of which will be affordable to lower-income tenants. That opinion—now final, as the California Supreme Court has denied review[2]—allows an affordable housing project that drew national press attention to move forward.

Background

In early 2011, the City received the developer’s application for the Project, on an approximately 22-acre site adjacent to State Highway 24 north of the Pleasant Hill Road entrance/exit. At that time, the City’s General Plan land use designation and zoning for the Project site allowed multi-family development at a greater density than proposed. The City certified the Environmental Impact Report (“EIR”) prepared for the Project in 2013, but did not vote on whether to approve the Project at that time.

Instead, City staff and the developer entered into a “Process Agreement,” which allowed the City to devote its time and resources towards consideration of an alternative project, with 44 single family homes, a playfield, dog park, tot lot, and associated parking. Under this Agreement, the developer agreed that the City could suspend processing of its Project application, on the condition that the City would resume processing it at the developer’s request.

The City approved the alternative, 44-home project in 2015, but over the next three years opponents of that project successfully blocked its development through the referendum process and associated legal challenges.

In 2018, shortly after project opponents’ efforts to stop the 44-home project succeeded, the City Council changed the General Plan land use designations and zoning of the Project site (so as to no longer permit multi-family housing) and the developer terminated the Process Agreement and asked the City to resume processing the original Project. Around that time, the City engaged Coblentz Patch Duffy & Bass to serve as its legal counsel with respect to the Project. The City resumed processing the Project application, and prepared an addendum to the 2013 EIR. The Planning Commission approved the addendum and the Project on July 1, 2020, and the City Council affirmed the approvals on appeal in the early morning hours of August 25, 2020, after a long public meeting.

Courts Reject Challenges to the City’s Approval of the Project

One month later, Save Lafayette filed a writ petition to challenge the Project’s approval. It argued that the City had no power to process the developer’s 2011 Project application in 2018, because the Permit Streamlining Act (“PSA”) had required the City to process the application within 180 days. According to Save Lafayette, the City should have processed the Project as if the application had been submitted in 2018, not 2011. If Save Lafayette were correct, the General Plan and land use designations in effect in 2018 would have barred the Project. Save Lafayette also claimed that the addendum to the 2013 EIR violated the California Environmental Quality Act (“CEQA”), because the City should have instead prepared a supplemental EIR. The trial court rejected both arguments.

Save Lafayette appealed the trial court’s decision, and the First District Court of Appeal unanimously affirmed the trial court’s decision, a sound rejection to Save Lafayette’s claims. In the published portion of its decision, the Court explained that the Housing Accountability Act (“HAA”) prohibits a local agency (such as the City) from disapproving an affordable housing project unless it makes one of certain findings, such as that the project is inconsistent with the general plan land use designation and zoning that existed when the project application was deemed complete. The Court of Appeal concluded that the Project application was deemed complete in 2011 and rejected Save Lafayette’s arguments that the Project’s application had been withdrawn.

The Court explained that the PSA did not affect this determination, for four reasons.

• First, even if the City failed to meet the PSA’s deadlines, nothing in the PSA results in an application being deemed withdrawn, disapproved, or resubmitted at a later date. To the contrary, the PSA expressly states that the potentially available remedies for a violation of its deadlines are that the application is deemed complete or deemed approved.
• Second, the Project application had been deemed complete in 2011 and no resubmission was required or had occurred.

• Third, Save Lafayette’s interpretation of the PSA conflicted with its express provision requiring agencies to make findings specifying reasons for the disapproval of development applications other than the agency’s failure to act within the PSA’s deadlines.
• Fourth, the HAA’s protections against land use redesignations and rezonings occurring after a project is deemed complete, and the Legislature’s intent in curbing local agencies’ ability to deny housing projects, weighed in favor of relying upon the City’s 2011 determination that the Project application was deemed complete, rather than Save Lafayette’s preferred later date after the City had down-zoned the project site.

In an unpublished portion of its decision, the Court upheld the adequacy of the City’s 2013 EIR and the 2020 addendum, and held that substantial evidence supported the City’s decision to prepare an addendum rather than a supplemental EIR.

The Court of Appeal’s decision—left intact by the Supreme Court—is the first appellate decision considering the relationship between the PSA’s deadlines and the HAA’s protections for qualified housing projects, including affordable housing developments. Its analysis makes clear that projects can obtain the benefits of the Housing Accountability Act even after expiration of the Permit Streamlining Act’s deadlines. It is also another important published decision that gives full weight to the stated legislative intent in the HAA that it be “interpreted and implemented in a manner to afford the fullest possible weight to the interest of, and the approval and provision of, housing.” The Legislature in recent years has strengthened housing laws, particularly the HAA, and Save Lafayette is the latest affirmation that those changes have real impact.

[1] (2022) 85 Cal. App. 5th 842.

[2]https://appellatecases.courtinfo.ca.gov/search/case/dockets.cfm?dist=0&doc_id=2464538&doc_no=S277983&request_token=OCIwLSEmLkw8WyBZSCM9SENIUEg0UDxTJCMuIzJTTDtLCg%3D%3D

The land use entitlement process in California is notoriously complicated, lengthy, and fraught with uncertainty. Less attention is paid to the process of receiving building permits, post-entitlement. Generally, this process is more straightforward because the local agency’s review is limited to ensuring state and local building code compliance. Accordingly, the issuance of building permits is typically a ministerial act, not subject to the discretion of city or county officials and not appealable. In San Francisco, however, post-entitlement building permits are shielded from appeal to the Board of Appeals only if the project has received a Conditional Use Authorization from the Planning Commission, per Charter section 4.106(b). AB 1114, introduced by Assemblymember and former San Francisco Supervisor Matt Haney, would extend this protection to other residential projects that have received, for example, only a Downtown Project Authorization or a Large Project Authorization.

AB 1114 provides that building permits for projects that are “at least two-thirds residential” are not subject to appeal. It builds on prior legislation, AB 2234, which set strict timelines for local agencies to respond to and issue post-entitlement building permits for housing development projects that comply with existing application requirements. If adopted, the bill would apply these timelines to qualifying San Francisco housing projects and protect them from building permit appeals, regardless of the underlying entitlement obtained.

In the Assembly Committee reports, Assemblymember Haney stated that the legislation is necessary because it can take almost two years to obtain a post-entitlement building permit in San Francisco, in part because of the potential for building permit appeals, and that as a result, the city “is struggling to build housing and is falling behind the rest of the State on its affordable housing goals.” The Committee reports cite California Department of Housing and Community Development data indicating that it can take an average of 450 days to obtain entitlements in San Francisco and an average of 524 days to get permits to commence construction for an entitled project—the longest of any jurisdiction that permitted more than 10 projects.

The bill recently passed the Assembly and is moving through the Senate. We will continue to track its progress and provide status updates.