• Bay Area Air Quality Management District Updates CEQA Thresholds for Greenhouse Gas Impacts

    On April 20, 2022, the Bay Area Air Quality Management District (BAAQMD) adopted new recommended thresholds for determining the significance of individual projects’ greenhouse gas impacts under the California Environmental Quality Act (CEQA).

    Fifteen years after the Legislature amended the California Environmental Quality Act (CEQA) to require consideration of individual project contributions to global climate change, many lead agencies continue to struggle to establish defensible thresholds of significance for these impacts, so these thresholds may be welcome news. However, it is up to local agencies to decide whether to embrace the new guidance, and some may favor standards to meet their particular circumstances rather than relying on the recommended “one size fits all” approach.

    Background

    BAAQMD’s update to its greenhouse gas thresholds is the first since the thresholds were adopted in 2010. The prior thresholds recommended that all greenhouse gas emissions from a project should be calculated and compared to quantified screening criteria to determine significance. Alternatively, if a lead agency had adopted a “qualified GHG Reduction Strategy” under CEQA Guidelines section 15183.5, then a project would be presumed to have a less-than-significant greenhouse gas impact if it was found to be consistent with that strategy.

    The latter approach – determining significance based on consistency with a qualified greenhouse gas reduction strategy – has been upheld in the Court of Appeal (see Mission Bay Alliance v. Office of Community Investment and Infrastructure (6 Cal. App. 5th 160 (2016)), concerning development of the Golden State Warriors arena in San Francisco). However, the alternate approach of comparing emissions to a quantified threshold has been called into question over time through a series of published court opinions. In part, this is because the previously recommended screening criteria were based on achieving the statewide greenhouse gas reduction goals under Assembly Bill 32 (2006), and did not reflect the more aggressive reductions later adopted by Senate Bill 32 (2016).

    New Recommended Thresholds

    Under the new thresholds, proposed land use projects could still be analyzed for consistency with a qualified greenhouse gas reduction strategy, if one has been adopted. If no such plan has been adopted, then BAAQMD recommends that a land use project must include specified minimum design elements to ensure that the project is contributing its “fair share” toward achieving the state’s key climate goal: carbon neutrality by 2045.

    Specifically, for buildings, the project must not:

    • Include natural gas appliances or natural gas plumbing (in both residential and nonresidential development); and
    • Result in any wasteful, inefficient, or unnecessary electrical usage as determined by the analysis required under CEQA section 21100(b)(3) and CEQA Guidelines section 15126.2(b). In other words, the project’s CEQA document must conclude that the project will have less than significant impacts relating to electricity use.

    For transportation, the project must:

    • Achieve compliance with electric vehicle requirements in the most recently adopted version of CALGreen Tier 2, and
    • Achieve a reduction in project-generated vehicle miles traveled (VMT) below the regional average consistent with the current version of the California Climate Change Scoping Plan (currently 15 percent) or meet a locally adopted Senate Bill 743 VMT target reflecting the following recommendations:
      • Residential projects: 15 percent below the existing VMT per capita;
      • Office projects: 15 percent below the existing VMT per employee; or
      • Retail projects: no net increase in existing VMT.

    Additionally, BAAQMD adopted thresholds for local governments to use when adopting long-range plans, such as General Plans: Such plans must either be consistent with qualified greenhouse gas reduction strategy, or demonstrate that they will meet the state’s goals to reduce emissions 40% below 1990 levels by 2030, and achieve carbon neutrality by 2045.

    Limitations and Considerations

    For lead agencies that do not currently have qualified reduction strategies, the new thresholds may provide a welcome framework to address greenhouse gas emissions in CEQA documents, but they are unlikely to satisfy all stakeholders. For example, some commenters have raised concerns that particular uses cannot effectively avoid using natural gas; that rural communities will have challenges meeting the transportation-related criteria; and that the thresholds will not be appropriate for all types of land uses (such as projects involving “stationary source” emissions).

    BAAQMD staff have indicated that the thresholds may incentivize local governments to create their own qualified greenhouse gas reduction strategies, which may allow for more flexibility to assess impacts and apply mitigation measures to address areas of local concern. BAAQMD’s website explains that the agency “does not approve or ‘certify’ projects or plans for consistency with the State CEQA Guidelines,” but that it is developing additional guidance on how to ensure that a greenhouse gas reduction plan “is robust enough to meet the State’s climate goals.”

    We will continue to monitor BAAQMD’s development of CEQA guidance and local agency responses, and will provide updates when available.

    Posted on: April 26, 2022 Tags: Categories: Blogs

  • San Francisco Requires 10-Day Warning to Tenants Prior to Eviction Proceedings, and Property Owners File Suit

    On March 14, 2022, a new eviction ordinance took effect, amending the San Francisco Administrative Code to require that landlords provide residential tenants a 10-day written warning and opportunity to cure prior to initiating “just cause” eviction proceedings. “Just causes” for eviction include failure to pay rent, a material lease violation, severe nuisance, illegal use of the premises, and refusing certain landlord access to the premises.

    Just over a week later, the San Francisco Apartment Association and Small Property Owners of San Francisco Institute filed a lawsuit challenging the validity of the ordinance. The San Francisco Superior Court ordered a temporary stay on the 10-day warning notice requirement pending resolution of the lawsuit. A hearing is set for May 17, 2022.

    If the ordinance is upheld, the 10-day notice must describe the alleged violation and warn that failure to cure within ten days may result in initiation of eviction proceedings. The amendment to Section 37.9 of the San Francisco Administrative Code states that the Rent Board will prepare a notice form for landlords to use.

    There would be several exceptions to the 10-day notice requirement: first, any longer notice and cure period agreed to in a lease agreement or otherwise applicable would supersede the ten day notice requirement; second, the ten day notice would not apply where the landlord is seeking eviction based on an imminent risk of physical harm to persons or property; and third, the ten day notice would not apply to evictions based on non-payment of rent or other amounts that came due between March 1, 2020 and March 31, 2022, as those proceedings are governed by the State’s COVID-19 Tenant Relief Act (SB-91) and generally require 15 days’ notice.

    According to the San Francisco Chronicle, the local ordinance is the first in California to impose such a warning period and opportunity to resolve a dispute prior to formal eviction proceedings.  The legislation’s stated purpose is to eliminate confusion about how long a tenant’s misconduct must continue before it rises to the level of just cause to evict, and to provide a reasonable timeframe for a tenant to correct a violation, thereby reducing undue hardship suffered by tenants who face sudden evictions and promote economy in the use of judicial resources.

    We will continue to provide further updates when they are available.

    Contact Real Estate attorney Caitlin Connell at cconnell@coblentzlaw.com for additional information.

    Posted on: April 19, 2022 Tags: Categories: Blogs

  • Bay Area Regional Housing Needs Allocation (RHNA) Plan Nearly Final, Appeals Hearings Ongoing

    The Association of Bay Area Governments (ABAG) is finalizing its Regional Housing Needs Allocation Plan (RHNA Plan) for the sixth housing element cycle (2023-2031), which allocates a total of over 440,000 housing units across all Bay Area cities and counties, more than double the allocation from the prior 2015-2023 cycle. Notably, 27 Bay Area cities and counties have appealed to ABAG to reduce their draft RHNA allocations. ABAG has begun holding hearings for these appeals and will finalize RHNA allocations for each city and county in December. For housing developers, a jurisdiction’s high RHNA allocation may create more opportunities for project streamlining under SB 35, if that jurisdiction is unable to meet its RHNA obligations.

    An Overview of the RHNA Process

    Generally, the RHNA process is a coordinated effort between state, regional, and local governments to ensure that local planning efforts collectively address state-wide housing needs, in compliance with housing element law (Government Code section 65584, et seq.). First, the California Department of Housing and Community Development (HCD) consults with each regional council of governments or “COG” (ABAG, for the nine Bay Area counties) to determine each COG’s Regional Housing Needs Determination. This determination sets forth the total amount of housing that must be planned across the entire region to address four major affordability levels: very-low, low, moderate, and above-moderate income. Then, the COG allocates this total number of units among each of its constituent cities and counties through its RHNA Plan, which each city or county may appeal. Once the RHNA Plan is finalized, each city or county must actively plan to accommodate its RHNA allocation over the next eight years. Each jurisdiction is required to update its general plan housing element to identify an inventory of land suitable for residential development and, as a result, may need to amend its zoning ordinance to allow for higher-density housing development on an increased number of parcels. Each city and county must also annually report progress towards its RHNA allocation to HCD.

    Implications of the Pending RHNA Plan

    Though the RHNA process does not obligate a jurisdiction to construct actual units, falling short of the RHNA allocation has become increasingly tied to reductions in local control over land use decisions. For example, SB 35 streamlining, which limits a local government’s authority to deny a housing project that meets affordability and other requirements, only applies to jurisdictions that have failed to meet their RHNA allocations for lower income housing (households earning 80 percent or less of area median income) or above-moderate income housing (households earning over 120% of area median income). To qualify for SB 35 streamlining, a project in a jurisdiction that has failed to meet its lower income RHNA allocation must provide 50% of the project’s units for lower-income households. If a jurisdiction has failed to meet its RHNA allocations at the above-moderate income level, a project only needs to provide 10% of its units for lower-income households; in the nine-county Bay Area, a project could alternatively provide 20% of its units for moderate income households (those earning between 80 and 120% of area median income). Currently, most of the jurisdictions in the highest-cost regions of California are subject to the 50% affordability requirement, which has limited use of SB 35. The increased RHNA allocation across all income levels may cause many more projects, including those in the highest-cost regions, to become eligible for SB 35 at the lower 10% or 20% affordability level. Additionally, a city or county that fails to adequately plan for its RHNA allocations or otherwise violates housing element law may be subject to an enforcement action by the Attorney General’s Office, which, as clarified under Assembly Bill 215, has the authority to pursue enforcement actions against non-compliant jurisdictions. Conversely, cities or counties with compliant housing elements receive preferential consideration for certain state-administered incentive programs.

    ABAG RHNA Allocations and the Appeals Process

    In 2020, HCD issued a Regional Housing Needs Determination that 441,176 total housing units would be needed across the nine Bay Area counties (see table below). This updated determination is a substantial increase from the 187,990 total housing units designated for the Bay Area during the prior RHNA cycle (2015-2023) and tracks with HCD’s state-wide efforts to increase housing production in major metropolitan areas. In May 2021, ABAG released its Draft Regional Housing Needs Allocation Plan (2023-2031) to establish a methodology and apportion this total across all Bay Area local governments.

    From ABAG’s Draft RHNA Plan

    Local governments were allowed to appeal their housing allocations set forth in the Draft RHNA Plan until July 9, 2021, and the following 27 Bay Area governments have submitted appeals:

    • Cities and Towns: Alameda, Belvedere, Clayton, Corte Madera, Danville, Dublin, Fairfax, Lafayette, Larkspur, Los Altos, Los Altos Hills, Mill Valley, Monte Sereno, Palo Alto, Pleasant Hill, Pleasanton, Ross, San Ramon, Saratoga, Sausalito, San Anselmo, Tiburon, and Windsor; and
    • Counties: Contra Costa County, Marin County, Santa Clara County, and Sonoma County [two appeals].

    ABAG accepted written comments to these appeals from HCD and members of the public through August 30, 2021, and has begun conducting public hearings via Zoom to consider the appeals (starting September 24, and continuing through October 29). Following the hearings, ABAG will issue a final determination on each appeal, and if an appeal is successful, ABAG will redistribute RHNA allocations as appropriate. ABAG has already denied several of these appeals. In December, the ABAG Executive Board will conduct a public hearing to adopt the Final 2023-2031 RHNA Plan. Each local government must complete its housing element updates in accordance with these final allocations and submit its housing element to HCD by January 2023.

    We will be monitoring the outcomes of the appeals process and will provide an update when ABAG adopts its Final 2023-2031 RHNA Plan. Please contact Dan Gershwin at dgershwin@coblentzlaw.com for additional information.

    Posted on: October 14, 2021 Tags: Categories: Blogs

  • SF Board of Supervisors Pursues COVID-19 Residential Tenant Protections, Adapting to State Law Changes

    The San Francisco Board of Supervisors continues to pursue options for COVID-19 tenant protections, in anticipation of the September 30, 2021 expiration of State protections of residential tenants from eviction for non-payment of rent due to COVID-19.

    On September 28, the Board of Supervisors unanimously passed on second reading amendments to the City’s COVID-19 residential eviction prohibition in the Administrative Code. A prior version of this legislation attempted to provide residential eviction protections for non-payment of rent due to COVID-19 from July 1, 2021 through December 31, 2021. In June, however, the State passed Assembly Bill 832, which provides such protections only until September 30, 2021, and precludes localities from providing protections that extend past this date. In response, the new legislation provides that any of its non-payment of rent eviction protections for the October to December 2021 time period “shall not be operative so long as [State law] continues to prohibit local governments from enacting or amending local ordinances that apply to rental payments that came due” between October and December, and urges the State to modify Assembly Bill 832 to allow San Francisco to provide such protections.

    In addition to the provisions pertaining to non-payment of rent evictions, the Mayor and the Board have provided additional protections in the Administrative Code, through executive actions and legislation, against “no-fault” evictions, such as evictions for owner move-ins or capital improvements. These COVID-19 protections, which were set to expire on September 30, 2021, generally prohibit evictions “unless necessary due to violence, threats of violence, or health and safety issues.” Notably, these protections do not apply to evictions for non-payment of rent, which are covered by the State and local laws discussed above. On September 28, the Board unanimously approved an emergency ordinance to temporarily extend for 60 days the City’s COVID-19 no-fault eviction protections, making findings that an emergency exists justifying prevention of a “wave of evictions on October 1,” and that “it is in the public interest to prevent tenant displacement in San Francisco due to COVID-19 to the maximum extent permitted by law.”

    We will continue to provide further updates when they are available.

    Contact Real Estate attorneys Dan Gershwin at dgershwin@coblentzlaw.com and Caitlin Connell at cconnell@coblentzlaw.com for additional information.

    Posted on: September 29, 2021 Tags: Categories: Blogs

  • 2021 Housing Legislation Overview: Major Bills Signed, More on Governor’s Desk

    While the 2020-2021 California Legislative Session was dominated by the ongoing COVID-19 health crisis and the ultimately unsuccessful Gubernatorial recall election, there were significant efforts made to change statewide housing policy. Last week, the Governor began signing some of those new housing bills into law—including the widely discussed SB 9, which is regarded as the end to California single-family zoning law.

    The Legislative Session included over a dozen housing bills, building on legislative efforts in recent years to tackle California’s housing crisis. Notably, Senate leadership focused on its 2021 Housing Production Package, referred to as “Building Opportunities for All,” which included eleven Senate bills aimed at increasing housing supply. Nine of the eleven bills successfully passed both houses and were sent to the Governor for signature, as summarized below. Two additional bills failed to move forward: SB 5 (Affordable Housing Bond Act, which would have placed a $6.5 billion bond on the November 2022 ballot to fund affordable housing) and SB 6 (authorizing residential development on existing qualifying office and retail sites). The state Assembly also sponsored a number of important housing bills.

    Key housing-related bills that have been signed or are on the Governor’s desk for signature include the following. The Governor has until October 10 to either sign or veto the remaining bills. Going forward, we will follow up with more in-depth coverage on the potential impacts of legislation signed by the Governor on housing production and regulation.

    Signed Legislation

    SB 7 (Atkins) [CEQA Streamlining Extension for Environmental Leadership Projects] – Senate Bill 7, signed by the Governor on May 20, 2021, extended California Environmental Quality Act (CEQA) streamlining for qualifying environmental leadership development projects approved through 2025, thereby reinstating and expanding the former AB 900 streamlining process—albeit with new substantive requirements. Read our prior coverage of SB 7 here.

    SB 8 (Skinner) [SB 330 Housing Crisis Act Extension] – Senate Bill 8 extends the provisions of SB 330, the Housing Crisis Act of 2019, from 2025 until 2030. It allows applicants who submit qualifying preliminary applications for housing developments prior to January 1, 2030 to utilize the protections of the Housing Crisis Act through January 1, 2034, with those applications subject only to the ordinances and policies in effect when the preliminary application is deemed complete, with limited exceptions. Among other changes, SB 8 clarifies that for purposes of the Housing Crisis Act, a “housing development project” may involve discretionary and/or ministerial approvals, or construction of a single dwelling unit, and adds demolition, relocation and return rights.

    SB 9 (Atkins) [Duplex and Lot Split Zoning] – Senate Bill 9, referred to as the duplex zoning law, would require, for qualifying parcels, ministerial approval of two-unit housing developments in single-family zoning districts, and would allow single-family parcels to be subdivided into two lots. Taken together, these provisions could allow for development of up to four housing units on lots where only one unit is permitted today. SB 9 requires applicants for lot splits under this law to confirm that they intend to occupy one of the housing units as their principal residence for a minimum of three years, unless the applicant is a community land trust or qualified nonprofit corporation. Under SB 9, a local agency retains discretion to deny a proposed housing project if it finds that the project would have an adverse health and safety or environmental impact that cannot be feasibly mitigated or avoided. Local agencies are also required to prohibit use of the units for short-term rentals of 30 days or less. Read our prior related coverage of SB 9 here, which highlighted national, state and local efforts to shift away from traditional single-family zoning.

    SB 10 (Wiener) [CEQA Streamlining for Upzoning] – Under current state law, local agencies must conduct environmental review under CEQA prior to adopting zoning changes that could have the potential to cause a direct or indirect impact on the environment, with limited exceptions. SB 10 allows, but does not require, local agencies to avoid this CEQA review when upzoning parcels to allow up to 10 units per parcel, at a height specified by local ordinance, if the parcel is located in a qualifying transit-rich area or an urban infill site. SB 10 does not provide new CEQA exemptions or streamlining for the projects that would be constructed on these upzoned parcels but, under existing law, certain CEQA exemptions or streamlining may be available on a case-by-case basis depending on project size, site conditions and other factors. However, for larger residential or mixed-use projects with more than 10 units developed on one or more parcels upzoned pursuant to SB 10, the bill prohibits those projects from being approved ministerially or by right, or from being exempt from CEQA, with limited exceptions. Taken together, SB 10 could be a useful tool for encouraging development of smaller residential projects of 10 or less units in jurisdictions who choose to take advantage of the CEQA streamlining provided. However, projects larger than 10 units proposed in an SB 10 zoning district, such projects that utilize the state density bonus or include multiple parcels, may face a more challenging entitlement process given the limitations on CEQA exemptions and use of any ministerial approval process. If a local agency chooses to adopt an upzoning ordinance under SB 10, it must do so by January 1, 2029. Read our prior related coverage of SB 10 here.

    Bills Pending Governor’s Signature

    SB 290 (Skinner) [Density Bonus Law Amendments] – Senate Bill 290 amends the state Density Bonus Law to clarify certain provisions and extend incentives to student housing projects. The bill allows one incentive or concession for projects that include at least 20% of the total units for certain “lower-income students” (as defined in SB 290) in a student housing development. Existing Density Bonus Law provides that a local agency cannot require a parking ratio above 0.5 spaces per unit if the development provides at least 20% low income units or 11% very low income units and is located within one-half mile of a major transit stop; this bill’s amendments would extend the parking ratio limit to developments with at least 40% moderate income units.

    SB 478 (Wiener) [Minimum FAR Restrictions] – Senate Bill 478 is designed to spur the creation of “missing middle” housing, by prohibiting local governments from establishing a floor area ratio (“FAR”) that is less than 1.0 for projects of three to seven units, or less than 1.25 for projects consisting of eight to ten units. Those local governments also cannot deny a qualifying project solely based on the fact that the lot area does not satisfy the minimum lot size requirement. This applies to projects that are either entirely residential, mixed-use with at least two-thirds of the square footage designated for residential use, or transitional or supportive housing. Eligible projects must (1) provide at least 3 and up to 10 units and (2) be located in either a multi-family residential zone or mixed-use zone. This bill does not prohibit a local government from imposing other zoning or design standards, such as height and setback limits, except for a lot coverage requirement that would physically preclude a qualifying project from achieving the permitted FAR. This bill also limits private restrictions (e.g., from a homeowners’ association) that effectively prohibit or unreasonably restrict an eligible project from achieving the permitted FAR. The California Department of Housing and Community Development (“HCD”) is tasked with identifying violations and may notify the State’s Attorney General, which can bring a suit to enforce the law.

    AB 215 (Chiu) [Expanded HCD Enforcement Authority] – Assembly Bill 215 provides HCD with additional enforcement authority for local agency violations of specified housing laws, and increases public review for housing elements, a required component of long-range General Plans. For example, AB 215 requires HCD to notify the Attorney General of violations of housing element law, including SB 35 (streamlined ministerial approval for specified housing projects). This bill also expands the Attorney General’s authority to initiate an enforcement action against a local jurisdiction for housing element noncompliance by eliminating requirements that HCD first provide two consultations and written findings to a noncompliant jurisdiction.

    SB 477 (Wiener) [HCD Annual Progress Reports] – Senate Bill 447 establishes additional information and data that cities and counties must report annually to HCD and the Office of Planning and Research. Under existing law, the annual progress report (“APR”) must include information such as the total number of housing units approved, the number of SB 35 applications approved, and the number of density bonus applications submitted and approved. Beginning January 1, 2024, cities and counties must also include, among other requirements, the following information for each project in their APR: (1) whether the project was submitted pursuant to state and/or local ADU laws, (2) whether the project requested any bonus, concession, or waiver under Density Bonus Law and whether the request was approved, (3) whether the project was submitted pursuant to SB 35, (4) whether the project was submitted pursuant to Project Roomkey, (5) whether the project received streamlining or an exemption from CEQA, and (6) whether the project submitted a preliminary application pursuant to SB 330 and instances in which a preliminary application expired.

    SB 791 (Cortese) [New Surplus Land Unit Within HCD] – Senate Bill 791 creates the California Surplus Land Unit within HCD to facilitate the development of housing on local qualifying surplus land. Under the existing Surplus Land Act, when local agencies seek to dispose of “surplus” public land, they first must send notice to various public agencies and qualified nonprofit groups to offer the land for affordable housing, parks and open space, school facilities, and infill opportunity zones or transit village plans, among other requirements. Under SB 791, the newly created Surplus Land Unit would facilitate agreements between housing developers and local agencies that are looking to dispose of surplus public property and collaborate with state financing agencies to assist with obtaining financing for housing projects. Creation of the Surplus Land Unit would require funding appropriation of approximately $2.5 million by the Legislature.

    AB 1487 (Gabriel) [Homelessness Prevention Fund] – Assembly Bill 1487 establishes a Homeless Prevention Fund to be administered by the Legal Services Trust Fund Commission, under the State Bar of California, to fund eviction defense programs. The Commission would distribute the funds in the form of grants to legal aid organizations for eligible services. Such services are generally limited to households with incomes less than 80% of the area median income.

    The Coblentz Real Estate team continues to track changes in state and local legislation impacting housing production. Please contact us for additional information and any questions related to the impact of these new bills on land use and real estate development.

  • San Francisco Board of Supervisors Adopts Further Commercial Tenant Relief in Response to COVID-19 Pandemic

    The COVID-19 pandemic continues to affect the commercial real estate market, and the San Francisco Board of Supervisors is pursuing relief for certain categories of commercial tenants, including adoption of an ordinance creating a rebuttable presumption that a commercial tenant’s legally required shutdown excuses rent owed for the shutdown period.

    We previously reported on San Francisco’s eviction protection for “Covered Commercial Tenants,” which are tenants (1) registered to do business in San Francisco, and (2) with combined worldwide gross receipts for tax year 2019 equal to or below $25 million. Covered Commercial Tenants do not include for-profit entities occupying space in property zoned or approved for Office Use, nor entities leasing property from the City and County of San Francisco.

    Covered Commercial Tenants are currently protected from evictions for COVID-19 related missed rent payments that came due between March 16, 2020 and September 30, 2021. After September 30, 2021, unless the Governor further extends his executive order allowing for local jurisdictions to protect commercial tenants from eviction, Covered Commercial Tenants with 50 or more full time equivalent (“FTE”) employees will be required to immediately pay any unpaid rent owed to their landlords, while smaller Covered Commercial Tenants will be entitled to a forbearance period after September 30, 2021 ranging from 12 to 24 months.

    On July 20, the Board of Supervisors took further action that would effectively forgive some past due rent from certain Covered Commercial Tenants, even after their applicable forbearance period expires. The Board of Supervisors unanimously passed an ordinance (Board File No. 210603) establishing a rebuttable presumption, for a Covered Commercial Tenant legally required to shut down due to COVID-19, that the shutdown frustrated the purpose of the lease, and that payment of rent for the shutdown period is excused. Importantly, the rebuttable presumption only applies where a generally applicable health order legally obligated a tenant to shut down, not where a tenant closed operations because of a COVID-19 outbreak or due to COVID-19 economic impacts. It does not apply if there is a contract provision or other agreement between the landlord and Covered Commercial Tenant demonstrating that the shutdown did not frustrate the purpose of the lease. Where applicable, a Covered Commercial Tenant can avail itself of this rebuttable presumption without terminating its lease.

    Recognizing that many commercial landlords and tenants negotiated site-specific agreements regarding their existing leases in response to COVID-19, and seeking to encourage such agreements, the ordinance specifically states that the presumption also does not apply where a landlord and tenant executed a valid, written agreement in response to COVID-19 to reduce, waive, or extend a deadline to pay rent.

    While the above-described contract provisions and agreements between a landlord and tenant render this presumption inapplicable, the factual circumstances that could rebut the presumption are less certain. For example, a landlord could attempt to rebut the presumption if the tenant could have operated at the premises during a shutdown in a different, legally permitted manner, such as a restaurant that was forced to close onsite dining, but still prepared or could have prepared food for pick-up or delivery from its premises without violating health orders.

    Another more incremental, but nevertheless important potential change to San Francisco’s commercial tenant relief program has been introduced, and is pending Board of Supervisors action. Supervisor Safai has introduced legislation (Board File No. 210762) to allow a 6 month forbearance period for Covered Commercial Tenants with between 50 and 99 FTE employees, who as discussed above are currently entitled to no forbearance. On July 15, Board President Walton waived the 30-day hold for this legislation and transferred it to the Budget & Finance Committee. We will provide further updates when they are available.

    Contact Real Estate attorneys Dan Gershwin at dgershwin@coblentzlaw.com and Caitlin Connell at cconnell@coblentzlaw.com for additional information.

  • As California Opens for Business, Public Hearings Allowed To Continue Remotely Through At Least September 30, 2021

    In March 2020, in response to the COVID-19 public health crisis, Governor Newsom issued Executive Order N-29-20, suspending open public meeting requirements under the Brown Act and Bagley-Keene Act thereby allowing state and local public agencies – including Boards of Supervisors, City Councils and Planning Commissions – to meet by teleconference without requiring a physical meeting place for members of the public to convene. Since that time, Zoom-based public meetings have become ubiquitous.

    Executive Order N-29-20 was set to expire last month on June 15, 2021 – the same date that the state of California marked its official re-opening as the Governor lifted a number of prior COVID-related public health orders and restrictions. However, in a letter to the Governor, an association of cities and other public agencies expressed concern that returning to conducting public hearings in person would require additional time and revamped logistics to ensure continued public health and safety.

    To that end, the Governor’s office announced in a June 2, 2021 response letter that public agencies would be permitted to continue holding public meetings virtually, with no expiration date set at that time. The Governor’s office also committed to providing advance notice ahead of any termination of Executive Order N-29-20 to give state and local agencies sufficient time to transition and comply with applicable open meeting legal requirements.

    On June 11, 2021, the Governor formalized this guidance through issuance of Executive Order N-08-21, extending the public meeting exceptions through September 30, 2021. Until that time, or as otherwise extended, public agencies may continue to convene remotely and, if they do so, must allow members of the public to observe and participate in meetings telephonically or electronically through that date.

    Some local public agencies across the Bay Area are anticipated to hold off on returning to in-person hearings until the expiration of the public meeting exceptions, although others are exploring earlier returns in summer 2021. As public agencies begin to navigate their own re-openings, it is likely, but not yet certain, that some jurisdictions will offer hybrid opportunities for public participation in addition to in-person attendance, including continued use of teleconference and/or online video platforms such as Zoom.

    The Coblentz Real Estate team continues to track ongoing updates related to the project approval landscape across the Bay Area in light of the ongoing COVID-19 public health crisis. Please reach out to a member of our team for assistance navigating state and local COVID regulations related to land use and development.

  • SB 7 Breathes New Life into CEQA Streamlining Process

    AB 900, a law that provided for speedy resolution of California Environmental Quality Act (CEQA) litigation, was allowed to “sunset” at the end of the 2020 legislative session, without an anticipated legislative extension. On May 20, 2021, Governor Newsom signed SB 7, the Jobs and Economic Improvement Through Environmental Leadership Act of 2021, to reinstate and expand the former AB 900 streamlining process for certain environmental leadership development projects (ELDPs).

    SB 7 allows new ELDPs to be certified through 2023 and approved through 2024, and makes a new class of smaller residential projects eligible for certification for the first time. The new law provides clear benefits to projects that were previously certified as ELDPs under AB 900, but that did not receive project approvals by the prior deadline of January 1, 2021. For many new projects seeking the legislation’s CEQA streamlining benefits, the feasibility to achieve ELDP status is uncertain, given onerous new requirements prioritizing on-site and local direct greenhouse gas emissions reductions over offsets, and imposing new geographic requirements for any offsets that remain necessary.

    AB 900 Background

    Under AB 900, the Jobs and Economic Improvement Through Environmental Leadership Act of 2011, three types of major development projects were eligible for ELDP certification: (1) clean renewable energy projects that generate electricity exclusively through wind or solar; (2) clean energy manufacturing projects; or (3) “residential, retail, commercial, sports, cultural, entertainment, or recreational use projects” on infill sites that would achieve LEED Gold certification and improved transportation efficiency. All ELDPs were required to cause no net additional emissions of greenhouse gases (GHGs) as determined by the California Air Resources Board (CARB), adhere to specific prevailing wage and project labor requirements, and result in at least a $100 million investment in the state, among other requirements.

    Once certified by the Governor, ELDPs were entitled to significant litigation streamlining benefits in exchange for their environmental and economic commitments—namely, that all judicial challenges to an EIR certification or related project approvals, including “any potential appeals,” must be resolved, to the extent feasible, within 270 days. Absent such streamlining, CEQA litigation frequently lasts for two years or more with appeals. To facilitate speedy resolution, the schedule for preparation of the administrative record was shortened, running concurrently with the entitlement process, and the lead agency must certify the record within 5 days of its approval of the project (rather than 60 days after filing a petition under the normal CEQA process). However, despite certain news reports that the legislation was intended to speed up environmental review, it in fact only accelerated the timeline for litigation following completion of environmental review.

    Reviving AB 900 Certifications

    Approximately 20 ELDPs were certified by the Governor between 2012 and the statutory deadline of January 1, 2020, including the 3333 California Street Project in San Francisco and the Inglewood Basketball and Entertainment Center (which proceeded under project-specific legislation). However, under the former act, projects that were certified before January 1, 2020, but not approved by a lead agency before January 1, 2021, were left with expired certifications.

    SB 995, an earlier bill aimed at lengthening the runway for certified projects, passed both the California Senate and Assembly but failed to be finalized in the hectic final hours of the last legislative session. SB 7 picks up where SB 995 left off. Under SB 7, previously certified ELDPs are entitled to the same benefits and subject to the same requirements prescribed in the former act, but now have until January 1, 2022 to obtain final approval by a lead agency. The legislation was enacted with an urgency clause, meaning that it is effective immediately.

    Expanding Eligibility for Certification

    For new projects interested in securing CEQA streamlining, SB 7 offers some good news: ELDPs now may be certified by the Governor before January 1, 2024, and approved by a lead agency before January 1, 2025. Additionally, SB 7 makes a new class of projects eligible for certification—residential infill projects that result in an investment of between $15 million and $100 million, with at least 15% of units affordable to lower income households.

    SB 7 also authorizes the Governor, before a lead agency’s approval of an ELDP, to certify a project alternative if the alternative also complies with AB 900’s statutory conditions at the time of the Governor’s original certification. This clarification is intended to ensure that certification remains valid if the lead agency ultimately selects a project alternative under CEQA.

    Raising the Bar for GHG Neutrality

    At the same time, SB 7 raises the bar for ELDP certification. It adds construction labor requirements to the existing prevailing wage/project labor agreement requirements, requiring eligible projects to use a “skilled and trained” workforce for all construction work, and requires applicants to pay the costs of the trial court (not only the Court of Appeal), in hearing and deciding any case challenging the ELDP’s CEQA certification or project approvals.

    Most notably, SB 7 imposes material new barriers to demonstrating that a project will have no net additional GHG emissions, which typically requires use of GHG “offsets” to reduce emissions beyond what would be possible as part of the project itself. Under AB 900, the determination of GHG neutrality was left up to CARB’s discretion, and there were no geographic restrictions on the location of GHG offset programs, which allowed flexibility in completing or funding cost-effective GHG reduction measures to achieve GHG neutrality. Under SB 7, with the exception of the newly eligible housing development projects described above, projects newly seeking certification must first prioritize direct emissions reductions that also reduce other air emissions within the same air district in which the project is located. If those measures are not sufficient, the project must address any unmitigated GHG impacts through offsets within the same air district as the proposed project, or that otherwise have a “specific, quantifiable, and direct environmental and public health benefit to the region in which the project is located.” The market for offsets is quite constrained, particularly for offset projects located in urban areas in California, and is expected to become even more so in the coming years. Given this change, the feasibility of new ELDPs is uncertain.

    Coblentz has guided clients through certification, approval, and development of several ELDPs and would be happy to discuss the opportunities and challenges of SB 7.

  • UPDATE – Status of Eviction Moratoriums Protecting Residential and Commercial Tenants in Response to COVID-19 Pandemic

    Since we last reported on this topic, many of the residential and commercial eviction moratoriums that were enacted in response to the COVID-19 pandemic have been amended, replaced and/or extended. These moratoriums are generally set to expire on June 30, 2021. Depending on how COVID vaccination and the broader economic recovery play out in the coming months, these moratoriums may be further extended.

    Residential Evictions

    At the state level, the COVID-19 Tenant Relief Act (“CTRA”), which protects residential tenants from eviction for non-payment of rent due to COVID-19, is comprised of two statewide laws, AB 3088 and SB 91. Together, these laws have imposed a statewide eviction moratorium on evictions from March 1, 2020 through June 30, 2021 (the “State Moratorium Period”), and have replaced most of the local residential eviction moratoriums that were enacted at the start of the pandemic.

    Under the CTRA, a residential tenant that owes rent during the State Moratorium Period cannot be evicted for failure to pay rent so long as they provide the landlord with a signed declaration claiming financial hardship related to COVID-19 within the required timeframe, and, on or before June 30, 2021, the tenant pays 25% of the rent owed to the landlord during the period from September 1, 2020 through June 30, 2021. Tenants remain responsible for paying any unpaid rent to landlords, but those unpaid amounts are not a permitted basis for eviction or late fees. Landlords may begin to recover unpaid rent on or after August 1, 2021 in small claims court (even if the amount of unpaid rent exceeds $5,000).

    Commercial Evictions

    Although the CTRA only applies to residential tenants, Governor Newsom’s Executive Order N-80-20 (“EO N-80-20”) grants local governments the authority to enact protections for commercial tenants. Many local governments that have enacted commercial eviction moratoriums have tied the effectiveness of the protections to EO N-80-20, which is currently set to expire on June 30, 2021. Key provisions of some of the most important Bay Area commercial eviction moratoriums include:

    City and County of San Francisco:

    On November 25, 2020, the San Francisco Board of Supervisors adopted an Ordinance (the “SF Ordinance”) to address commercial evictions (which replaced the March 18, 2020 Mayor’s Order that is no longer in effect). Under the SF Ordinance, if a “covered commercial tenant” misses rent payments from March 16, 2020 through June 30, 2021 (the “SF Moratorium Period”) because of financial impacts resulting from the COVID-19 crisis, the landlord may not evict the covered commercial tenant.

    A “covered commercial tenant” is a tenant that (1) is registered to do business in San Francisco, and (2) has combined worldwide gross receipts for tax year 2019 equal to or below $25 million. However, the moratorium does not apply to for-profit entities occupying space in property zoned or approved for use as Office Use (as defined in Section 102 of the Planning Code), or to entities leasing property from the City and County of San Francisco.

    The landlord is not permitted to assess interest or other charges based on unpaid rents that were due during the SF Moratorium Period. Additionally, the landlord must provide smaller (fewer than 50 full-time employees) covered commercial tenants a forbearance period after the moratorium ends to repay the missed rent before it can evict a covered commercial tenant for non-payment. The forbearance period is tied to the number of full-time employees employed by the covered commercial tenant, and ranges from 12 to 24 months after the end of the SF Moratorium Period. The SF Ordinance will expire upon expiration of EO N-80-20 or any extensions of the order (currently set to expire on June 30, 2021). If EO N-80-20 is further extended, the SF Ordinance will automatically be extended by its terms.

    The SF Ordinance provides additional protection to small business owners with 10 or fewer full-time employees (“Tier 1 Tenants”). A Tier 1 Tenant that is unable to pay rent due to financial impacts related to COVID-19 has the option, despite any terms in the lease to the contrary, to terminate its lease if it fails to reach a mutually satisfactory agreement for repayment with the landlord.

    More detailed information on the SF Ordinance can be found here.

    City of Oakland:

    Under the City of Oakland’s commercial eviction moratorium, landlords are not permitted to evict small businesses (generally independently owned and operated businesses, which together with their affiliates have 100 or fewer employees, and average annual gross receipts of $15 million or less over the previous three years – more particularly defined in Government Code Section 14837(d)(1)(A)), and nonprofit organizations for failure to pay rent if such failure is due to a substantial decrease of income caused by the COVID-19 pandemic or by any governmental response to COVID-19, and is documented. This does not relieve commercial tenants of the obligation to pay back rent in the future. The City of Oakland’s commercial eviction moratorium will expire upon expiration of EO N-80-20 or any extensions of the order (currently set to expire on June 30, 2021). If EO N-80-20 is further extended, the City of Oakland’s commercial eviction moratorium will automatically be extended by its terms.

    Contra Costa County:

    On February 2, 2021, the Contra Costa County Board of Supervisors unanimously passed Urgency Ordinance No. 2021-04, which extended the temporary commercial eviction moratorium for commercial tenants through June 30, 2021. Under Urgency Ordinance No. 2021-04, landlords cannot evict a commercial tenant for failure to pay rent if the tenant demonstrates that failure to pay is directly related to a loss of income associated with the COVID-19 pandemic or any local, state or federal government response to the pandemic. In order to qualify, a tenant must document the loss of income. Landlords cannot charge or collect late fees on any unpaid rent from a commercial tenant who demonstrated loss of income. Commercial tenants have a grace period ending August 31, 2021 (unless the landlord agrees to a longer repayment period), to pay past due rent for the period from March 16, 2020 to June 30, 2021.

    Santa Clara County:

    On November 3, 2020, the Santa Clara County Board of Supervisors enacted Ordinance No. NS-9.293, which extended Santa Clara County’s eviction moratorium for small business tenants until the earlier of the expiration of EO N-80-20 or April 30, 2021. Unlike the other local eviction moratoriums described above, Santa Clara County’s eviction moratorium is currently set to expire on April 30, 2021. Small business tenants (defined in the U.S. Small Business Administration’s table of size standards by industry, codified in the Code of Federal Regulations at 13 C.F.R. Section 121.201) have 6 months after the moratorium expires or terminates to repay at least 50% of the past-due rent, and up to 12 months after the moratorium expires or terminates to repay in full the past-due rent. Landlords cannot charge late fees on unpaid rent due so long as the rent is repaid according to the above timeline. Santa Clara County’s commercial eviction moratorium does not prevent a landlord from pursuing lawful or “at-fault” evictions for reasons other than non-payment of rent.

    We will continue to monitor developments to the state eviction moratorium and local eviction moratoriums across the Bay Area. Contact Real Estate attorneys Tamara Lam-Plattes at tlam-plattes@coblentzlaw.com or Leah Collins at lcollins@coblentzlaw.com for additional information.

  • AB 1561 Extends Housing Entitlements by 18 Months

    The state has granted an 18-month extension to certain housing development entitlements that were otherwise due to expire before the end of 2021. AB 1561 (Garcia) was enacted last year to support continued housing production in light of the ongoing economic and administrative challenges created by the COVID-19 pandemic. Its provisions apply to approvals, permits, and entitlements for housing development projects issued by a state or local agency that were in effect on or before March 4, 2020 and that would otherwise expire before December 31, 2021. Under AB 1561, these housing entitlements are extended for 18 months from their original expiration date.

    This 18-month permit extension applies to entitlements for housing development projects and mixed use projects in which at least two-thirds of the square footage is residential, including the following:

    A. State Permits: A legislative, adjudicative, administrative, or any other kind of approval, permit, or other entitlement necessary for, or pertaining to, a housing development project issued by a state agency;
    B. Local Permits: An approval, permit, or other entitlement issued by a local agency for a housing development project that is subject to the California Permit Streamlining Act (Gov. Code § 65920 et seq., which includes a broad range of discretionary development approvals);
    C. Ministerial Permits: A ministerial approval, permit, or entitlement by a local agency required as a prerequisite to the issuance of a building permit for a housing development project;
    D. Application Submittal Deadlines: A requirement to submit an application for a building permit within a specified period of time after the effective date of a housing entitlement described in subparagraph (B) or (C); and
    E. Vested Rights: A vested right associated with an approval, permit, or other entitlement described in (A)-(D), above.

    Some limited exceptions apply; for example, the legislation does not extend the life of development agreements or projects approved pursuant to the SB 35 ministerial streamlining process. Additionally, the protections of AB 1561 do not apply to housing entitlements that were previously extended by at least 18 months by a local agency on or after March 4, 2020 and before September 28, 2020 (the effective date of AB 1561). However, the protections otherwise support a broad range of housing-related approvals, reflecting the legislature’s intent to provide developers with a longer runway to support the construction of housing development projects in the context of a state-wide undersupply of housing intensified by the pandemic-induced recession.

    Extensions for San Francisco Projects

    On March 16, 2021, San Francisco’s Zoning Administrator issued a Letter of Determination indicating that the City’s typical approval condition, which provides extensions for delays caused by a public agency, an appeal, or legal challenge, is deemed trigged for the recognized delay period of March 17, 2020 through March 16, 2021. For example, if a project’s required performance period is July 17, 2017 to July 17, 2020 (otherwise expiring 4 months after the beginning of the recognized delay period), the performance period is extended for 4 months (the duration of the overlap between the performance period and the recognized delay period in this example). Any such extension granted by the City of San Francisco runs concurrently with the 18-month extension granted by AB 1561.

    No additional action is needed by state or local agencies to apply the 18-month extension to covered housing entitlements. However, interpretation and implementation may vary by individual agency, so it is advisable to consult with counsel on a project-specific basis about the analysis and how best to memorialize the extension.