• Competing Inclusionary Housing Proposals Introduced at the Board of Supervisors

    Is the City another step closer to sorting out inclusionary housing requirements and implementation of Proposition C?  Board of Supervisors members have introduced two competing ordinances that seek to call the question regarding the City’s inclusionary housing priorities and requirements.

    Very generally, the legislation introduced by Supervisors Safai, Breed and Tang comes closer to reflecting the City Controller’s recommendations regarding inclusionary housing percentages, summarized in our February blog post. It would also substantially increase the percentage of inclusionary units that are targeted for middle-income earners. By contrast, the legislation proposed by Supervisors Peskin and Kim would maintain inclusionary housing percentages and income level distributions that are closer to existing requirements.

    As shown in our side by side summary chart, both ordinances would add new complexity to inclusionary housing requirements. For example, they would:

    • Distinguish between requirements for ownership and rental units;
    • Require rental units to remain rental for at least 30 years or meet higher requirements;
    • Change income level distribution requirements;
    • Revise the basis for the fee rate calculation; and
    • Introduce new unit mix requirements, with an emphasis on larger, family-focused units.

    Notably, the Safai/Breed/Tang legislation would apply the new unit mix requirements project-wide — not just to the inclusionary housing units — with certain exceptions.

    The Peskin/Kim legislation would generally retain existing grandfathering protections for pipeline projects, and projects over 120 feet in height would generally be subject to a 30% requirement for off-site or fee compliance, as compared to the existing 33% requirement. The Safai/Breed/Tang legislation would generally retain existing grandfathering protections for pipeline projects complying with the on-site option but would generally eliminate such protections for off-site and fee compliance, although the proposed percentages are generally equivalent to or lower than existing grandfathering protections. There is an exception: existing protections for projects with an Environmental Evaluation (EE) application on file prior to January 1, 2013 would be retained in all instances.

    One key issue is how inclusionary housing requirements should interact with State Density Bonus law. The Safai/Breed/Tang legislation would require that an “in-lieu” inclusionary housing fee be paid for any density bonus units, as recommended by the City Controller. As we previously reported, that requirement would be additive, meaning that millions of dollars of additional fees could be due for market rate housing projects with otherwise required inclusionary housing units provided on-site. The Peskin/Kim legislation does not currently specify that the fee would apply to density bonus units, but it proposes to increase the on-site inclusionary percentage by 5% for buildings over 300 feet — even though the City Controller reported that he found no evidence to support a higher requirement for high-rise projects.

    The legislation is currently on hold under the Board’s 30 day rule, and is expected to be debated at the Land Use and Transportation Committee in the coming months. In the meantime, the Planning Commission is scheduled to hold an informational hearing on the legislation on March 16, 2017. Planning Department staff has produced a detailed analysis of the legislation, including exhibits that detail how the ordinances would impact fees and inclusionary percentages.

  • Inclusionary Housing Recommendations a Mixed Bag for Developers

    The City is one step closer to sorting out inclusionary housing requirements and local implementation of the State Density Bonus law now that the City Controller has released its final recommendations to the Board of Supervisors. The good news for developers is that recommended on-site and in-lieu fee percentages are below Proposition C levels. On the other hand, an “in-lieu” fee for density bonus units is now being contemplated.

    The legislation passed by the Board of Supervisors in the wake of Proposition C directs the Controller, working with an appointed Technical Advisory Committee (TAC) and independent consultants, to conduct a feasibility study and make recommendations to the Board of Supervisors.

    According to those recommendations, the Controller would:

    • Reduce the on-site requirement from 25 percent (generally) under Proposition C to 14 to 18 percent for rental projects and 17 to 20 percent for ownership projects, with an annual increase of 0.5 percent over a period of 15 years.
    • Reduce the percentage requirement used for calculating in-lieu fees from 33 percent (generally) under Proposition C to 18 to 23 percent for rental projects and 25 to 28 percent for ownership projects, with an annual increase equal to 1.3 to 1.4 times the rate of the on-site increase — if the Board of Supervisors wants to avoid incentivizing payment of the in-lieu fee.

    As noted in our December blog post, once inclusionary housing requirements are finalized, the City will need to determine how they interact with the State Density Bonus law. Notably, the Controller also recommends requiring an inclusionary housing “in-lieu” fee for density bonus units, which would be additive, meaning that millions of dollars of additional fees could be due for market rate housing projects with otherwise required inclusionary housing units provided on-site. To illustrate, a 100 unit building with 20 low-income units would qualify for the maximum 35 percent density bonus under the State Density Bonus Program, yielding a 135 unit building comprised of 20 low-income units, 80 market-rate units, and 35 market-rate bonus units. Assuming here that the 20 low-income units would meet the City’s forthcoming inclusionary housing requirements, the Controller’s approach would nonetheless apply the City’s in-lieu fee to the 35 bonus units.

    The Board of Supervisors will ultimately decide whether and how to implement the Controller’s recommendations, which are currently scheduled to be considered by the Planning Commission on February 23, 2017.

  • Transportation Demand Management Program Takes Effect in SF: How Will Your Project Comply?

    On February 7th, the San Francisco Board of Supervisors unanimously approved the implementing ordinance for San Francisco’s Transportation Demand Management (TDM) Program. Pending the Mayor’s approval, the TDM Program will take effect in March. What does this mean for project sponsors?

    Developers must now incorporate TDM features into their projects, chosen from a menu of options in the City’s adopted TDM Program Standards. As the number of on-site parking spaces proposed for a project increases, developers must include more TDM features such as bicycle parking and amenities, car-share parking, and vanpool programs.

     

    Menu of Options from TDM Program Standards: 

     

     

     

     

     

     

    To see how these new requirements would apply to your project, check out the Planning Department’s interactive web-based tool (soon to be updated to include the amendments to the TDM Standards discussed below), or its Excel tool (already updated to include amendments).

    Project sponsors are now required to submit a draft TDM Plan along with all Preliminary Project Assessment applications (and Development Applications for projects that have already submitted PPAs), and must discuss TDM measures and solicit community feedback at all required pre-application community meetings.

    Since our last post on the topic, important changes were made to both the implementing ordinance and the TDM Program Standards, which can be reviewed and modified by the Planning Commission at any time. Grandfathering language was added to the ordinance—projects that filed an Environmental Evaluation Application or Development Application on or before September 4, 2016 must meet 50% of the TDM target. Projects filing a Development Application between September 4, 2016 and January 1, 2018 must meet 75% of the TDM target.  After 2018, no grandfathering is available.

    The TDM Program Standards were amended by the Planning Commission on January 19th, and larger projects obtained some relief through these amendments. Large projects must only obtain 80% of the total available TDM points—without that amendment, some large projects would have exhausted the available number of TDM points. A previous version of the Standards would have required those projects to reduce parking below the amount permitted under the Planning Code. Numerous other changes were made, including amendments to address small projects and revised point totals available for providing on-site affordable housing.

  • Plan for the Extra Cost: Increased Prop W Transfer Tax is in Effect

    As we previously reported, on November 8, 2016, the voters of the City and County of San Francisco passed Proposition W (Real Estate Transfer Tax on Properties Over $5 Million) increasing real property transfer taxes. Effective December 27, 2016, the Real Property Transfer Tax is raised as follows:

    • From the current rate of 2% to 2.25% for properties with a value or consideration of at least $5,000,000 and less than $10,000,000;
    • From the current rate of 2.50% to 2.75% for properties with a value or consideration of at least  $10,000,000 and less than $25,000,000; and
    • From the current rate of 2.50%  to 3% for properties with a value or consideration of at least  $25,000,000 or more.

    Download a copy of the Transfer Tax Affidavit here.

  • State Density Bonus Law Debuts in San Francisco

    The San Francisco Planning Commission took a major step on December 8, 2016, by approving the first market rate housing project to utilize the State Density Bonus law.

    The State law, which has been in effect for almost 40 years, incentivizes developers to construct more affordable housing by providing density bonuses of up to 35 percent for projects that incorporate on-site affordable units. The amount of the density bonus varies depending on the level of affordability and the number of affordable units.  The State law provides that local development standards, such as building height and FAR limits, may be modified without new legislation if necessary to physically accommodate the additional units. It also provides for certain development concessions and incentives in the form of the waiver or reduction of local zoning requirements. The State law was recently amended to require that local jurisdictions adopt an implementation program.

    San Francisco has historically offset affordable units provided under the local inclusionary housing ordinance against the density bonus percentage. This effectively eviscerated the State law.  But a 2013 California Court of Appeals case in Napa County held that even required affordable units count toward the density bonus total.  Since that case, advocates have been pushing for local compliance with the State law, which has remained elusive until now.

    To date, the San Francisco Board of Supervisors has been unable to agree on a comprehensive implementation program.  Instead, it passed a local density bonus ordinance this past summer that only applies to 100 percent affordable housing projects, leaving the mixed-income component of the program at a standstill. In the meantime, projects that comply with the State law are moving forward in the pipeline. On December 8, 2016, the 333 12th Street project, relying on the State law, requested and received from the Planning Commission the maximum 35 percent density bonus (about 52 additional units). It also received a height increase of about 25 feet for the additional units, which normally would require a Height Map amendment approved by the Board of Supervisors.

    What’s next for the implementation program? The mixed-income component isn’t scheduled to be considered by the Planning Commission until March 2, 2017, even though the pressure is now on. One of the major issues is sorting out the City’s inclusionary affordable housing requirements under Proposition C, which was passed by San Francisco voters last June, and the related legislation passed by the Board of Supervisors.  Once that happens, the City will need to determine how those requirements interact with State law, taking into account the 2013 Court of Appeals case.

  • Senator Wiener Moves Quickly out of the Gate on Housing Bill

    Shortly after being sworn in as California State Senator on Monday, former San Francisco Supervisor Scott Wiener introduced SB 35, placeholder legislation addressing barriers to housing production. The legislation currently consists of a one paragraph intent statement, focusing on streamlining and providing incentives for creation of housing, and removing local barriers to creating affordable housing and complying with regional housing needs obligations.

    According to press coverage, Senator Wiener ultimately intends to pursue two approaches: (1) exempting 100% affordable housing projects from certain local requirements, and (2) allowing housing developers to avoid certain local requirements in cities that are out of compliance with their regional housing needs obligations.

    The legislation comes on the heels of the “By Right Housing Approvals” streamlining legislation proposed by Governor Brown, which died in the last legislative session due to opposition from a coalition of labor, environmental and other groups.  In San Francisco, the Board of Supervisors passed a Resolution urging the San Francisco legislators in Sacramento to seek amendments to the state legislation or oppose it; that Resolution was opposed by then-Supervisor Wiener and ultimately vetoed by Mayor Lee.

    As we reported in our November post-election summary, affordable housing had mixed results in Bay Area elections, with notable successes on major bond and sales tax measures, and a range of outcomes on rent control and other affordable housing-related issues. In San Francisco, this summer the Board of Supervisors failed to pass mixed-income density bonus legislation, and instead approved a density bonus program limited to 100% affordable housing projects. As a Supervisor, Wiener voted for the 100% affordable density bonus legislation, and also supported the mixed-income version.

    It remains to be seen what SB 35 retains or rejects from Governor Brown’s “By Right” legislation, and whether it becomes the vehicle for both the 100% affordable and regional housing needs obligation approaches that Senator Wiener is purportedly pursuing.

  • Bursting at the Seams: Expanded “Purple Pipe” Requirements

    Existing on-site water recycling requirements for toilets, urinals and landscaping have applied to buildings of 250,000 gross square feet or larger in the Reclaimed Water Use Map (the “Map”) area since November 2015. The Map generally covers properties along large portions of the east-side and west-side of the City. The on-site water recycling requirements now apply Citywide due to the expiration of the November 2016 grandfathering deadline for projects outside the Map area. The San Francisco Board of Supervisors passed legislation yesterday that will expand the scope of existing requirements by applying them on a project-wide basis to any development of 250,000 gross square feet or larger, even if the development is located on separate parcels.

    Limited exceptions were included in the new legislation for: (a) Hope SF projects, (b) projects with small domestic water meters, and (c) projects (or phases thereof) subject to a development agreement (or similar contractual agreement) with certain approvals in place before November 2015 (in the Map area) or November 2017 (outside the Map area). For other projects, some flexibility has been built in – the General Manager of the Public Utilities Commission will now have the authority to approve alternative district systems and water purchase agreements.

    This is a very general summary. Please see the new legislation, which is expected to be effective next month, for detailed information.  See also the separate reclaimed water use requirements under Article 22 of the San Francisco Public Works Code, which apply to a broader range of projects in the Map area.

  • USPTO’s New Trademark Trial and Appeal Board Rules Take Effect Soon

    Next month, the procedural rules governing trademark registration disputes are changing.  They present new strategic considerations for brand owners protecting their trademark rights.

    The Trademark Trial and Appeal Board (“TTAB”) is implementing its first major procedural rule change since 2007.  Unlike Article III federal courts, which adjudicate disputes over the use of a trademark, the TTAB resolves the narrower question of whether a trademark is entitled to federal registration.  Effective January 14, 2017, the revisions will overhaul many aspects of TTAB procedure.  They apply to both new and pending cases.

    How will the changes affect brand owners?  The answer depends on their objectives.  On the one hand, the changes should make TTAB proceedings more efficient overall.  For example, they will facilitate paperless transactions, impose new limits on discovery, and offer new tools for parties to reach early resolution.  In a straightforward registration battle, they should help.

    On the other hand, the streamlining may have unintended costs.  For example, it may frontload discovery battles that previously could be postponed to the later stages of a dispute. The revisions also do nothing to strengthen sanctions for parties that do not comply with discovery obligations, an enduring problem in TTAB proceedings that Article III courts handle better.  The stakes in TTAB disputes remain significant, particularly given last year’s Supreme Court decree (in B&B Hardware, Inc. v. Hargis Industries, Inc.) that a TTAB finding that one mark is confusingly similar to another can have preclusive effect in federal court proceedings.  Given that fact, a streamlined TTAB case may not always prove to be the best venue for relief.  In close calls, it may tip brand owners toward seeking the more comprehensive relief of federal courts.

    The new rules include the following changes:

    • Complaints, Filings, and Service.  The Board is now responsible for effecting service of complaints, which it will do only by email.  All case filings must now be made through the Board’s electronic filing system, ETTSA, with very limited exceptions.  Service is completed by email rather than physical mail, with no extensions for mail service.
    • Discovery Limits: Parties may serve a maximum of 75 requests for production of documents and 75 requests for admission, matching the existing limit for interrogatories.  All discovery must be served early enough to ensure that responses are served within the 6-month discovery period.
    • Accelerated Case Resolution and Testimony.  The rules expressly contemplate stipulations designed to expedite proceedings, such as limiting the amount or length of discovery, shortening the trial period, stipulating to facts, and allowing for motion evidence to be converted to trial evidence.  Trial testimony may now be submitted by declaration or affidavit, subject to the right to oral cross-examination.
    • Confidentiality.  The Board is granted express authority to treat certain materials as not confidential, notwithstanding a particular confidentiality designation provided by a party.

    A comprehensive record of the rules changes is available here.

    The bottom line for brand owners: the TTAB’s rules changes should improve the efficiency of garden variety trademark registration battles.  For more critical disputes, they may nudge parties toward the more comprehensive relief of federal court.

    For further information about the forthcoming TTAB rules changes, and how they affect trademark enforcement, contact Thomas Harvey, tharvey@coblentzlaw.com, or Karen Frank, kfrank@coblentzlaw.com.

    Posted on: December 6, 2016 Tags: Categories: Publications

  • New Registration Required for Designating Agents Under the DMCA

    IMPORTANT NOTICE:

    Under new Copyright Office regulations, parties seeking the benefits of immunity under the Digital Millennium Copyright Act must re-register their Designation of Agents for notice and service through a new electronic registration system.  The deadline is December 31, 2017.  Registration is conducted through the Copyright Office website, at www.copyright.gov.

    Under the Digital Millennium Copyright Act (the “DMCA”), online service providers (“ISPs”) can take advantage of a safe harbor against copyright infringement liability from infringing material posted to their websites by third parties.  This safe harbor is available where the ISP’s comply with certain steps, including the registration with the Copyright Office of a Designated Agent for notification of claimed infringements.

    As of December 1, 2016, registration of Agents for notification of infringements under the DMCA must be done through the Copyright Office’s electronic registration system.  Parties that previously registered through the Copyright Office’s paper registration system must re-register under the electronic system by December 31, 2017.  Existing registrations will remain current to December 31, 2017.  From December 1, 2016, new DMCA Agent registrations will be good for a three-year period and must be renewed, or will expire.

    Information required to register an Agent for notification under the DMCA:

    • Designate a primary and secondary representative to serve as the contacts for DMCA notifications:
      • The Agent can be an individual, a title, such as “Copyright Agent,” a department, such as “Legal Department,” or a third party entity (such as outside counsel).
    • Provide contact information for the primary and secondary Agent, including:
      • Agent’s Name
      • Agent’s Organization
      • Agent’s Physical Mail Address (Post Office Box allowed)
      • Agent’s Electronic Mail Address
      • Agent’s Telephone  Number
    • Provide Contact Information for the Company (the service provider) (Post Office Box not allowed).
    • Provide any Alternate Names used by the Company (the Service Provider), such as DBAs, website names, and other names that the public is likely to use to search for the service provider.

    To create a DMCA Designated Agent Registration Account or to Designate an Agent for Service Provider, go to https://dmca.copyright.gov/osp/login.html.

    For further information about designating an Agent under the DMCA, or for other copyright or trademark questions or requests for advice, contact Karen Frank at kfrank@coblentzlaw.com, or Thomas Harvey at tharvey@coblentzlaw.com.

    Posted on: December 1, 2016 Tags: Categories: Publications

  • What We’re Reading: November 18, 2016

    A roundup of news and articles the Unfamiliar Terrain team is reading this week:

    “Versailles in the Valley” (The Economist): What do the new, monumental headquarters of Silicon Valley’s tech powerhouses say about them?

    “The Great Rent Squeeze” (CityLab): Households are spending larger shares of their income on rent—does this stifle the economy?

    “Can the US economy return to dynamic and inclusive growth?” (McKinsey Global Institute):  Can declining cities fuel economic growth?

    “Airbnb, under the gun, is ready to cooperate with SF” (SF Chronicle): Changes are afoot at Airbnb.

    “Four trends from state and local elections” (Brookings Institution): What concerns are shaping America’s cities and regions?

    “Teslas in the Trailer Park: A California City Faces Its Housing Squeeze” (NYTimes): “We joke that it’s the only mobile home park with Mercedeses and Teslas in the driveway…It’s like the new middle class in California.”