• A Plethora of Propositions: Real Estate Tax, Land Use and Governance on the San Francisco Ballot

    Admittedly the issues may appear benign compared to the Presidential race and the drugs, sex and other provocative topics on the state ballot.  But San Francisco voters again face a long list of significant local propositions on November 8th, and among them are a number of measures impacting real estate taxes, land use and governance.

    Unfamiliar Terrain summarizes the key measures impacting our industry:

    • Propositions L and M: Shifting authority from the Mayor to the Board with respect to San Francisco Municipal Transportation Authority and the Office of Economic and Workforce Development/Mayor’s Office of Housing and Community Development
    • Proposition O: Exempting office space in Hunter’s Point/Candlestick Point from the Proposition M office cap
    • Proposition U: Making affordable units available to low and moderate income households
    • Proposition W: Increase in transfer tax
    • Proposition X: Production, Distribution and Repair space replacement

    We hope that our summaries will help you navigate the issues.  And if all else fails, take a break and check out our “What We’re Reading” post.

  • What We’re Reading: November 4, 2016

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

    “Africa unplugged” (The Economist): How will off-grid solar change patterns of urban and regional development?

    “Visualizing the Toughest Challenges Facing Global Cities” (CityLab): Can enhanced data visualization help us tackle complex, interconnected urban problems?

    “Is New York Too Expensive for Restaurateurs? We Do the Math” and “Art Dealers Move Out of the Gallery and Into a Taco Bell” (NYT): How can new restaurants and galleries stay afloat in competitive real estate markets?

    “The Next Frontier for Energy Savings in Buildings and Cities: Tenant Spaces” (Natural Resources Defense Council): New opportunities for improving energy performance.

    “Here’s How Self-Driving Cars Will Transform Your City” (Wired):  8 experts weigh-in.

    “Uber’s New Goal: Flying Cars in Less Than a Decade” (MIT Technology Review): On-demand flying cars(!).

    “Achieving Lasting Affordability through Inclusionary Housing” (Lincoln Institute of Land Policy): Recommendations on how to craft robust inclusionary housing based on the analysis of 20 inclusionary housing programs across the US.

    “Half a House” (99% Invisible): How did slum upgrading and incremental housing techniques from the 1970s find their way into Pritzker Prize-winning architecture?

    “Closing California’s housing gap” and “Urban world: Meeting the demographic challenge in cities” (McKinsey Global Institute): New McKinsey reports address housing needs and demographic change.

  • Prop U: Making Affordable Units Available to Low and Moderate Income Households

    Prop U dovetails with the City’s new increases in required affordable housing percentages by expanding the range of household income levels that would be eligible to rent an affordable housing unit. According to the Controller, this would increase rental revenue for property owners and tax revenue for the City.  The measure is part of an ongoing debate about the appropriate income range for defining eligibility for affordable units, and reflects a desire to expand the range to include more low/low moderate income families (as opposed to very low income).

    Prop U proposes to increase the qualifying household income cap from 55 to 110 percent of area median income. But it would retain the maximum allowable rent at 30 percent of a household’s annual income.

    Under the current 55 percent cap, a household living in an on-site affordable unit may pay up to $1,121 a month for a one-bedroom unit and $1,261 for a two-bedroom unit. Under Prop U, a qualifying household could pay up to $2,241 for a one-bedroom unit or $2,521 for a two-bedroom unit, but could also pay less, depending on income.

    The City’s Department of Elections website lists Thomas A. Hsieh as Prop U’s proponent, Supervisor Farrell as the proponent argument author, and the San Francisco Council of Community Housing Organizations as the opponent argument author.

  • What We’re Reading: October 21, 2016

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

    Top-Down, Bottom-Up Urban Design (The New Yorker): Updating Le Corbusier’s Athens Charter at the UN Habitat III conference and charting the course of future cities.

    San Francisco Makes a Guerilla Bike Lane Permanent (CityLab): The rise of the San Francisco Municipal Transformation Authority.

    A New Typology of Cities (CityLab): New metrics for urban form and productivity.

    A Tale of Blue Cities (LA Review of Books): Cities and voting trends.

    A Free Place for Designers to Work (NYT): creating a communal design and prototyping workspace in Brooklyn.

    Next Big Tech Corridor? Between Seattle and Vancouver, Planners Hope (NYT): A vision to rival Silicon Valley.

    Suburbs Will Soar on Wings of Tech (Bloomberg): Will tech propel suburban growth?

    The Return of the Utopians (The New Yorker): A brief survey of utopias in America.

    Cities Will Change When Cars Drive Themselves (Bloomberg): How self-driving cars might alter land use, traffic, and parking in cities.

  • Update: City Controller Recommends Reduction in Prop C’s Affordable Housing Percentages

    After several weeks of delays, on September 13 the City Controller released a study assessing the impacts of Prop C’s increases in the affordable housing percentage requirements for market rate developments.

    Whereas Prop C increased the required set-aside rate from 12 to 25 percent, the study recommends setting an initial on-site requirement of 14 to 18 percent for rental projects and 17 to 20 percent for ownership projects. The study, authorized by the Board of Supervisors in trailing legislation contingent on voters’ approval of Prop C in June, directed the Controller to assess the economic feasibility of current and increased inclusionary housing requirements under Prop C, and make recommendations in an advisory report. The Board of Supervisors will now consider the recommendations in setting the City’s inclusionary housing requirements.

    The study also recommends setting a schedule for incrementally increasing the inclusionary housing rate by .5% annually and phasing in the requirements over a 15 year period, with a study every 5 years. The City Controller and the Technical Advisory Committee—a group of affordable housing developers, advocates, community representatives, lenders, and real estate developers appointed by the Mayor and Board of Supervisors—unanimously endorsed these recommendations.

  • Coming Into Focus – Draft Central SoMa Plan Released

    The Planning Department released the Central SoMa Plan on August 11, 2016, updating the framework for developing the 230-acre neighborhood.  The Plan focuses on increasing density in a transit-rich area while emphasizing economic, social, and environmental sustainability.

    The full Plan is available here.

    Many aspects of the Plan involve the most-debated and legislated issues in San Francisco development today, including affordable housing requirements, PDR space, and new office development – leaving the Plan subject to further evolution following this fall’s election.

    Overview

    The Central SoMa Plan is the latest area plan developed by the Planning Department over the last twenty years.  The Plan includes major changes in land use designation and height and bulk districts, as reflected in the following new zoning maps:

     

     

     

     

     

    Key features of the Plan include:

    • Proposed height and bulk increases
    • Proposed affordable housing requirements and development fees based on the level of up-zoning for each property
    • Mello-Roos Community Facilities District covering the plan area
    • Production, Distribution, and Repair (PDR) space requirements (replacement and new developments)
    • Design Guidelines; and
    • Eco-District requirements

    Development fees in the Plan Area are based on tier system – the greater the increase in allowable development on a site, the higher the fees are.  Below Market Rate housing requirements in the plan area range from 16% for properties receiving the lowest level of up-zoning and constructing of new housing on-site, to 33% when such housing is provided off-site for properties receiving the highest levels of up-zoning.  A full listing of the proposed fees and Below Market Rate requirements can be found here.

    Election Issues

    The Plan’s Below Market Rate requirements are based on financial analysis completed before Proposition C was enacted earlier this year.  Proposition C generally sets the affordable housing levels for new projects at 25% for on-site and 33% for off-site, with such housing divided between low-income and middle-income households.  The levels set by Proposition C are subject to adjustment by the Board of Supervisors and the City Controller’s report, as discussed in more detail here.

    This November’s ballot also includes a proposition that would require conditional use authorization to convert PDR space into another use all across the Central SoMa Plan Area, along with required replacement of converted PDR space.  The measure is Proposition X, titled “Preserving Space for Neighborhood Arts, Small Businesses and Community Services in Certain Neighborhoods”, and was proposed Supervisor Kim.  Passage of Proposition X would add new requirements that would need to be taken into account in a revised version of the Plan.

    Next Steps

    The draft Plan is open for public comment, with the goal of submitting a version to the Planning Commission in November of 2016.  A draft EIR for the Plan is expected to be released this fall, with the goal of completing the final EIR in early 2017.

  • SF Planning Commission Moves Forward with Transportation Demand Management Program

    On August 4, the San Francisco Planning Commission took two actions to move forward the establishment of a citywide Transportation Demand Management (TDM) Program designed to shift San Franciscans out of cars and onto sidewalks, bicycles and public transit. The Planning Commission recommended that the Board of Supervisors approve an ordinance creating the citywide TDM Program, and simultaneously adopted TDM Program Standards to take effect if the Board of Supervisors approves the TDM Program ordinance.

    The next step is a likely October hearing before the Board of Supervisors’ Land Use and Transportation Committee—the ordinance was introduced at the Board’s September 6 meeting. This is the final component of the Planning Department’s three-part Transportation Sustainability Program. Last fall, the City approved new transportation fees (the “Invest” component). Earlier this spring, the Planning Commission changed the way transportation impacts are measured under the California Environmental Quality Act (CEQA), using Vehicle Miles Traveled (VMT) instead of automobile delays at intersections, or Level of Service (the “Align” component).

    Although some TDM requirements are scattered across the City’s Planning Code for certain districts and project types, TDM requirements for new development are most frequently imposed through the CEQA process as mitigation for traffic impacts, or are included by developers as amenities or to reduce projected vehicle trip counts. The City’s move to Vehicle Miles Traveled as the CEQA standard for transportation impacts means that fewer projects will have significant transportation impacts to mitigate. The TDM Program contains a comprehensive set of requirements, requiring changes to City law by ordinance to require developers to include TDM measures in new projects. It mandates that developers meet certain TDM targets, chosen from a menu of TDM options, which increase as the number of on-site parking spaces increases. Retail and office uses will have more robust TDM requirements than residential uses, because of the larger number of vehicle trips generated by a retail or office parking space.

    For example, a 100-unit residential project offering 50 parking spaces would be required to earn 16 TDM “points” by incorporating TDM measures into the project—13 base points for parking spaces 1-20 and 1 point for each additional 10 spaces. To earn these points, the developer could, for example, improve walking conditions on project sidewalks, provide bicycle and car-share parking, sell or lease parking spaces separately from units (“unbundled parking”), and pay for resident transit passes. Within each of these categories, a range of TDM point options can be earned, with more intense efforts earning more points.

    New development projects of 10 or more residential units or 10,000 or more commercial square feet will be subject to the TDM Program requirements, as will be most changes of use of 25,000 or more occupied square feet. Projects triggering TDM Program requirements must submit a TDM Plan along with the first development application. Developers and property owners will need to prove compliance with the TDM Plan, by demonstrating TDM measures are in place prior to obtaining a certificate of occupancy, and by participating in ongoing monitoring and compliance after occupancy.

    As currently drafted, the law would give the Planning Department and Commission leeway to make future changes to the Program Standards, including the menu of TDM options, required points, and point values assigned to various TDM options. Projects will be required to comply with the Program standards in place at the time of their submission of a TDM Plan, making it critical to stay on top of Program changes and account for TDM measures in early project planning and design.

  • What We’re Reading: September 30, 2016

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

    Uber World (Economist): Uber, self-driving vehicles, and the future of transport.

    Jane Jacobs’s Street Smarts (The New Yorker): Examining the strengths and limits of Jane Jacobs’s urban vision.

    Self-Driving Cars Gain Powerful Ally: The Government (NYT): New federal guidelines for the burgeoning automated vehicle industry.

    In Cranes’ Shadow, Los Angeles Strains to See a Future With Less Sprawl (NYT): Is LA becoming denser?

    AS OUR CITIES GROW HOTTER, HOW WILL WE ADAPT? (The New Yorker): Urban planning for climate change.

    Obama takes on zoning laws in bid to build more housing, spur growth (Politico): Obama, NIMBY, and YIMBY.

  • City Controller’s Draft Report Finds New Affordable Housing Requirements May Be Economically Infeasible

    Publication of the much-anticipated feasibility study of the City’s new, heightened affordable housing requirements, originally due on July 31st, has been delayed until September. Nonetheless, on August 22nd the City Controller released draft recommendations concluding that increasing the new affordable housing set-aside to twenty five percent would reduce total housing production by twenty two percent as compared to the prior set-aside of twelve percent.

    The draft states that an eighteen percent on-site set aside for apartments and a twenty percent on-site set aside for condos mark the upper bounds of economic feasibility.

    The City adopted the increased affordable housing requirements in June with the passage of Prop C, a ballot measure to amend the City’s Charter and update affordable housing requirements. In May, the Board adopted trailing legislation (contingent on voter approval of the ballot measure) implementing Prop C.  Among other things, it required a feasibility study to assess how increasing on-site affordable housing requirements from twelve to twenty five percent, and off-site and in lieu fees from twenty to thirty three percent, will affect housing production in San Francisco. Once released, the report could form the basis for adjustments to the requirements.

    The San Francisco Housing Action Coalition estimated that 1,600 units in the approval pipeline would still be subject to Prop C’s requirements, and the report’s delay prolongs the economic uncertainty for many of these projects.

  • Marketing Your Brand With Influencers? Make Sure the FTC Hits the “Like” Button

    Authored by Thomas Harvey; originally published in The Recorder, September 22, 2016.

    Brand owners and their attorneys are grappling with an important question: how to disclose their connections to luminaries like PewDiePie.

    If you haven’t heard of PewDiePie, don’t worry—he’s a 26-year-old Swedish college dropout who likes to sit at his computer, play video games and shoot movie clips. But he also happens to operate the most popular YouTube channel in the world. He has nearly 50 million subscribers, and his commentary wields huge influence over the success of a video game release. Marketers pay him to exercise it. Last year, PewDiePie’s production company reported an operating profit of about $8.1 million.

    Brands have long valued “native advertising,” promotional content that is similar to the news, articles and entertainment that surrounds it. But they are increasingly spending their dollars on the particular subspecies known as influencer marketing, in which individuals—ranging from stars (LeBron James) to quasi-stars (Kim Kardashian) to everyday people (a little-known blogger)—endorse products with messages that are personal, direct and authentic. The dollars at stake are substantial. According to a recent report, the most popular influencers (three to seven million followers) command an average of $187,500 per YouTube post, $75,000 per Instagram or Snapchat post, and $30,000 per Twitter post. Even lesser influencers (between 50,000 and 500,000 followers) command average payouts of $2,500, $1,000 and $400, respectively.

    The proliferation of social platforms has created many new marketing opportunities for brands. But in these formats it is often impossible to distinguish between products that influencers happen to like and those that they are paid to endorse. Today, brand owners struggle with how to harness their authenticity without deceiving customers or falling afoul of federal disclosure requirements.

    The Federal Trade Commission is watching carefully. Guided by Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce,” the FTC has increasingly focused on influencer marketing. Last December, it updated its guidance with a policy statement on deceptively formatted advertisements. In its long-held view, messages not identifiable as advertising are deceptive if they mislead consumers into believing that they are independent, impartial or not from the sponsoring advertiser. It explores this principle in the context of influencer marketing.

    Click here to continue reading a PDF of the article.

    Posted on: September 27, 2016 Tags: Categories: Publications