SF Apartment : January 2017


In-Law Alley

by Pam McElroy

Supervisor Aaron Peskin has been fighting to pass ADU legislation since 2002, and his hard work has finally paid off. In a Q&A with Pam McElroy of SF Apartment Magazine, he talks about the new ordinance, Proposition C, and his favorite neighborhood in San Francisco.

Pam McElroy: How long have you lived in San Francisco? What brought you here? What brought you into politics?

Supervisor Peskin: I have lived in San Francisco with my wife Nancy for over 26 years, nestled right in the heart of the city in District 3. It’s really one of the most iconic clusters of neighborhoods in the world, boasting one of the last remaining Chinatowns in the United States and the beautiful historic homes of Russian, Nob, and Telegraph Hills, flanked by Polk Gulch to the west and San Francisco’s legendary waterfront to the east. I can say with all honesty that I love living and working in this community, and I’m pretty grateful that I get to wake up every morning and do what I love.

I grew up in Berkeley and have spent most of my adult life immersed in environmental advocacy and land use policy, so I’ve tried to continue that work on the Board of Supervisors, whether it’s serving on the Land Use & Transportation Committee or the regional Bay Conservation & Development Commission.

Pam McElroy: What was the genesis of the ADU program in San Francisco? How was it first received? How did the legislation come to pass?

Aaron Peskin:
Actually, I’ve been trying to pass citywide Accessory Dwelling Unit (ADU) legislation since my first go-round in office! “In-law units,” which we are formally calling ADUs, have provided housing to generations of San Franciscans. Much of the existing housing throughout the city can accommodate new ADUs, and for decades, several elected officials, namely Supervisors Terence Hallinan, Mabel Tang, and Tom Ammiano, attempted to pass legislation enabling just that.

In 2002, I made a valiant attempt to pass citywide ADU legislation, but unfortunately the political climate wasn’t in my favor. In 2014, the Board of Supervisors was able to pilot district-specific programs in Districts 3 and 8; one of the first things I did after being re-elected was dust off my 2002 legislation and update it to address the needs of both tenants and homeowners who have been dealing with a raging housing crisis citywide. According to Planning’s own estimates, the potential is there to create upward of 33,000 new units of rent-controlled housing.

Pam McElroy: Do you think this will have a big enough impact on the housing crisis?

Aaron Peskin: I have always thought this was an incredible way to address new housing creation without having a huge impact on neighborhoods, which most large developments struggle to mitigate. Not only is this new housing that is permanently affordable in the sense that it is rent-controlled, but it also fits into the design and culture of whatever neighborhood it’s in. There is also a restriction that ADUs not be listed as short-term rentals (or Airbnbs), so we know that these homes will accommodate real tenants and neighborhood stakeholders.

Pam McElroy: Who benefits from the ADU program?

Aaron Peskin: With the potential for 33,000 new units of rent-controlled housing, the benefits are felt by everyone citywide! I mean, that’s basically what the Mayor pledged to construct or rehab by 2020. If this program is actually utilized, we could reach that goal sooner rather than later.

I think that large apartment buildings will see the benefits of this program, and the San Francisco Apartment Association is a wonderful resource for tapping into contracting and financing recommendations. But I’m also really hoping that we see the smaller buildings and what I call “mom & pop” homeowners take advantage of this program. You’re providing a legitimate legal home for a tenant and will ultimately recoup the construction costs within 3-5 years of being a landlord. It’s a win-win situation, and it ultimately increases the value of your home. It also adds housing to the neighborhood while preserving its fundamental character. For many families, it could mean creating a separate but accessible space to house grandparents, children, or other relatives. For others, it’s a way to accrue funds to help pay off a mortgage or other financial commitments.

Much has been made of the need for middle-income housing, and we started tackling that by updating our inclusionary housing program this June—for the first time ever, we now have a middle-income housing requirement for developers. 
Our ADU program was the second stab at pretty immediately incentivizing the creation of new housing in the 80-145% area median income (AMI) range. That’s permanently affordable middle-income housing in the neighborhoods that need it the most.

Pam McElroy: Who is eligible? What are the restrictions? Is there a re-occurring roadblock you’d like to make homeowners aware of?

Aaron Peskin: You can add an ADU within an existing building or an existing authorized auxiliary structure wherever residential use is permitted in San Francisco—that’s a lot of possibility. The city now allows the unlimited construction of ADUs within buildings that are five units or more, with one unit allowed in buildings with four or fewer units. Garages, storage rooms, and other kinds of funky sub-basement spaces are the most common types of opportunities to convert. There are some restrictions—for example, you can’t install an ADU in a building that’s had an owner move-in (OMI) eviction in the last five years or any other kind of “just cause” eviction in the last ten years—but mostly we’ve tried to ensure that as many housing types as possible can benefit from potential add-ons within their existing envelope.

One thing to be aware of: if it becomes necessary to add height to the building 
to accommodate a legitimate residential unit with code compliant head space, then you must do a full seismic retrofit of the whole building. The trade-off is an extra three feet in exchange for those valuable safety improvements.

Pam McElroy: How does the ADU program tie in to seismic retrofitting overall?

Aaron Peskin: For one thing, the cost benefits of doing a seismic retrofit and an ADU simultaneously are huge — you can literally offset the costs of your safety work through acquiring an additional unit to charge rent on. It’s also a way to kill two birds with one stone, in terms of the trips and time that you spend at the DBI and/or Planning permitting counters.

Pam McElroy: What are the standard costs? Are there financing options?

Aaron Peskin: The average cost to build an ADU is roughly in the $150,000-$200,000 range. My office is working with the San Francisco Federal Credit Union to create a low-interest loan program to help first-time mom & pop homeowners and small apartment owners finance their ADUs. We are hoping to unveil the collaboration in the spring of 2017—I’m serious about wanting folks to use this program!

Pam McElroy: What about the permitting process? Are there any waivers?

Aaron Peskin: Basically, the entire process is averaging about six months—or more in the case of some neighborhood-specific requirements. That is where I’m the most hopeful in terms of where we can continue to improve and streamline our city process and really help applicants through this new experience from start to finish. We’ve worked with SF Planning to ensure that they were able to hire a planner solely dedicated to ADU applications, and we’re already seeing that shave time off the process.

With respect to waivers, there is the potential for the Zoning Administrator to waive some rear yard, parking, open space, and density requirements, which is helpful for project applicants.

Pam McElroy: Is there anything in the legislation that you think still needs work?

Aaron Peskin: I think the legislation has been pretty thoroughly vetted, though I’ve never been afraid to revisit a piece of policy down the road if there’s an opportunity for improvement.

Like I said, I think my focus now is really to ensure that people use the program, and that has meant convening numerous meetings with SF Planning, Department of Building Inspection, the Fire Department, and invested stakeholders to solicit feedback on how we can better streamline the permitting and application process. We’re getting close.

Pam McElroy: What of the legislation are you most proud of?

Aaron Peskin: I’m really most proud of the compromises that I struck along the way, and the very strong legislative work from my team. I was able to pass good policy that will benefit landlords and tenants citywide, and pull a ballot measure off the ballot that didn’t need to be there. I’m also pleased that the end result is an ordinance that incentivizes putting these new units on the rental market. Policy-making takes patience and sometimes putting aside your pride to ensure that your constituents come first. I’m happy that I was able to work with my colleagues to get this passed at the Board of Supervisors, where it belonged.

Pam McElroy: How many ADUs have been permitted? How many more permit applications to you expect the city will receive in 2017?

Aaron Peskin: My understanding as of our last Land Use hearing is that over 100 new ADU’s have been permitted under the new program, and Planning staff has indicated that applications are rolling in. That is great news. Now my goal is really to get as many people as possible excited and educated about the program and its benefits.

Pam McElroy: Is there a notable success story that stands out to you?

Aaron Peskin:
One of the standout success stories is the coalition that we built along the way, from tenant advocates to property owners, historic preservationists, neighborhood leaders, architects, and even the SF Apartment Association. I think it’s accurate to say everyone had an opportunity to leave their mark on the legislation, and their experience-based feedback was critical. Everyone involved should be proud of the partnerships that were forged along the way.

Pam McElroy: Do you have advice for owners considering adding an ADU?

Aaron Peskin: Take advantage of the tools that are at your disposal. I highly recommend checking out the resource hub that my office has been working with Planning to pull together. You can find more here: http://sf-planning.org/accessory-dwelling-units.

Pam McElroy: In conclusion, is there anything else you’d like our readers to know?

Aaron Peskin:
Yes! We also passed a bond measure this past November, which I authored to help secure low-cost loans for housing preservation, rehabilitation, and acquisition. It was a herculean effort, given how cluttered our San Francisco ballot was—and given the high vote threshold we needed to pass the measure.

In the end, we were the only measure requiring a 2/3 vote of the electorate to pass, and Proposition C freed up $261 million for private property owners to not only do seismic safety upgrades on their multi-unit housing, but expand those dollars to include electrical, fire, plumbing, and other safety and rehabilitation work on their properties. Part of that funding will also be available for non-profits to acquire small residential buildings as permanently affordable housing.

Finally, we passed common-sense Short Term Rental regulations that many of your readers and members have been championing for quite some time. While some of the big corporate actors still have not figured out how to be good corporate citizens, at least the city has taken the steps necessary to protect our housing stock and our homeowners and Short Term Rental hosts, by putting the onus on the rental corporations to obey the law and take a stand against illegal listings.

All in all, a pretty good year for strong housing policy. Thanks to the Apartment Association for all its input and advocacy. My door is open anytime, and if I don’t see you out in the neighborhood, please feel free to come by and visit me at City Hall. 

For more information about Supervisor Aaron Peskin and how to contact him, visit http://sfbos.org/supervisor-peskin. Pam McElroy is the editor of SF Apartment Magazine and can be reached at pam@blackpointpress.com.