SF Apartment : February 2018


Driving Development

In September 2017, Mayor Ed Lee implemented Executive Directive 17-02, Keeping Up the Pace of Housing Production, wherein he directed all city departments to take steps toward process improvements that would increase housing production.

In December, the Planning Department submitted a plan to the Mayor’s Office that could speed up development in San Francisco. The implementation plan is long and detailed, and provides some quite significant and promising steps that could have a meaningful impact on housing production and the approval processes in San Francisco.

Below are a few examples of the types of measures that the Planning Department has recommended, and hopefully will be undertaking. Implementation of the following was proposed to occur within first quarter of 2018:

  • PPA (preliminary project assessment) letters to be converted to abbreviated responses, with shortened 60-day deadline (instead of current 90 days), along with overall efficiency improvements to PPA processes;
  • Creation of a single consolidated “Development Application” form with a master project description, with supplemental forms to be submitted for specific entitlements, such as conditional uses, variances, etc., combined 30-day Planning Department application completeness determination, subsequent 30-day Notice of Planning Department Requirements (NOPDR) issuance, and a 30-day staff review period for project sponsor’s NOPDR response, with immediate commencement of CEQA and current planning review thereafter;
  • Implementation of various CEQA related efficiency and streamlining measures (e.g. reassessment of criteria that triggers the need for consultant-prepared technical studies, and discontinuance of CEQA exemption certificates and concurrent expansion of exemption checklist applicability);
  • Automatic scheduling of residential projects within the 6, 9, 12, 18 or 22-month deadlines established by the Directive; and
  • Automatic scheduling of DR (Discretionary Review) hearings to occur within 45 days after the end of the 30-day notice period;

Proposed Phase 2 measures that would be implemented during the second half of 2018 would include:

  • Increased capacity for over-the-counter (OTC) approvals, including elimination of the need for Historic Preservation Commission hearings for certain preservation permits and concurrent expansion of the permits that would instead be approved OTC by preservation staff;
  • Streamlining of notice types, periods and mailing radius;
  • Potential elimination of the need for a conditional use authorization (and a hearing) for changes of use from one formula retail use to another formula retail use; and
  • Coordination and launch of an integrated and project tracking system between the Planning Department and the San Francisco Department of Building Inspection.

The Planning Department and DBI also submitted a joint voluntary plan to allow parallel processing for certain housing development applications. The process is available primarily to less than 240-foot tall new construction projects that have either 50 or more units without any non-residential uses, or 250 or more units with other, non-residential uses. The parallel process could be a significant time-saver as it would allow commencement of DBI review of a building permit application to occur at the same time as Planning Department’s review, prior to completion of CEQA review.

A full copy of the Planning Department’s plan and more information on the parallel plan can be accessed at sfplanning.org.

The above information was provided by Tuija Catalano with Reuben, Junius & Rose, LLP.

Attack on Costa-Hawkins Defeated

On January 11, 2018, Assembly Bill 1506, which threatened to repeal the state’s Costa-Hawkins Rental Housing Act, was narrowly defeated in the Assembly Housing and Community Development Committee. If it had passed, the bill would have had disastrous effects on the rental housing industry.

Proposed by Santa Monica Assemblymember Richard Bloom, and co-sponsored by San Francisco representative David Chiu and Oakland representative Rob Bonta, the bill would have enabled cities throughout California to impose vacancy control and to place single-family homes, condominiums and buildings built after 1979 under rent control.

The California Apartment Association, the San Francisco Apartment Association and allied industry partners worked together to organize and bring busloads of several-hundred property owners to the Capitol in Sacramento for the hearing. This enormous display of opposition to the proposal, as well as CAA’s advocacy and leadership, were instrumental in the bill’s defeat. Opponents of the bill outnumbered tenant advocates at the hearing by more than 150 people.

However, SFAA and its members must continue to be vigilant. The legislation was only one vote short of getting out of committee and signatures are currently being gathered to place the same measure, a full repeal of the Costa-Hawkins Act, on the November 2018 statewide ballot. CAA and SFAA have been preparing for this measure for months and are working to organize the opposition campaign. If the proposal does qualify for the November 2018 ballot, it will represent one of the largest attacks on the rental housing industry in several decades. SFAA members will be asked to contribute to the campaign to help preserve the Costa-Hawkins Act.

Thank you to SFAA members who attended the hearing in Sacramento, as well as to CAA, the San Francisco Association of Realtors, the Small Property Owners of SF and BetterHousingPolicies.org for helping to organize this successful effort.

Annual Allowable Rent Increase

Effective March 1, 2018, through February 28, 2019, the allowable annual rent increase amount will be 1.6%. This amount was determined by taking 60% of the percentage increase in the Consumer Price Index. To calculate the allowable rent increase, multiply the tenant’s base rent by .016. Also, security deposit interest for the same time period is now 1.2%, up significantly from .6% last year. For more information, click here.

Proposition 13 – Property Tax Restrictions

A proposed change to California property tax restrictions might make its way on the November 2018 ballot. Proposition 13 states that, “The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property.” The change, proposed by the California Association of Realtors (CAR), would allow California property owners who are older than age 55 or severely disabled to retain their lower tax rate for life, no matter how many times they move, as long as they remain in California.

According to CAR, the change could help relieve the housing shortage by encouraging empty-nesters to move out of the large, single-family homes they’ve been holding on to for tax purposes. Those against the proposal—YIMBY Action, for example—see it as another tax break for the wealthy, which would ultimately take funding meant for public schools.

The California Association of Realtors needs to gather 585,000 voter signatures by the end of March to get the measure on the November 2018 ballot.

California Solar Program

The California Public Utilities Commission approved the Solar on Multifamily Affordable Housing (SOMAH) program in December, allowing $1 billion in incentives and rebates to landlords who outfit buildings with solar panels inhabited by low-income renters.

The program implements Assembly Bill 693, which was sponsored by Assemblymember Susan Talamantes Eggman (D-Stockton) and passed in 2015. The funding will provide up to $100 million annually and run for the next ten years. The funding will come from the state’s climate-change program and could decrease the electric bills of up to 150,000 tenants.

To qualify for SOMAH, a residential building must include at least five subsidized units for low-income tenants and be located in a disadvantaged area or be mostly inhabited by families earning 60 percent of the area’s typical income. Fifty-one percent of the utility savings must benefit the tenant. The program is expected to officially begin in the fall of this year.

New Regulations for Public Utilities

After the record-breaking fires throughout California in 2017, the California Public Utilities Commission has approved new regulations. In high-risk areas, communications companies and electric utilities companies must now 1) increase the distance between trees and power lines from four feet to twelve feet; 2) place new wires farther apart to keep them from touching in high winds; 3) prioritize safety-related repairs; and 4) inspect overhead power lines annually.

The CPUC worked with the California Department of Forestry and Fire Protection (Cal Fire) to determine which areas in California are considered extreme and high risk for wildfires. For more information, visit www.cpuc.ca.gov/.

Au is hoping to soon grow his company beyond the greater San Francisco Bay Area. He says his company’s mission is to “transform real estate into desirable communities for people to live and work while creating exceptional values for our residents, employees, and investors, and in that order. If you make your customers happy, your staff happy, investors will ultimately be happy.”

The above content was sourced from Multifamily Executive Magazine.

Introducing SFAA’s New Officers

SFAA recently elected a new board of directors for 2018, including a new president: Chris Bricker of Parkmerced. This will be Bricker’s first term serving in this capacity. Outgoing president Eric Andresen will still serve on the board.

The new vice president is Robert Link of S&L Realty, who has previously served a term as SFAA president. Owner Jim Hurley will continue in his role as treasurer and Mark Henderson, director of Address Group LLC, will take on the role of secretary.

The new officers will be joined by 2018 board members Andre Ferrigno, Bob Mayer, Neveo Mosser, J.J. Panzer, Bert Polacci, Susan Sangiacomo, and Dave Wasserman. SFAA would like to congratulate its new officers and thank all of its board members for their service and guidance.

SFAA Trade Show: Monday, February 26

Mark Monday, February 26 on your calendar for the annual SFAA tradeshow. The event will take place at the Fort Mason Conference Building, Gallery 308, from 4:00 p.m. to 7:00 p.m.

Attendees will learn all about the latest trends, products and services in the multifamily housing industry. Consult with legal and management professionals, get to know service providers, improve your overall effectiveness at the free educational classes, and meet peers in the San Francisco rental property market. The event is free and open to the general public, so bring your friends and enjoy!

Please note that the tradeshow will replace the February member meeting. For more information on the tradeshow or to become a sponsor, contact vanessa@sfaa.org.

SFAA 2018 Lease Available

The updated lease is now available to members on the SFAA website. The updates reflect protections for landlords regarding the recent marijuana and internet service provider ordinances, as well as details for properly allocating recyclables, trash, food and garbage.