SF Apartment : May 2018


Rent Reductions Realized

While overall asking rents in San Francisco are still up 4 percent compared to one year ago, some neighborhoods are seeing double-digit declines, according to a new report from Zumper.
The median asking prices for one-bedrooms in Cole Valley are down 14 percent to $2,950, while the Inner Richmond is down 11 percent to $2,550 and Mission Dolores is down 9 percent to $3,350 since the same time last year, according to data from the apartment listing site.

But in other San Francisco neighborhoods, prices were still on the rise. In general, prices rose the most in the city’s least-expensive neighborhoods. Bayview was up almost 8 percent to $2,750 and the Tenderloin was up over 6 percent to $2,550 for a one-bedroom unit. And there are some already expensive neighborhoods that are still showing increases. For example, in Lower Pacific Heights, rents rose 10 percent over last year to an average of $3,630 for a one-bedroom.

Certain Passthroughs in Jeopardy

San Francisco Supervisor Sandra Lee Fewer recently introduced legislation to disallow passthroughs for certain operating and maintenance costs. San Francisco currently allows landlords to pass portions of their property tax bills and mortgages onto tenants. If their petition is approved by the San Francisco Rent Board, landlords can raise rents permanently by up to 7 percent on top of the annual allowable increases.

Under the proposed legislation, landlords would still be able to apply to pass on other costs, like capital improvements and utility increases. But passing on the expenses of paying loans and property taxes is “unfair,” Fewer told the San Francisco Chronicle.

“It doesn’t improve the property, it doesn’t make conditions better—it’s not upgrading anything,” Fewer said. “All it’s doing is making a corporation richer. That’s all it is.”
But Charley Goss, government affairs manager for the San Francisco Apartment Association, told the newspaper that debt-service and property tax passthroughs were an essential tool for landlords trying to keep their buildings going in such an expensive city. “This has been a vehicle in San Francisco that we feel has helped members maintain their buildings and keep people investing in private property in San Francisco,” Goss said, adding that SFAA planned to meet with city lawmakers to discuss the bill.

The legislation would invalidate debt-service and property tax passthroughs on operating and maintenance petitions filed at the rent board on or after December 11, 2017. Of the roughly 100 petitions still pending at the rent board, 56 were filed on or before December 11, 2017.

Buyout Law Upheld

An appeals court ruled that San Francisco’s anti-buyout law is legal. The 9th U.S. Circuit Court of Appeals said that the law does not violate landlords’ free speech, privacy, equal protection or due process rights. 

The San Francisco Board of Supervisors passed the law in 2014 under the presumption that landlords were pressuring tenants to accept buyouts to get around rent control restrictions and rerent the unit at market rate. The law requires landlords to inform tenants of their rights in a buyout. It also allows tenants to back out of a buyout deal within 45 days and prohibits landlords from converting buildings into condominiums for 10 years after they pay tenants to leave two or more units–or just one unit if the tenant was ill or had a disability.

SFAA and other industry groups fought the 2015 ruling of a district judge, who sided with the city. “Nothing in the ordinance either forbids particular speech or speech activities, thereby imposing a true restraint on future speech, or conditions speech or speech activities upon the unbridled discretion of government officials,” U.S. District Judge Phyllis Hamilton wrote at the time.

Apartment industry attorneys appealed, arguing that buyout negotiations are protected speech, and the part of the law requiring landlords to get a tenant’s signature before negotiating violates their free speech rights. However, the circuit panel upheld the lower court’s ruling, agreeing with the district court that the ordinance does not violate landlords’ constitutional rights.

Statewide Change That Would Have Led to Denser Housing Defeated

A State Senate Committee has voted down state senator, and former supervisor, Scott Wiener’s housing bill, which would have allowed higher, denser buildings near public transit.

The committee recently voted against Senate Bill 827, which would have allowed for zoning changes that would increase density near transit statewide. Supporters said the changes were needed to address the drastic housing shortage across the state. Critics said the measure took away local control over development, conferred huge values on properties by allowing increased heights without requiring more public benefits and increased the chances of tenant displacement.

Wiener recently announced several amendments to the bill, meant to address some of these concerns. Among other things, the amendments set affordable housing requirements in cities that don’t already have them; change the definition of “transit corridors” to mean those that have consistent, high-quality transit that runs all day and on weekends; exclude properties that have had an Ellis Act eviction within five years from getting a demolition permit; remove the 85-foot height allowance and concentrate instead on 45-55-foot buildings; and delay implementation of the bill to 2021.

But these changes were not enough to get the divisive bill, which was opposed by 8 out of 11 San Francisco supervisors, out of the State Senate’s Transportation and Housing Committee. Wiener has said that despite the defeat he will be bringing the bill back in the next legislative session.

Legislation to Speed Up ADU Conversion in the Works

Way back in 2016, the city created its Accessory Dwelling Unit program, which was designed to create a pathway to legalization for unpermitted in-law units. Yet since that time, only 23 ADUs have been successfully constructed. Now several supervisors are advancing legislation to speed up the process.

Supervisor Katy Tang introduced major amendments to the program, which includes requiring all relevant department staff to be present during a project’s initial meeting and removing difficult construction requirements around bicycle parking and street trees.

Supervisor London Breed is proposing an ADU task force that would include officials from the Planning Department, Department of Building Inspection and Fire Department. The working group would go through the cases in the backlog and figure out which applications can be sped up.

There are 419 ADU projects in the planning pipeline, many of which are proposing multiple units. Therefore, the actual number of ADUs pending approval is 1,100. Only about a quarter of those projects have been issued permits thus far.