The News

Welcomed Waivers

Upcoming fire alarm upgrade deadlines and business tax payments have been delayed, providing relief to local small businesses.

Editor’s Note: state and federal guidelines and legislation are constantly changing regarding COVID-19. For the latest information, resources, financial aid, and forms, visit www.sfaa.org or www.caanet.org/coronavirus.

Fire alarm system upgrade: At the time of publication, the deadline to upgrade fire alarm systems in residential buildings has been extended two years. The new deadline will be set for July 2023 (the previous deadline was July 1, 2021). All buildings that are required to have a fire alarm system under Fire, Building and Housing Codes must upgrade the fire alarm system, if necessary, to comply with the sound level requirement for sleeping areas.

Fire alarms must reach a sound level of at least 15 dB above the average ambient sound level or 5 dB about the maximum sound level, having a duration of at least 60 seconds or a sound level of at least 75 dBA, whichever is greater, measured at the pillow level in the area required to be served by the system using the A-weighted scale (dBA). If there is a barrier, like a door or curtain for example, between the notification appliance and the pillow, the barrier must be in place during the sound test. For more information, visit sf-fire-org/fire-safety-requirements-building-owners.

Annual Business Taxes: The deadline to file business taxes has been extended from March 1, 2021 to April 30, 2021.

By April 30, most rental property owners should file and pay the gross receipts tax for each building (if four or more residential units are leased in an individual building); file and pay the payroll expense tax for each building, unless your taxable payroll expense attributable to that building is less than or equal to $320,000; and pay 2020-2021 business registration fees for each building (this had been deferred from June 1, 2020).

Reminder: Government grants, including funds from the Payroll Protection Program (PPP loans) are not taxable. They are not considered to be “gross receipts” for purposes of the city’s gross receipts tax.

Small business relief: Small businesses or restaurants that were ordered to stop operating due to a San Francisco health order and which have less than $25 million in 2019 gross receipts qualify for relief. For businesses that qualify, the 2020-2021 business registration fees (originally due on May 31, 2020) and the regulatory license fees (originally due March 2020) will be waived. To qualify for this relief, you must first file a tax return. For detailed instructions and to file your return, visit sftreasurer.org/covid-19-tax-relief-businesses#file

Some 2021 deadlines have been extended as well. The 2021-2022 license fees are now due on November 1, 2021 (originally due March 30, 2021). Additional 2021 extensions are awaiting approval from the Board of Supervisors, including the business registration renewal, originally due May 31, 2021, and the delinquency date for point-of-sale weights and measures fees.

New Bills to Boost Housing
Senate Bill 478, authored by Senator Scott Wiener (D-San Francisco), will ease restrictions on how much can be built on lots zoned for multifamily housing. Specifically, the bill targets regulations that cap a development’s square footage based on lot size, prohibiting local jurisdictions from limiting square footage to less than 1.5 times the lot size. The law would pertain to buildings with two to ten units.

According to Wiener, current law makes it cost prohibitive to build modest multifamily housing. “We should not tolerate a situation where a city makes it impossible to build,” he said, speaking in support of the bill.

Senate Bill 621, authored by Assemblymember Susan Eggman (D-Stockton), would incentivize the conversion of vacant hotels and motels into multifamily housing. Converting these buildings would increase the housing supply, but also revitalize economically depressed spaces, generate jobs, unlock commercial corridors, and rejuvenate communities. The bill would include a streamlined process for converting the buildings, hopefully reducing the costs and building time for developers. A percentage of each building must be set aside for affordable housing.

Fees Waived for New In-Law Units
San Francisco supervisors voted unanimously to ease restrictions for property owners who want to build accessory dwelling units on properties with single-family homes. Fees for building inspections, plan review, records retention, and site surcharges would be waived for these projects.

The ordinance was written by Supervisor Gordon Mar. Because single-family homes make up 31% of the city’s housing stock, the bill could have a big impact. He said, “By waiving building permit fees on ADUs, we are incentivizing homeowners to expand affordable housing opportunities and support extended families and seniors with mobility and caretaking needs.”

For more information about this ordinance, read “Lay of the Land Use” by M. Brett Gladstone in the March issue of SF Apartment Magazine (sfaa.org).

New Interim Density Controls
In January the Board of Supervisors passed interim zoning controls for parcels in residential-commercial combined (RC), residential-mixed (RM), and residential-transit oriented (RTO) zoning districts (excluding RTO-M).  The controls require Conditional Use Authorization (CU) for most new construction or alterations that do not maximize residential density. Sponsored by Supervisor Aaron Peskin, the interim zoning controls became effective on January 21st and are in place for 18 months, until July 2022. They apply to all projects—even ones currently under review by the Planning Commission—where a final site or building permit has not been issued (i.e., any project currently on file with the City).

The controls aim to disincentivize low-density projects, restrict the construction of large residences, and prevent the loss or conversion of rent-stabilized housing units.  The zoning districts cited allow for a higher density (i.e., more units at a smaller size), but often are developed with larger units that are more suitable to higher-income families (i.e., fewer units at larger sizes).

The controls apply to any (i) new construction of a residential building or (ii) a proposed alteration that would result in the expansion of the building. A CU from the Planning Commission will be required if the residential building does not maximize the principally permitted residential density while meeting minimum unit size requirements. The following minimum unit sizes must be used in density studies under the interim controls: 450 square feet for one-bedrooms, 700 square feet for two-bedrooms, 900 square feet for three-bedrooms, and 1,100 square feet for four bedroom units.

There are exceptions to the Conditional Use requirement where site constraints prevent a project from maximizing density or for certain minor expansions. To fall under the site constraints exception, a project must meet the following criteria:

Existing lot conditions or form-based restrictions on development (e.g., height, bulk, rear yard requirements) prevent a project from maximizing density without seeking a variance or subdividing units (while adhering to the minimum unit sizes in the Planning Code);

• The proposed project increases density on a subject lot; and
• No unit is greater than 2,000 square feet in size.
• Expansions of existing residential buildings are permitted without a CU if the proposed expansion is 25% or less of the existing residential building and:
• Does not increase the size of any unit that is already larger than 2,000 square feet in size;
• Does not create a new unit larger than 2,000 square feet, or
• Does not cause an existing unit less than 2,000 square feet in size to exceed 2,000 square feet.

It is unclear how many projects the interim zoning controls will impact, or whether it will result in changes to proposed development. Until the Planning Department or Planning Commission adopt clear guidelines for implementing the controls, including standards for density studies, the impact of the interim zoning controls remains uncertain.

The above content was written by Reuben, Junius & Rose Attorney Tara Sullivan and was reprinted with permission. This content is general in nature. Readers should consult with legal counsel before relying on this information.

Vallie Brown to Lead Nonprofit Arts Funding Agency
Former San Francisco Supervisor Vallie Brown was appointed the director of the city’s main nonprofit arts funding agency Grants for the Arts, by Mayor London Breed and City Administrator Carmen Chu. The nonprofit was established in 1961 and has distributed early $400 million to hundreds of nonprofit arts and culture organizations in San Francisco, according to its website, sfgfta.org.

In addition to being a city supervisor, Brown’s experience includes metalwork sculpting, fighting for equity for arts programming in underserved neighborhoods, and many years in City Hall.

SFAA Updates
Annual SFAA Trade Show: SFAA’s annual trade show will take place on June 17 this year. The event will be jam-packed with important and timely information for San Francisco rental property owners. Attendees will learn about all the latest legislation, trends, products, and services regarding the local multi-unit housing industry. For more information, turn to page 65.

To sponsor the event, contact [email protected]. Look for date, time, and registration information at www.sfaa.org and in the May issue of the magazine.

As SFAA pivots to provide you services during the pandemic, there is a new way to connect with SFAA. Email [email protected] to have your questions and concerns promptly addressed. While the SFAA office is closed, SFAA staff is working round-the-clock to keep the nonprofit running. Timely payment of membership dues is necessary to help the association help you.

SFAA classes will be available online during shelter-in-place. The San Francisco Apartment Association is happy to announce that current CCRM students can continue their education during the pandemic right from home. We understand keeping up education is crucial and want to assist our members to stay up to date. Thus we will be setting up more webinars in the future. See the calendar on page 54 for a full list of classes.