o0064-24

FILE NO. 231185 AMENDED IN COMMITTEE 3/4/2024 ORDINANCE NO. 064-24 [Planning, Administrative Codes - Conditional Use Authorization for Removal of Unauthorized Unit] Ordinance amending the Planning Code to waive the Conditional Use Authorization requirement for removal of an unauthorized unit in a single-family home where the owner satisfies certain eligibility criteria, waive the Conditional Use Authorization requirement for removal of an unauthorized unit where that unit requires and is ineligible for waivers from does not satisfy open space,or dwelling unit exposure requirements, or the unit does not meet minimum floor area and floor-to-ceiling height requirements, and update the required Conditional Use Authorization findings for removal of an unauthorized unit to account for the history of tenancies in that unit; amending the Administrative Code to require that where an owner obtains an exemption from the Conditional Use Authorization requirement to remove an unauthorized unit from a qualifying single-family home, the single-family home shall be subject to the rent increase limitations of the Rent Ordinance; affirming the Planning Department's determination under the California Environmental Quality Act; and making findings of consistency with the General Plan and the eight priority policies of Planning Code, Section 101.1, and adopting findings of public necessity, convenience, and welfare under Planning Code, Section 302. NOTE: Unchanged Code text and uncodified text are in plain Arial font. Additions to Codes are in single-underline italics Times New Roman font. Deletions to Codes are in strikethrough if:€1/ics Times 1Vew Roman font. Board amendment additions are in double-underlined Arial font. Board amendment deletions are in strikethrough Arial font. Asterisks (* * * *) indicate the omission of unchanged Code subsections or parts of tables. Be it ordained by the People of the City and County of San Francisco: Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 1 Section 1. CEQA and Land Use Findings. (a) The Planning Department has determined that the actions contemplated in this ordinance comply with the California Environmental Quality Act (California Public Resources Code Sections 21000 et seq.). Said determination is on file with the Clerk of the Board of Supervisors in File No. 231185 and is incorporated herein by reference. The Board affirms this determination. (b) On January 18, 2024, the Planning Commission, in Resolution No. 21489, adopted findings that the actions contemplated in this ordinance are consistent, on balance, with the City's General Plan and eight priority policies of Planning Code Section 101.1. The Board adopts these findings as its own. A copy of said Resolution is on file with the Clerk of the Board of Supervisors in File No. 231185, and is incorporated herein by reference. (c) Pursuant to Planning Code Section 302, this Board finds that these Planning Code amendments will serve the public necessity, convenience, and welfare for the reasons set forth in Planning Commission Resolution No. 21489, and the Board adopts such reasons as its own. A copy of said resolution is on file with the Clerk of the Board of Supervisors in File No. 231185 and is incorporated herein by reference. Section 2. Background and Findings. (a) San Francisco faces a continuing shortage of affordable housing. The General Plan recognizes that existing housing is the greatest stock of rental and financially accessible residential units, and is a resource in need of protection. To that end, Planning Code Section 317 requires a Conditional Use Authorization (CUA) prior to approval of any permit that would remove existing housing, with certain exceptions. Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 2 (b) Section 317 also applies to removal of Unauthorized Units, or "UDUs," defined as one or more rooms within a building that have been used, without the benefit of a building permit, as a separate and distinct living or sleeping space independent from the residential units on the same property. In some instances, an unpermitted ground floor bedroom and bathroom in a single-family home may be considered a UDU. (c) Some families purchase single-family homes with no knowledge that the property contains a UDU. For example, at some point after the purchase, families may learn of the UDU when they apply for a building permit to connect the ground-floor bedroom and bathroom with the living spaces on the upper floors. Families in these situations face the high costs of either legalizing the UDU or obtaining a CUA for its removal. In addition to these costs, legalization is not desirable for some homeowners, as some homeowners wish to integrate the separated UDU space with the existing single-family home by, for example, removing internal staircases, walls or doorways, which present internal barriers to growing families or intergenerational living arrangements (d) This ordinance waives the CUA requirement for removal of a UDU in owner- occupied single-family homes where the unit has not been rented for the last 10 years, except to a qualifying member, as defined in the ordinance. Project sponsors that utilize the CUA waiver must enter into regulatory agreements with the City acknowledging that, in consideration for this waiver, the existing unit will be subject to local rent control notwithstanding the Costa-Hawkins Rental Housing Act (California Civil Code Section 1954.50 et seq.). (e) Facilitating the removal of UDUs in single-family homes may lead to speculative real estate investments that may seek to maximize profits by displacing current residents, demolishing existing housing stock, absorbing the UDU into a large, remodeled single-family home, and quickly selling those homes. To discourage such speculation and displacement, Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 3 this ordinance waives the CUA requirement only where the UDU has not been occupied by a tenant in the past 10 years, except where the UDU was occupied by a blood, adoptive, or step-family relative of the owner or the owner's spouse or registered domestic partner. Additionally, the benefits of this ordinance are available only where the owner resides in the primary dwelling unit at the time of application to remove the UDU and intends to remain in the primary dwelling unit for at least three years after removal of the UDU is approved. (f) This ordinance also implements policies and actions adopted in the 2022-2031 Housing Element as they pertain to UDUs and facilitating the living needs of multi- generational families. Under current law, removal of a UDU does not require a CUA if the Department of Building Inspection determines that there is no path for legalization under Section 106A.3.1.3 of the Building Code. This ordinance replaces that no-legalization determination with the following objective criteria: whether the UDU satisfies the open space requirements of Planning Code Section 135, the dwelling unit exposure requirements of Planning Code Section 140, or the minimum legal floor-to-ceiling height requirement in the Housing Code. This ordinance also updates the required Conditional Use Authorization findings under Section 317 to account for the history of tenancies in a UDU. Further, this ordinance clarifies that the removal of a UDU pursuant to a permit does not trigger the penalties in Planning Code Section 176(c)(1 )(C)(i). Section 3. The Planning Code is hereby amended by revising Sections 176 and 317, to read as follows: SEC. 176. ENFORCEMENT AGAINST VIOLATIONS. * * * * (c) Penalties. Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 4 (1) Administrative Penalties. * * * * (C) Penalties for Specified Violations. (i) Alteration, Merger, Construction, or Demolition of Residential Units without a Permit. For any unpermitted alteration, merger, construction, or demolition of any building or structure containing one or more Residential Units, including work that takes place in violation of Section 317 of this Code, on or after March 1, 2023, resulting in the addition of more than three unauthorized Residential Units, or the loss of one or more Residential Units, (1) the owner of that building shall be required to apply for a replacement project under section 317 of this Code, and (2) the Responsible Party shall be liable for a penalty of up to $250,000 upon issuance of a Notice of Violation for each Residential Unit added or lost through such alteration, merger, or demolition. Within 12 months of the effective date of the ordinance in Board File No. 220878 amending this Section 176, the Planning Commission shall adopt factors and criteria for consideration, to be updated from time to time, to provide guidance to the Zoning Administrator when determining the appropriate penalty amount for violations subject to this subsection (c)(1 )(C)(i). * * * * SEC. 317. LOSS OF RESIDENTIAL AND UNAUTHORIZED UNITS THROUGH DEMOLITION, MERGER, AND CONVERSION. * * * * (c) Applicability; Exemptions. (1) Within the Priority Equity Geographies Special Use District, any application for a permit that would result in the Removal of one or more Residential Units or Unauthorized Units is required to obtain Conditional Use authorization. Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 5 * * * * (7) Exemptions for Unauthorized Dwelling Units. The Removal of an Unauthorized Unit does not require a Conditional Use authorization pursuant to subsections (c)(1) or (c)(2) if the Depart."lwnt ofBuitding Inspection has determined that there is no path for legalization under Section 106A.3.I.3 ofthe Building Cede.ff-the Unauthorized Unit does not comply with any of the following.,: (A) the Unauthorized Unit requires a waiver of-4Re open space requirements of Section 135 or dwelling unit exposure requirements, and the Unauthorized Unit is ineligible for a waiver or exemption from those standards pursuant to Section 307, Section 207(c)(4) (Accessory Dwelling Units - Local Program}, Section 207(c)(6) (Accessory Dwelling Units - State Mandated Program), or Section 207.3 (Dwelling Unit Legalization Program);~ (B) the d\~.'elling unit exposure requirements of Section 140; or ____ fq(B} the Unauthorized Unit has no contiguous area that meets both the required minimum superficial floor area in Housing Code Section 503(b} and the minimum legal floor-to-ceiling height requirement in tt+e--Housing Code Section 503(a). * * * * (10) Exception for Certain Unauthorized Units with No Tenant Occupant for 10 Years. The Conditional Use requirement of subsections (c)(J) and (c)(2) shall not apply to an application for a permit that would result in the Removal of an Unauthorized Unit in a one-family dwelling where all of the conditions in subsection (c)(71 Q)(A) are met. To establish eligibility, the owner shall furnish a declaration under penalty ofperiury on a form prescribed by the Department. attesting to compliance with all of the conditions in subsection (c)(71 O)(A). (A) Eligibility. The one-family dwelling shall meet all the following criteria: (i) the owner currently resides in the primary dwelling unit; Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 6 (ii) the Unauthorized Unit has not been rented for consideration in the last JO years. For the purposes of this subsection (c)(7.1 O)(A)(ii), "rented for consideration" shall not include any use or tenancy of the Unauthorized Unit by a blood. adoptive, or step-family relationship. specifically by a grandparent. parent. sibling. child, or grandchild. or the spouse or registered domestic partner of such relations, or by a property owner's spouse or registered domestic partner; (iii) the owner intends to reside in the one-family dwelling for at least three years a/ier the Removal of the Unauthorized Unit is approved; and (iv) the owner enters into a regulatory agreement with the City subiecting the one-family dwelling to the San Francisco Residential Rent Stabilization and Arbitration Ordinance (Chapter 37 of the Administrative Code) pursuant to subsection (c)(7.1Q)(B). (B) Regulatory Agreement. Sponsors ofproiects utilizing the Conditional Use Authorization exception in subsection (c)(7.1Q) ofthis Section 317 shall enter into a regulatory agreement with the City subiecting the one-family dwelling to the Residential Rent Stabilization and Arbitration Ordinance (Chapter 37 of the Administrative Code). as amended from time to time. as a condition of approval ofthe permit to remove the Unauthorized Unit ("Regulatory Agreement"). The property owner and the Planning Director. or the Director's designee. on behalf oft he City. shall execute the Regulatory Agreement, which is subject to review and approval by the City Attorney's Office. The Regulatory Agreement shall be executed prior to the City's issuance of the permit to remove the Unauthorized Unit. Following execution ofthe Regulatory Agreement by all parties and approval by the City Attorney, the Regulatory Agreement or a memorandum thereof shall be recorded in the title records in the Office of the Assessor-Recorder against the property and the Regulatory Agreement shall be binding on all fitture owners and successors in interest. At a minimum. the Regulatory Agreement shall contain the following: (i) A statement that the one-family dwelling is not subiect to the Costa- Hawkins Rental Housing Act (California Civil Code Section 1954.50 et seq.) Further. that under Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 7 Section 1954.52(b), the property owner has entered into and agreed to the terms of the agreement with the City in consideration for other forms of assistance or other direct financial contribution specified in California Government Code Section 65915 et seq.; (ii) A description oft he forms of assistance or other direct financial contribution provided to the property owner; and (iii) A description of the remedies for breach of the agreement and other provisions to ensure implementation and compliance with the agreement. **** (f) Residential Merger. The Merger of Residential Units, not otherwise subject to Conditional Use authorization by this Code. or exempted from the Conditional Use requirement by this Section 317, shall be prohibited. (g) Conditional Use Criteria. * * * * (7) Removal of Unauthorized Units. In addition to the criteria set forth in subsections (g)(1) through (g)(4) above, the Planning Commission shall consider the criteria below in the review of applications for removal of Unauthorized Units: (A) whether the costs te legelize the U1wuthorized Unit or Units under the Plmming, Building, tmd other ewlic€1hle Codes is re€lson€1hle h€1Sed on how such cost co,'1ip€lres to the €lver€lge cost oflegeliwtionper unit deri'.·edji·om the cost ofprojects on the Pl€inning Dep€lrtment 's },faster List o}Addition€ll Dwelling [)nits Awroved required hy Section 207.3(k) of this Code; (B) whether it isjin€lnci€lllyfe€lsihle to legttlize the U,muthorized Unit or Units. Such determin€ltion v,iill he h€1sed on the costs to legelize the Un€luthorized Unit(s) under the Plmming, Building, €Ind other ePJ3liC€1hle Codes in comp€lrison to the €ldded Y€llue th€lt legttlizing tmid Units wouldprmide te the subject property. The g€lin in the ;•€Jltte of the subject property slwll he h€1Sed on the current ,,,€lltte of the property with the Un€luthorized Unit(s) comp€lred to the V€llue of the property if Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 8 the Um;11;1thorized Unit(s) is/ere legelized. The calculation of the gain in 'mlue shall he conducted and approved hy a California licensedproperty appraiser. Legalization would he deemedfilianciallJ,1 feasible ifgein in the ,;alue of the subject prOJ3erty is equal to or greater than the cost to kgelize the Unauthorized Unit. (C) If no City funds are a1milahle to assist the property owner with the cost e>f legalization, whether the cost would constitute afinancial hardship. (A) whether the Unauthorized Unit has been rented within the 10 years preceding the application. excluding any use of the Unauthorized Unit by a blood, adoptive, or step- .family relationship, specifically by a grandparent, parent, sibling, child, or grandchild, or the spouse or registered domestic partner of such relations, or by a property owner's spouse or registered domestic partner; (B) whether the Unauthorized Unit has a history of evictions under Administrative Code Sections 37.9(a)(8)-(l 2) or 37.9(a)(l4)-(16) within the JO years preceding the application. * * * * Section 4. Chapter 37 of the Administrative Code is hereby amended by revising Sections 37.2 and 37.3, to read as follows: SEC. 37.2. DEFINITIONS. * * * * (r) Rental Units. All residential dwelling units in the City together with the land and appurtenant buildings thereto, and all housing services, privileges, furnishings, and facilities supplied in connection with the use or occupancy thereof, including garage and parking facilities. Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 9 * * * * The term "rental units" shall not include: * * * * (4) Except as provided in subsections (A)-(ED), dwelling units whose rents are controlled or regulated by any government unit, agency, or authority, excepting those unsubsidized and/or unassisted units which are insured by the United States Department of Housing and Urban Development; provided, however, that units in unreinforced masonry buildings which have undergone seismic strengthening in accordance with Building Code Chapters 168 and 16C shall remain subject to the Rent Ordinances to the extent that the ordinance is not in conflict with the seismic strengthening bond program or with the program's loan agreements or with any regulations promulgated thereunder; * * * * (D) The term "rental units" shall include (i) Accessory Dwelling Units constructed pursuant to Section 207(c)(4) of the Planning Code and that have received a complete or partial waiver of the density limits and the parking, rear yard, exposure, or open space standards from the Zoning Administrator pursuant to Planning Code Section 307(1), and (ii) New Unit(s) constructed and funded pursuant to Administrative Code Chapter 85; (iii) new dwelling units created pursuant to the density exception set forth in Section 207(c)(8) of the Planning Code; (iv) new dwelling units created pursuant to the HOME-SF Program set forth in Section 206.3(c)(1 )(B) of the Planning Code; tmd--(v) new dwelling units created pursuant to the density exception set forth in Section 249.94(d)(1) of the Planning Code~.· and (vi) dwelling units that obtain the exemption from the conditional use authorization set forth in Section 317(c){-l-1Q) of the Planning Code. * * * * Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 10 SEC. 37 .3. RENT LIMITATIONS. (a) Rent Increase Limitations for Tenants in Occupancy. Landlords may impose rent increases upon tenants in occupancy only as provided below and as provided by subsections 37.3(d) and 37.3(g): * * * * (d) Costa-Hawkins Rental Housing Act (Civil Code Sections 1954.50. et seq.). Consistent with the Costa-Hawkins Rental Housing Act (Civil Code Sections 1954.50. et seq.) and regardless of whether otherwise provided under Chapter 37: (1) Property Owner Rights to Establish Initial and All Subsequent Rental Rates for Separately Alienable Parcels. (A) An owner of residential real property may establish the initial and all subsequent rental rates for a dwelling or a unit which is alienable separate from the title to any other dwelling unit or is a subdivided interest in a subdivision as specified in subdivision (b), (d), or (f) of Section 11004.5 of the California Business and Professions Code. The owner's right to establish subsequent rental rates under this paragraph shall not apply to a dwelling or unit where the preceding tenancy has been terminated by the owner by notice pursuant to California Civil Code Section 1946 or has been terminated upon a change in the terms of the tenancy noticed pursuant to California Civil Code Section 827; in such instances, the rent increase limitation provisions of Chapter 37 shall continue to apply for the duration of the new tenancy in that dwelling or unit. * * * * (D) An owner's right to establish subsequent rental rates under subsection 37.3(d)(1) shall not apply to a dwelling or unit that is a new dwelling unit created pursuant to the Code provisions specified in subsectionSection 37.2(r)(4)(D). or a dwelling unit that utilizes the Code provisions specified in subsection 37.2(r)(4)(D). Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 11 (D)2 An owner's right to establish subsequent rental rates under subsection 3 7. 3(d)(l) shall not €1pply to a dwelling unit that is created pursuant to the HO},{E SF Program set forth in Section 206.3(c)(1)(B) e>fthe Planning Cede. * * * * Section 5. Post-Introduction Changes to Planning Code Section 317 and Administrative Code Section 37.3(g). (a) After the introduction of the ordinance in this Board File No. 231185 (the first version), the City enacted Ordinance No. 248-23, which became effective in January 2024. Ordinance No. 248-23 amended Section 317 to add new text and renumber several subsections. To clearly reflect the changes in the law since introduction of the first version, the second version of the ordinance in this Board File No. 231185 shows in "existing text" font (plain Arial) the law currently in effect (Planning Code Section 317, as amended by Ordinance No. 248-23). The ordinance shows in "Board amendment" font (double-underlined Arial for additions, and strikethrough Arial for deletions) and "Code Addition" font (single-underline italics Times New Roman font) amendments to existing law. (b) After the drafting of the ordinance in this Board File No. 231185 (the first version), the City enacted Ordinance No. 195-23, which became effective in October 2023, but was not codified until after the introduction of the first version of this ordinance. Ordinance No. 195-23 amended Administrative Code Section 37.3(g) to make minor code corrections in the same manner as the first version of the ordinance in this Board File No. 231185. Because the amendments in version one are duplicative of existing law, the second version of this ordinance omits those amendments. Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 12 Section a~. Effective Date. This ordinance shall become effective 30 days after enactment. Enactment occurs when the Mayor signs the ordinance, the Mayor returns the ordinance unsigned or does not sign the ordinance within 10 days of receiving it, or the Board of Supervisors overrides the Mayor's veto of the ordinance. Section ez. Scope of Ordinance. In enacting this ordinance, the Board of Supervisors intends to amend only those words, phrases, paragraphs, subsections, sections, articles, numbers, punctuation marks, charts, diagrams, or any other constituent parts of the Municipal Code that are explicitly shown in this ordinance as additions, deletions, Board amendment additions, and Board amendment deletions in accordance with the "Note" that appears under the official title of the ordinance. Section+~. Severability. If any section, subsection, sentence, clause, phrase, or word of this ordinance, or any application thereof to any person or circumstance, is held to be invalid or unconstitutional by a decision of a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions or applications of the ordinance. The Board of Supervisors hereby declares that it would have passed this ordinance and each and every section, subsection, sentence, clause, phrase, and word not declared invalid or unconstitutional without regard to whether any other portion of this ordinance or application thereof would be subsequently declared invalid or unconstitutional. II II Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 13 Section 8fl. No Conflict with Federal or State Law. Nothing in this ordinance shall be interpreted or applied so as to create any requirement, power, or duty in conflict with any federal or state law. APPROVED AS TO FORM: DAVID CHIU, City Attorney By: /s/ Giulia Gualco-Nelson GIULIA GUALCO-NELSON Deputy City Attorney n:lleganalas2024123001501017 40691.docx Supervisors Melgar; Peskin, Mandelman BOARD OF SUPERVISORS Page 14 City and County of San Francisco Tails Ordinance City Hall I Dr. Carlton B. Goodlett Place San Francisco, CA 94102-4689 File Number: 231185 Date Passed: March 19, 2024 Ordinance amending the Planning Code to waive the Conditional Use Authorization requirement for removal of an unauthorized unit in a single-family home where the owner satisfies certain eligibility criteria, waive the Conditional Use Authorization requirement for removal of an unauthorized unit where that unit requires and is ineligible for waivers from open space, or dwelling unit exposure requirements, or the unit does not meet minimum floor area and floor-to-ceiling height requirements, and update the required Conditional Use Authorization findings for removal of an unauthorized unit to account for the history of tenancies in that unit; amending the Administrative Code to require that where an owner obtains an exemption from the Conditional Use Authorization requirement to remove an unauthorized unit from a qualifying single-family home, the single-family home shall be subject to the rent increase limitations of the Rent Ordinance; affirming the Planning Department's determination under the California Environmental Quality Act; and making findings of consistency with the General Plan and the eight priority policies of Planning Code, Section 101.1, and adopting findings of public necessity, convenience, and welfare under Planning Code, Section 302. March 04, 2024 Land Use and Transportation Committee - AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE March 04, 2024 Land Use and Transportation Committee - RECOMMENDED AS AMENDED March 12, 2024 Board of Supervisors - PASSED ON FIRST READING Ayes: 10 - Chan, Dorsey, Engardio, Mandelman, Melgar, Peskin, Preston, Safai, Stefani and Walton Excused: 1 - Ron en March 19, 2024 Board of Supervisors - Fl NALLY PASSED City and County of San Francisco Ayes: 10 - Chan, Dorsey, Engardio, Mandelman, Melgar, Peskin, Preston, Safai, Stefani and Walton Excused: 1 - Ron en Page I Printed at 9: 18 am on 3/20/24 File No. 231185 London N. Breed Mayor City a11d County of Sa11 Fra11cisco Page2 I hereby certify that the foregoing Ordinance was Fl NALLY PASSED on 3/19/2024 by the Board of Supervisors of the City and County of San Francisco . ....... Date Approved Pri11ted at 9: 18 am 011 3/20/24