Build or Die - Surviving a Project in San Francisco
By Joel M. Karr, Principal and Owner
San Francisco is one of the most costly real estate markets in the world. It is also a highly political and contentious environment to approach virtually any building project, no matter how small. These characteristics make it one of the most difficult cities in the country in which to attempt to build. This affects everyone from a small home-owner who wants to add a bedroom to their outdated home, to huge commercial development companies that can wait up to 10 years working through difficult planning and neighborhood approvals processes to carry out a large scale housing plan or other developments.
The net effect is a yawning gap between the need for more market-rate housing, and the realities of actually doing a project. This has the expected, free-market economics impact of normal supply-and-demand, and forces housing prices into the stratosphere, making San Francisco unaffordable to any other than the top income brackets. The social as well as economic impacts are enormous. We see the out-migration of the service and support workers that make a city run smoothly. It also forces up the housing prices in outlying areas.
In the face of all this, some of us "hale and hearty" souls are still trying to undertake architectural and development projects in the city. It takes a special sort of thick skin to wend one's way through the thicket of regulations and the confrontational nature of the neighborhood review process that is required. In this article, I will share some battle stories, as well as points of advice to those who might want to attempt it. I have spent almost 15 years in practice in this wonderful city. I love San Francisco, more than any other exciting city I have ever lived in, but I struggle with the planning and building processes in this town. Many of the issues seem outwardly illogical, but in some cases they may actually be illegal. That is the topic of a different article. For today, I'd like to focus on strategies and ideas that can assist a property owner in managing a difficult and complicated process.
1--311 REASONS TO KNOW YOUR NEIGHBORS
As a practitioner as well as a private developer, I have come to love and hate the 311 process. 311 refers to the planning code section that requires notification to neighbors when a new construction project is planned. It is required that a project sponsor file a 311 notification if there is any change to the exterior "envelope" (or "exterior appearance") of a building. This can literally be as small a change as extending a wall out by one foot, or the addition of a dormer window on an existing roof. Certain "minor" changes like changing out existing windows can be done without a 311 notice can be reviewed "over-the-counter" by a planner at the walk-up desk in the Planning Department. However, if a 311 is required, you should factor in 6 extra months to the project. By the time drawings are prepared and ready, filed with the building department, routed to the planning department, reviewed by the planner (who provides comments or corrections) and revisions resubmitted, at least 3-4 months will have elapsed. With increasing savvy on the part of the public, one or another of the immediate neighbors is almost certain to file a request for a Discretionary Review (or "DR"), which is the mechanism that has been put in place for such complaints against projects.
A major problem with the Planning Department today is that they will simply not reject a request for DR, even if the proposed project fully complies with the zoning and planning design guidelines requirements ("as of right"). But in San Francisco, the concept of "as of right" has been essentially abandoned. A perfect example is one of my own client's projects, in which a neighbor who had built a window facing directly onto a side property line filed for a DR when the proposed project covered her window. Virtually anyone knows that, in a dense urban environment where both side property lines are likely to have buildings tight against them at some point, adding a side lot-line window is not a good idea. However, in that case, the planner refused to reject the request for DR, and referred the case to the Planning Commission.
This is where advance planning and footwork can make a significant difference. I have heard clients say "Oh, the neighbors won't be a problem, we're all friends�" only to be stopped cold by a neighbor when proposing their project. Building neighbor support for your plan is absolutely critical. You cannot begin too soon, or be too open in communicating your intentions. Get the buy-in of your neighbors during the planning phase of your project so you can not only address their concerns in your plan but also anticipate what potential delays you may have to face. This is probably one of the cases where "good fences don't make good neighbors�"
2--NIEGHBORHOOD POWER AND HISTORIC PRESERVATIONAs neighbors have become increasingly sophisticated in their NIMBYism ("Not In My Backyard"), they have learned that, if a building is simply old, it can be arguably subjected to a lengthy and exhaustive process of historic review through the Major Environmental Assessment (MEA) process under the CEQA law. CEQA is the California Environmental Qualities Act, enacted in 1970, which was meant to protect the broader environment in California, including everything from air and light, to historic buildings, to soil runoff, etc. Unfortunately, CEQA has been tortured into a tool for stopping projects in San Francisco based on Historic Value of older buildings. The simple fact that a building is old does not make it historic. But smart citizens have discovered that they can derail a project by claiming that a building does have historic value. With the activist legions of far left wing Historic Preservationists in San Francisco, there is someone who will claim that virtually anything has historic value. This is not a legitimate use of the law, and perverts the genuine intent of protecting historic resources. To avoid dealing with the MEA the safest approach is to look for properties that don't require physical expansion of the "envelope", like ones with added crawl spaces below or unfinished basement levels that can be upgraded without planning approval. Another useful trick is to understand that the buildings "drip line" is what is considered the line of the envelope. In other words, you can add building area beneath an overhanging portion of the building without separate planning approval.
The unfortunate fact is the primary job of City Planners is to keep the city from being sued. The second unfortunate fact is that the public has picked up on this atmosphere around the Planning Department, and knows that if they push back just a little bit the Planning Staff will crumble and refer the issue to the full Planning Commission. I have experienced this directly when a published decision by Planning of non-historic value of a dilapidated old house was actually withdrawn after one of the activist historians published an exaggerated report that purported to refute the evaluation. Even though the planners told me in so many words that there was nothing in that report that held any credence, they still withdrew their decision, and referred the issue to the full commission. The Mayor's office and the Planning Commission could consider more aggressive legislation in this area. The review processes were put in place specifically to provide an objective evaluation of the data so that a fair and balanced approach to our city can be enacted. This is precisely what is not happening. The result is that the process seems utterly capricious and unevenly applied. It can sometimes seem as if the planners are likelier to work hard on approvals for large scale projects than to assist small property owners in getting their projects through.
The only reasonable way to deal with this is to have a clear sense, in advance, of the nature of potential opposition to your project. If it involves a sensitive neighborhood, if there are tenants involved, or if the building has any potential historic significance, you are likely to have a fight on your hands.
4--SMALL OR LARGE PROJECTS, WHO GETS APPROVED?
Larger developers can have even more hurdles to cross in getting their approvals than small homeowners. The well-known experience of Angelo SanGiacomo whose Trinity Properties spent over ten years working on getting approvals for the new Trinity Plaza development at 8th St. and Market Streets is not uncommon for large scale projects. However, those 10 years are proportionally much less painful to someone like him than the 2-3 years it takes a small property owner to get their approvals. Going into a project understanding this is crucial. If you are on a "tight time schedule", you are likely to be enormously frustrated, and angered by the process. If, however, you are able to approach it as a long-term process, and you can take a sort of "zen" attitude about the progress, you will probably be a lot happier in the long run.
5--YOUR NEIGHBOR, YOUR FRIEND
Neighboring property owners have enormous power today in the building process. There are multiple points along the process that they can slow you down dramatically, or even stop you altogether. The underpinning issue (when additional support is needed for an existing foundation) is a big one, because up until not even a year ago, a homeowner could pull an underpinning permit for the neighboring property without any approval from the neighbor, as long as it met the structural and safety requirements of the normal plan check. Now, however, one must obtain a signed letter from the neighbor giving permission to do the work. This has resulted in huge misunderstandings between neighbors, and generates a great deal of fear. The actual work of underpinning is a pretty standard matter of course on such projects, but the requirement for a letter of permission has virtually stopped a huge number of projects. There is no need for this sort of complication, and San Francisco is one of only a very few municipalities that now requires this sort of permission. Clearly, most municipalities recognize the potential capriciousness of a neighbor who can stop your progress.
Additionally, the neighbors' power to appeal your approvals at several points in the process adds potential delays. The opportunity to appeal the actual issuance of the permit for construction is the "last blow", when you think you are actually ready to start construction, and you can be stopped cold in your tracks.
Once again involving your neighbors early on in the planning process will ensure that they plan to support you (and you them) in the permitting and construction stages of the project.
6--CONCLUSIONS: CHOOSE THE RIGHT PROPERTY, BEFRIEND YOUR NEIGHBOR
It seems that both the strength and weakness of the city of San Francisco stems from how it protects its residents. On the one hand it ensures that the environment around us is architecturally rich and engaging, but on the other hand it puts enormously strong tools in the hands of potentially capricious individuals to curb change and progress.
It is therefore imperative to view your neighbors as partners in your development project, no matter how big or small it may be. Consulting with home and business owners around your property in the very early phases of planning will not only bring them on board and give you a chance to alleviate concerns, but also gives you the opportunity to identify potential pitfalls and address them in the design phase. If a neighbor is concerned about a certain architectural element, working with him on adjusting it so it is no longer a problem may save you months of appeals or waiting for approvals that have been contested through the planning commission. Or if a business owner is concerned that your underpinning may jeopardize her structure, work together to bring the experts that will ensure that no harm is done to the building.
Having said that, it's key to identify the right property and recognize that when evaluating the potential for improvement the devil is in the details. A dilapidated Victorian may not be the best property above which to add two floors because it may throw the project into an endless review process with the MEA, which may turn back and reject your entire project to "preserve an historic building". Be smart about purchasing a property for development in San Francisco.