News & Research Archive

Recent rezoning of lots in Eastern Neighborhoods

May 08, 2009

 

Recent rezoning of lots in Eastern Neighborhoods have made illegal at least a thousand residential, office and retail spaces whose alteration permits are not clear.

Under new zoning (called the "Eastern Neighborhoods Rezoning") effective January 19, 2009, the Board of Supervisors has created a number of new areas in the eastern side of the City which can now be used only for activities called "production, distribution, and repair" ("PDR"). Formerly, these districts (East SOMA, the Mission, Showplace Square/Potrero Hill, and the Central Waterfront districts (mostly "M" zoning districts), contained the most permissive zoning,  allowing a mixture of PDR, housing, office, and retail.

Almost 1,000 of lots zoned M-1, which allowed a wide assortment of uses including residential, office and retail, have been rezoned to industrial only (PDR).

Property owners have eagerly awaited the zoning changes, which have taken up over 75 hearings and public meetings over the last 8 years, many of them frustrated because they have paid taxes, mortgages and insurance on land with an uncertain future while the new rules were hashed out.

Many owners and tenants alteration permits may be challenged by those political groups who want the Eastern Neighborhoods to become mostly industrial. This is because most owners and tenants left the submittal of alteration permits to contractors, who may have filled in the "proposed use" box in an alteration permit in a wrong way. Also, in the dot-com boom, the immediate needs for office space were so intense that owners may have placed tenants in spaces without going through the lengthy San Francisco permit approval processes.

WHAT ARE DEEMED ILLEGAL USES THAT HAVE TO TERMINATE?

The rezoning has made existing office uses in PDR districts into either "legal" nonconforming ones or "illegal" non-conforming ones. Illegal ones are those without Building Department permits which explicitly call out the use as office. Notices have gone out to 7,000 owners recently telling them this. If the uses are illegal, enforcement by the Planning Department will commence January 19, 2012. Those that are legal may continue indefinitely as long as (1) the alteration permits by which they moved in indicate on them that the proposed use is "office" (2) there is no physical expansion or intensity of use, (3) there is no period of office vacancy for three or more years, and (4) there is no change of office use to a PDR use at any future time.

WHAT IS THE GRACE PERIOD FOR COMING INTO COMPLIANCE BEFORE BEING SUBJECT TO TERMINATION?

If an occupant of a space has moved in without benefit of permits and has been in the space for more than two years as of January 19, 2009, the occupant or owner will have three years (starting January 19, 2009) to legalize by paying a fee of $10.50 per square foot (and an additional $1 per square foot for child care where 50,000 sf or more is being legalized). Any City determination to allow legalization (or not) can be appealed to the Board of Appeals.

The legitimization procedure can be used to legalize office, retail or residential space in areas that no longer allow such uses. The only thing you cannot legalize is live work space without benefit of permits.

WHAT IF LEGALIZATION IS IMPOSSIBLE?

If for certain reasons a particular space cannot be legalized (for example, the user of the space has moved in within the past two years), or if one is moving into a space for the first time and has a combination of PDR space and office space (even where the office space is as much as 2/3 of the space), one can seek approval as an Integrated PDR Space ("IPDR Space"). For very small spaces, even a lesser percentage of the square footage must be PDR. The City has decided to allow this for only a limited number of building types, and may extend it to other buildings once the City determines the success of this. The creation of IPDR space will trigger a fee, which may be forgiven under certain circumstances.

Should you have any questions on this, please feel free to contact Brett Gladstone Esq. or Susanne Kelly Esq. at (415) 434-9500 or by email to brett@gladstoneassociates.com or susanne@gladstoneassociates.com.

Written by: Brett Gladstone

E-mail: Brett@gladstoneassociates.com


This is a periodic newsletter from the law firm of Gladstone & Associates, San Francisco, a real estate transactions and land use firm providing commentary on new land use trends in San Francisco.

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