News & Research Archive

"Group Housing" - An Old Concept that Could Provide Workforce Housing for the Middle Class?

Oct 27, 2011

 

Most people think of "group housing" as a residential use in which a non-profit owns a building and rents furnished rooms (at very low prices) on a week to week basis to the economically disadvantaged, and/or those transitioning out of drug and alcohol addiction programs or out of jails. Indeed, most group housing does fall into this category. However, the Planning Code does not require that group housing be occupied by such persons. The growing price of rental apartments and the increase in the number of single young people migrating to the City for new jobs have led market rate group housing to start to appear.

This newer version of group housing has shown a great appeal to persons who do not want to sign a year's lease for many reasons; it has appeal to: (1) those for whom a long term hotel stay is expensive, and thus want to rent only week to week; (2) those who abhor the idea of roommates (especially strangers found by roommate services) yet cannot afford their own full apartment; (3) students for whom dorms are not available and who would otherwise room with other students and take up family sized dwelling units (4) those who are relocating to the City and do not wish to move all their furnishings somewhere until they live in the city a few months (and decide the right neighborhood in which to lease an apartment for a longer term); and (5) those who are coming to the City for specialized care at Kaiser and UCSF who wish to rent weekly because they do not know, at the beginning of a long treatment plan, how long the treatment will last. For all these persons, a week's stay in a furnished room is cheaper than renting a hotel for a week or month. These group housing opportunities are often found in older residential neighborhoods which, unlike some lower income areas, have decent neighborhood-serving retail and restaurants.

Market rate group housing rooms can provide good income to a landlord, especially since tenants may pay a little more per square foot for the flexibility of being able to stay weekly. There are also non-financial benefits, as the landlord will now have more control over each tenant to make sure each one pays, keeps spaces clean and treats other residents well, since the landlord has a separate lease with each tenant and can enforce the rules separately against an offending tenant without holding an entire roommate group responsible. While the rooms may be more expensive to a renter on a per night calculation than paying rent to a landlord as part of one roommate group and one lease, renters in these buildings can obtain free utilities, cleaning services, full furnishings and other amenities that would otherwise not be free. It is good for groups of friends as well. They can live all on one floor, but not worry that one or two of them will skip town and leave remaining roommates on the hook financially and with a poor credit rating.

The Planning Department will always be justifiably concerned that it is difficult for it to monitor when group housing with weekly rental turns into a hotel providing nightly stays. For example, people who only rent a furnished room for a week or two will, much as nightly tourists do, enter and leave only with clothing in suitcases. In a recent case before the Planning Commission where neighbors filed a request for Discretionary Review to oppose group housing, our law firm reassured anxious neighbors and Planning Staff that nightly rentals would not occur by suggesting that the client keep (and make available to neighbors and the Planning Department) daily records of who stays and how long, so monitoring would be easier, even though group housing does not require such monitoring (unlike SRO housing, which does). The Planning Commission then approved, after a Planning Staff recommendation of approval. A curious aspect of this recent neighbor-initiated hearing (for a use that did not require a hearing), is that some opposing neighbors complained that the use would overly gentrify the area but other neighbors complained that the group housing would lead to "the wrong kind of transient resident" and thus would cause blight to the neighborhood. It's been said that when two parties strongly disagree, and a third party imposes on them a decision those parties equally dislike, perhaps the third party has done the right thing.

How is group housing different from SRO hotels? Single room occupancy hotels (SRO's) are limited to those buildings or dwellings that were rented for a period of one week or less at the time rent control first went in during 1979. They are highly regulated by the City, and have low income residents, and the owners must send in extensive documentation to the City of who stays and for how long.

How is group housing different from a market rate dwelling unit? Under the Planning Code, group housing is a room for sleeping (with or without bathrooms), but without an individual kitchen; and a landlord has a direct lease with the occupant of each room. Unlike the rental of full dwelling units (units with kitchens and full bath), they can be rented by the week as well as by the month. If the landlord is not living in the unit, rentals of a room by the week are allowed only if the use is established as "group housing" under the Planning Code and under the Building Code. Otherwise, the only instance in which a landlord can rent a room by the week is one in which the landlord is occupying a room and leases out the other rooms to friends or strangers, as roommates. Fortunately, this use is allowed as of right in most residential neighborhoods and neighborhood commercial and other zoning districts, without Planning Commission approval. Landlords often give tenants separate spaces for storage in a communal kitchen where they may stash their own food, and separate storage areas.

Under the Rent Ordinance, "rooming and boarding houses" are not "rental units" unless occupied by an occupant for 32 consecutive days. Once occupied for 32 consecutive days, the occupied group housing room becomes a "rental unit" and subject to the regulations of the Rent Ordinance.

Under the Building Code, group housing at market rate and group housing owned by non-profits must upgrade the buildings in the same manner, but the upgrades are often inexpensive. Under the Building Code, "group housing" triggers extra exit signs with lettering (6 inches in height) on a contrasting background; identification of guest rooms by name, letter, or number; locking clear plastic covers over heater thermostats; and self-closing doors for each guest room and kitchen. And the building may be more often inspected by the Housing Inspection Services Bureau of the City than the typical apartment building in the City.

Is it difficult to find a building with the right zoning? The San Francisco Planning Code is quite permissive, as it allows group housing to be created as a matter of right in most districts (that is, without a special hearing/permit before the Planning Commission). There are two exceptions: group housing is not permitted in RH-1 (one family) districts; and requires a conditional use permit in RH-2 and RH-3 districts.

Older existing apartment units are not required to have a great deal of outdoor space, as the requirement did not exist when they were built. However, when one converts a building or a dwelling to group housing, the outdoor open space requirements of today for group housing kicks in. The Planning Code does require that group housing units have a certain amount of open space per room, and that is not always present in a building whose apartments were built well prior to the date that an open space requirement went into effect for new dwelling units in the City. This open space can be provided in balconies, on roof decks, on the top of garages, or in open rear yard. If not enough can be provided, one can ask for an open space variance from the Zoning Administrator in the Planning Department.

Except for properties within the RH-2 district, there is no parking requirement for group housing; in the RH-2 district, the requirement is only one space for every three bedrooms or for every six beds, whichever results in the greater amount.

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


M. Brett Gladstone

B.A. 1980 Harvard University, Magna Cum Laude
J.D. 1983, Duke University
Member, Lambda Alpha Society
Member, SPUR

Susanne B. Kelly

B.S. 1994 Santa Clara University
J.D. 1997 University of San Francisco School of Law
State Bar, Real Property Section Member

Disclaimer: This newsletter is not a substitute for legal advice and, since the facts of all matters differ, readers are cautioned not to take actions without seeking the advice of a real estate attorney. The issues discussed in this newsletter are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein.

COMMENT ON THIS ARTICLE VIA OUR BLOG

Written by: M. Brett Gladstone

E-mail: brett@gladstoneassociates.com


Starboard TCN is posting this article on its website and blog with the approval of Brett Gladstone Esq.

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. www.gladstoneassociates.com

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