SEC. 317. LOSS OF RESIDENTIAL AND UNAUTHORIZED UNITS THROUGH DEMOLITION, MERGER AND CONVERSION.

   (a)   Findings. San Francisco faces a continuing shortage of affordable housing. There is a high ratio of rental to ownership tenure among the City's residents. 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. Therefore, a public hearing will be held prior to approval of any permit that would remove existing housing, with certain exceptions, as described below. The Planning Commission shall develop a Code Implementation Document setting forth procedures and regulations for the implementation of this Section 317 as provided further below. The Zoning Administrator shall modify economic criteria related to property values and construction costs in the Implementation Document as warranted by changing economic conditions to meet the intent of this Section.

   (b)   Definitions. For the purposes of this Section 317, the terms below shall be as defined below. Capitalized terms not defined below are defined in Section 102 of this Code.

      (1)   "Residential Conversion" shall mean the removal of cooking facilities, change of occupancy (as defined and regulated by the Building Code), or change of use (as defined and regulated by the Planning Code), of any Residential Unit or Unauthorized Unit to a Non-Residential or Student Housing use.

      (2)   "Residential Demolition" shall mean any of the following:

         (A)   Any work on a Residential Building for which the Department of Building Inspection determines that an application for a demolition permit is required, or

         (B)   A major alteration of a Residential Building that proposes the Removal of more than 50% of the sum of the Front Facade and Rear Facade and also proposes the Removal of more than 65% of the sum of all exterior walls, measured in lineal feet at the foundation level, or

         (C)   A major alteration of a Residential Building that proposes the Removal of more than 50% of the Vertical Envelope Elements and more than 50% of the Horizontal Elements of the existing building, as measured in square feet of actual surface area.

         (D)   The Planning Commission may reduce the above numerical elements of the criteria in Subsections (b)(2)(B) and (b)(2)(C), by up to 20% of their values should it deem that adjustment is necessary to implement the intent of this Section 317, to conserve existing sound housing and preserve affordable housing.

      (3)   "Façade" is defined in Section 102 of this Code.

      (4)   "Front Façade" is defined in Section 102 of this Code.

      (5)   "Horizontal Elements" shall mean all roof areas and all floor plates, except floor plates at or below grade.

      (6)   "Mandatory Discretionary Review" is defined in Section 102 of this Code.

      (7)   "Residential Merger" shall mean the combining of two or more Residential or Unauthorized Units, resulting in a decrease in the number of Residential Units and Unauthorized Units within a building, or the enlargement of one or more existing units while substantially reducing the size of others by more than 25% of their original floor area, even if the number of units is not reduced. The Planning Commission may reduce the numerical element of this criterion by up to 20% of its value should it deem that adjustment is necessary to implement the intent of this Section 317, to conserve existing housing and preserve affordable housing.

      (8)   "Rear Façade" is defined in Section 102 of this Code.

      (9)   "Removal" shall mean, with reference to a wall, roof or floor structure, its dismantling, its relocation or its alteration of the exterior function by construction of a new building element exterior to it. Where a portion of an exterior wall is removed, any remaining wall with a height less than the Building Code requirement for legal head room shall be considered demolished. Where exterior elements of a building are removed and replaced for repair or maintenance, in like materials, with no increase in the extent of the element or volume of the building, such replacement shall not be considered Removal for the purposes of this Section. The foregoing does not supersede any requirements for or restrictions on noncomplying structures and their reconstruction as governed by Article 1.7 of this Code.

      (10)   "Removal" shall mean, with reference to a Residential or Unauthorized Unit, its Conversion, Demolition, or Merger.

      (11)   "Residential Building" is defined in Section 102 of this Code.

      (12)   "Residential Unit" shall mean a legal conforming or legal nonconforming Dwelling Unit, a legal nonconforming Live/Work Unit or Group Housing.

      (13)   "Unauthorized Unit" shall mean 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 Residential Units on the same property. "Independent" shall mean that (i) the space has independent access that does not require entering a Residential Unit on the property and (ii) there is no open, visual connection to a Residential Unit on the property.

      (14)   "Vertical Envelope Elements" shall mean all exterior walls that provide weather and thermal barriers between the interior and exterior of the building, or that provide structural support to other elements of the building envelope.

   (c)   Applicability; Exemptions.

      (1)   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. For Unauthorized Units, this Conditional Use authorization will not be required for Removal if the Zoning Administrator has determined in writing that the unit cannot be legalized under any applicable provision of this Code. The application for a replacement building or alteration permit shall also be subject to Conditional Use requirements.

      (2)   The Conditional Use requirement of Subsection (c)(1) shall apply to (A) any building or site permit issued for Removal of an Unauthorized Unit on or after March 1, 2016, and (B) any permit issued for Removal of an Unauthorized Unit prior to March 1, 2016 that has been suspended by the City or in which the applicant's rights have not vested.

      (3)   The Removal of a Residential Unit that has received approval from the Planning Department through administrative approval or the Planning Commission through a Discretionary Review or Conditional Use authorization prior to the effective date of the Conditional Use requirement of Subsection (c)(1) is not required to apply for an additional approval under Subsection (c)(1).

      (4)   The Removal of an Unauthorized Unit does not require a Conditional Use authorization pursuant to Subsection (c)(1) if the Department of Building Inspection has determined that there is no path for legalization under Section 106A.3.1.3 of the Building Code.

      (5)   The Demolition of a Single-Family Residential Building that meets the requirements of Subsection (d)(3) below may be approved by the Department without requiring a Conditional Use authorization.

   (d)   Demolition.

      (1)   No permit to Demolish a Residential Building in any zoning district shall be issued until a building permit for the replacement structure is finally approved, unless the building is determined to pose a serious and imminent hazard as defined in the Building Code. A building permit is finally approved if the Board of Appeals has taken final action for approval on an appeal of the issuance or denial of the permit or if the permit has been issued and the time for filing an appeal with the Board of Appeals has lapsed with no appeal filed.

      (2)   Conditional Use authorization is required for approval of the permit for Residential Demolition, and the Commission shall consider the replacement structure as part of its decision on the Conditional Use application. If Conditional Use authorization is required for the replacement structure by other sections of this Code, the Commission shall consider the demolition as part of its decision on the Conditional Use application.

      (3)   An application to demolish a Single-Family Residential Building on a site in a RH-1 or RH-1(D) District that is demonstrably not affordable or financially accessible housing is exempt from the Conditional Use authorization requirement of Subsection (c)(1). Specific numerical criteria for such analyses shall be adopted by the Planning Commission in the Code Implementation Document, in accordance with this Section 317, and shall be adjusted periodically by the Zoning Administrator based on established economic real estate and construction indicators.

         (A)   The Planning Commission shall determine a level of affordability or financial accessibility, such that Single-Family Residential Buildings on sites in RH-1 and RH-1(D) Districts that are demonstrably not affordable or financially accessible, that is, housing that has a value greater than at least 80% of the combined land and structure values of single-family homes in San Francisco as determined by a credible appraisal, made within six months of the application to demolish, are not subject to a Conditional Use hearing. The demolition and replacement building applications shall undergo notification as required by other sections of this Code. The Planning Commission, in the Code Implementation Document, may increase the numerical criterion in this Subsection by up to 10% of its value should it deem that adjustment is necessary to implement the intent of this Section 317, to conserve existing housing and preserve affordable housing.

         (B)   The Planning Commission, in the Code Implementation Document, shall adopt criteria and procedures for determining the soundness of a structure proposed for demolition, where "soundness" is an economic measure of the feasibility of upgrading a residence that is deficient with respect to habitability and Housing Code requirements, due to its original construction. The "soundness factor" for a structure shall be the ratio of a construction upgrade cost (i.e., an estimate of the cost to repair specific habitability deficiencies) to the replacement cost (i.e., an estimate of the current cost of building a structure the same size as the existing building proposed for demolition), expressed as a percent. A building is unsound if its soundness factor exceeds 50%. A Residential Building that is unsound may be approved for demolition.

      (4)   Nothing in this Section is intended to permit Residential Demolition in those areas of the City where other sections of this Code prohibit such demolition or replacement structure.

      (5)   Nothing in this Section is intended to exempt buildings or sites where demolition is proposed from undergoing review with respect to Articles 10 and 11 of the Planning Code, where the requirements of those articles apply. Notwithstanding the definition of "Residential Demolition" in this section and as further described in the Code Implementation Document with regard to Residential Demolition, the criteria of Section 1005 shall apply to projects subject to review under the requirements of Article 10 with regard to the structure itself.

   (e)   Conversion to Student Housing. The conversion of Residential Units to Student Housing is prohibited. For the purposes of this subsection, Residential Units that have been defined as such by the time a First Certificate of Occupancy has been issued by the Department of Building Inspection for new construction shall not be converted to Student Housing.

   (f)   Residential Merger. The Merger of Residential Units, not otherwise subject to Conditional Use authorization by this Code, shall be prohibited.

   (g)   Conditional Use Criteria.

      (1)   C-3 Districts. When considering whether to grant Conditional Use authorization for the loss or Removal of Residential or Unauthorized Unit(s) in the C-3 districts, in lieu of the criteria set forth in Planning Code Section 303, consideration shall be given to the adverse impact on the public health, safety, and general welfare of the loss of housing stock in the district and to any unreasonable hardship to the applicant if the permit is denied.

      (2)   Residential Merger. The Planning Commission shall consider the following criteria in the review of applications to merge Residential Units or Unauthorized Units:

         (A)   whether removal of the unit(s) would eliminate only owner occupied housing, and if so, for how long the unit(s) proposed to be removed have been owner occupied;

         (B)   whether removal of the unit(s) and the merger with another is intended for owner occupancy;

         (C)   whether removal of the unit(s) will remove an affordable housing unit as defined in Section 401 of this Code or housing subject to the Residential Rent Stabilization and Arbitration Ordinance;

         (D)   if removal of the unit(s) removes an affordable housing unit as defined in Section 401 of this Code or units subject to the Residential Rent Stabilization and Arbitration Ordinance, whether replacement housing will be provided which is equal or greater in size, number of bedrooms, affordability, and suitability to households with children to the units being removed;

         (E)   how recently the unit being removed was occupied by a tenant or tenants;

         (F)   whether the number of bedrooms provided in the merged unit will be equal to or greater than the number of bedrooms in the separate units;

         (G)   whether removal of the unit(s) is necessary to correct design or functional deficiencies that cannot be corrected through interior alterations;

         (H)   the appraised value of the least expensive Residential Unit proposed for merger only when the merger does not involve an Unauthorized Unit.

The Planning Commission shall not approve an application for Residential Merger if any tenant has been evicted pursuant to Administrative Code Sections 37.9(a)(9) through 37.9(a)(14) where the tenant was served with a notice of eviction after December 10, 2013 if the notice was served within 10 years prior to filing the application for merger. Additionally, the Planning Commission shall not approve an application for Residential Merger if any tenant has been evicted pursuant to Administrative Code Section 37.9(a)(8) where the tenant was served with a notice of eviction after December 10, 2013 if the notice was served within five (5) years prior to filing the application for merger. This Subsection (g)(2)(H) shall not apply if the tenant was evicted under Section 37.9(a)(11) or 37.9(a)(14) and the applicant(s) either (A) have certified that the original tenant reoccupied the unit after the temporary eviction or (B) have submitted to the Planning Commission a declaration from the property owner or the tenant certifying that the property owner or the Rent Board notified the tenant of the tenant's right to reoccupy the unit after the temporary eviction and that the tenant chose not to reoccupy it.

      (3)   Residential Conversion. The Planning Commission shall consider the following criteria in the review of applications for Residential Conversion;

         (A)   whether conversion of the unit(s) would eliminate only owner occupied housing, and if so, for how long the unit(s) proposed to be removed were owner occupied;

         (B)   whether Residential Conversion would provide desirable new Non- Residential Use(s) appropriate for the neighborhood and adjoining district(s);

         (C)   in districts where Residential Uses are not permitted, whether Residential Conversion will bring the building closer into conformance with the Uses permitted in the zoning district;

         (D)   whether conversion of the unit(s) will be detrimental to the City's housing stock;

         (E)   whether conversion of the unit(s) is necessary to eliminate design, functional, or habitability deficiencies that cannot otherwise be corrected;

         (F)   whether the Residential Conversion will remove Affordable Housing, or units subject to the Residential Rent Stabilization and Arbitration Ordinance.

      (3)1    Planning Commission approval shall not be required for the change of use or occupancy of a dwelling unit, group housing, or SRO to Student Housing if the dwelling unit, group housing or SRO will be Student Housing owned, operated or otherwise controlled by a not for profit post-secondary Educational Institution and

         (A)   it was built by the post-secondary Educational Institution;

         (B)   it is in a convent, monastery, or similar religious order facility;

         (C)   it is on an adjoining lot (i.e., sharing the same lot line) to the post- secondary Educational Institution, so long as the lot has been owned by the post-secondary Educational Institution for at least ten years as of the effective date of Ordinance 188-12; or

         (D)   as of August 10, 2010, it was owned, operated or otherwise controlled by a post-secondary Educational Institution that had an Institutional Master Plan on file with the Planning Commission, and where the occupancy by those other than students at that date was less than 20% of the total occupants. For purposes of determining occupancy, the post- secondary Educational Institution shall present to the Planning Department verified information regarding its rental or lease of units as of that date.

      (4)   Planning Commission approval shall not be required for a Residential Conversion if the Residential Unit was subject to the Residential Hotel Unit Conversion and Demolition Ordinance, San Francisco Administrative Code Chapter 41, and obtained a permit to convert in compliance with the requirements set forth therein.

      (5)   Residential Demolition. The Planning Commission shall consider the following additional criteria in the review of applications for Residential Demolition:

         (A)   whether the property is free of a history of serious, continuing Code violations;

         (B)   whether the housing has been maintained in a decent, safe, and sanitary condition;

         (C)   whether the property is an "historical resource" under CEQA;

         (D)   whether the removal of the resource will have a substantial adverse impact under CEQA;

         (E)   whether the project converts rental housing to other forms of tenure or occupancy;

         (F)   whether the project removes rental units subject to the Residential Rent Stabilization and Arbitration Ordinance or affordable housing;

         (G)   whether the project conserves existing housing to preserve cultural and economic neighborhood diversity;

         (H)   whether the project conserves neighborhood character to preserve  neighborhood cultural and economic diversity;

         (I)   whether the project protects the relative affordability of existing housing;

         (J)   whether the project increases the number of permanently affordable units as governed by Section 415;

         (K)   whether the project locates in-fill housing on appropriate sites in established neighborhoods;

         (L)   whether the project increases the number of family-sized units on-site;

         (M)   whether the project creates new supportive housing;

         (N)   whether the project is of superb architectural and urban design, meeting all relevant design guidelines, to enhance existing neighborhood character;

         (O)   whether the project increases the number of on-site Dwelling Units;

         (P)   whether the project increases the number of on-site bedrooms;

         (Q)   whether or not the replacement project would maximize density on the subject lot; and

         (R)   if replacing a building not subject to the Residential Rent Stabilization and Arbitration Ordinance, whether the new project replaces all of the existing units with new Dwelling Units of a similar size and with the same number of bedrooms.

      (6)   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 to legalize the Unauthorized Unit or Units under the Planning, Building, and other applicable Codes is reasonable based on how such cost compares to the average cost of legalization per unit derived from the cost of projects on the Planning Department’s Master List of Additional Dwelling Units Approved required by Section 207.3(k) of this Code;

         (B)   whether it is financially feasible to legalize the Unauthorized Unit or Units. Such determination will be based on the costs to legalize the Unauthorized Unit(s) under the Planning, Building, and other applicable Codes in comparison to the added value that legalizing said Units would provide to the subject property. The gain in the value of the subject property shall be based on the current value of the property with the Unauthorized Unit(s) compared to the value of the property if the Unauthorized Unit(s) is/are legalized. The calculation of the gain in value shall be conducted and approved by a California licensed property appraiser. Legalization would be deemed financially feasible if gain in the value of the subject property is equal to or greater than the cost to legalize the Unauthorized Unit.

         (C)   If no City funds are available to assist the property owner with the cost of legalization, whether the cost would constitute a financial hardship.

      (7)   Denial of Application to Remove an Unauthorized Unit; Requirement to Legalize the Unit. If the Planning Commission denies an application to Remove an Unauthorized Unit, the property owner shall file an application for a building permit to legalize the Unit. Failure to do so within a reasonable period of time, as determined by the Zoning Administrator, shall be deemed to be a violation of the Planning Code.

   (h)   Notice of Conditional Use Hearing. For any hearing to consider a Conditional Use authorization required under subsection (g)(2), (g)(3)1 , (g)(4), or (g)(5), the Zoning Administrator shall provide notice as required by Section 333 of this Code, including an explanation of the process for demolishing, merging, or converting Residential Units or Unauthorized Units, and including a description of subsequent permits that would be required from the Planning Department and Department of Building Inspection and how they could be appealed, in addition to any other notice required under this Code.

   (i)   Additional Exemptions. This Section 317 shall not apply to property:

      (1)   Owned by the United States or any of its agencies;

      (2)   Owned by the State of California or any of its agencies, with the exception of such property not used exclusively for a governmental purpose;

      (3)   Under the jurisdiction of the Port of San Francisco or the Successor Agency to the Redevelopment Agency of the City and County where the application of this Section is prohibited by State or local law; or

      (4)   Where demolition of the building or Removal of a Residential Unit or Unauthorized Unit is necessary to comply with a court order or City order that directs the owner to demolish the building or remove the unit, due to conditions that present an imminent threat to life safety.

(Added by Ord. 69-08, File No. 080210, App. 4/17/2008; amended by Ord. 140-11, File No. 110482, App. 7/5/2011, Eff. 8/4/2011; Ord. 188-12 , File No. 111374, App. 9/11/2012, Eff. 10/11/2012; Ord. 62-13 , File No. 121162, App. 4/10/2013, Eff. 5/10/2013; Ord. 287-13 , File No. 130041, App. 12/26/2013, Eff. 1/25/2014; Ord. 219-14 , File No. 140775, App. 10/29/2014, Eff. 11/28/2014; Ord. 22-15, File No. 141253, App. 2/20/2015, Eff. 3/22/2015; Ord. 188-15 , File No. 150871, App. 11/4/2015, Eff. 12/4/2015; Ord. 33-16 , File No. 160115, App. 3/11/2016, Eff. 4/10/2016; Ord. 195-18, File No. 180268, App. 8/10/2018, Eff. 9/10/2018; Ord. 179-18, File No. 180423, App. 7/27/2018, Eff. 8/27/2018, Oper. 1/1/2019)

AMENDMENT HISTORY

[Former] division (e)(1) amended; Ord. 140-11, Eff. 8/4/2011. Divisions (b)(1) and [former] (f)(1) amended; Ord. 188-12, Eff. 10/11/2012. [Former] division (d)(3)(C) amended; Ord. 62-13, Eff. 5/10/2013. Section header and division (b)(1) amended; divisions (b)(2), (b)(7), (b)(11), (b)(12), [former] (c), (d), (d)(2), (d)(3), (d)(4), (d)(5), [former] (e)-(e)(2) amended; [former] divisions (e)(4), (f), (f)(1) and (f)(2) amended; [former] divisions (g) and (g)(3) amended; Ord. 287-13, Eff. 1/25/2014. Division (b)(1) amended; divisions (b)(12) and [former] (f)(1) amended; [former] divisions (f)(3) and (f)(4) added; Ord. 219-14, Eff. 11/28/2014. Divisions (b)(3), (b)(4), (b)(6), (b)(8), (b)(11), and (b)(12) amended; Ord. 22-15, Eff. 3/22/2015. Nonsubstantive change; Ord. 188-15, Eff. 12/4/2015. Section header and divisions (b), (b)(1), (b)(7), (b)(10), and (b)(12) amended; new division (b)(13) added and former division (b)(13) redesignated as (b)(14); division (c) amended and redesignated as (c)(1); new divisions (c)(2)-(5) added; divisions (d)(2), (d)(3), (d)(3)(A), and (d)(3)(B) amended; former division (d)(3)(C) deleted; new divisions (e), (f), (g), and (g)(1) added; former divisions (e)-(e)(4) amended and redesignated as current division (g)(2) and its subdivisions; former divisions (f)-(f)(2)(F) redesignated as current division (g)(3)1 and its subdivisions; new divisions (g)(5)-(7) and (h) added; former division (g) amended and redesignated as (i); current divisions (i)(3) and (4) amended; Ord. 33-16, Eff. 4/10/2016. Division (c) amended; former division (g)(6)(A) deleted; former divisions (g)(6)(B)-(D) redesignated as divisions (g)(6)(A)-(C); Ord. 195-18, Eff. 9/10/2018. Division (h) amended; divisions (h)(1)-(2) deleted; Ord. 179-18, Oper. 1/1/2019.

CODIFICATION NOTE

1.   As currently codified, this Section includes two divisions designated as (g)(3). The first division so designated was added as new material as part of the extensive amendment and reorganization of this Section effected by Ord. 33-16. The second division so designated was, prior to Ord. 33-16, codified herein as division (f)(3). Former division (f)(3) was not explicitly shown in Ord. 33-16 as deleted, redesignated, or otherwise altered. In accordance with that ordinance's "Scope of Ordinance" clause, see Ord. 33-16 § 7, former division (f)(3) is retained here, now designated as the second division (g)(3), as shown.