CFAH

Built as a single-family residence in 1926, converted to a two-unit building in 1981, and sold in 2009 (for $2,003,500), the new owners of 2037 Jefferson would like to return their building to a single-family residence.
The five criteria to be considered by Planning in evaluating any proposed dwelling unit merger (DUM) pursuant to Section 317 of the Planning Code:
1. Removal of the units would eliminate only owner occupied housing
2. Removal of the units and the merger with another is intended for owner occupancy
3. Removal of the units will bring the building closer into conformance with the prevailing density in its immediate area and in the same zoning district
4. Removal of the units will bring the building closer into conformance with zoning
5. Removal of the units is necessary to correct design or functional deficiencies that cannot be corrected through interior alterations
Unfortunately for the owners of 2037 Jefferson their DUM request has been deemed to fail criteria one (there’s a tenant), four (it’s zoned RH-2), and five (functional deficiencies are rather subjective). And as such, the Planning Department has recommended that the Planning Commission reject the application.
Keep in mind that the City’s stated objective for strictly controlling unit mergers is driven by a desire to retain existing housing and is rationalized by “the fact that existing rental housing stock is virtually irreplaceable given the cost of new construction.”
Of course the latest long-term housing pipeline for San Francisco includes 46,600 units of new construction, including Avant Housing’s 194-unit 1880 Mission Street project which isn’t the only rental project in the reality mix.
Dwellng Unit Merger (DUM) Review: 2037-39 Jefferson [sf-planning.org]
San Francisco’s Q4 2009 Housing Pipeline Report [SocketSite]
1880 Mission (Gardens) Now Slated For Spring 2011 Bloom [SocketSite]

Comments from Plugged-In Readers

  1. Posted by Happy in SF

    Curious whether the rental unit is under Rent Control since the contruction date is pre-1979 (‘twould be icing on the cake for the owner), or whether the 1981 conversion date negates it.

  2. Posted by Augustus

    Would the owners be better off just doing what they want inside, instead of going to the Planning Commission? Would there be any consequences? Who would know or care?

  3. Posted by Dolores Guerrero

    @Augustus, I think that DBI would notice when you pull permits if it appears that the permitted work includes “merger” related activity such as removal of a kitchen, opening up a wall for the staircase, etc. Unless they are doing the work without permits, in which case I think you’re right that no one would know, but that probably isn’t a viable option for this type of remodel.

  4. Posted by Augustus

    1823 Jackson, now on the market again at $6m, changed a lot of things, and it now looks like one house with a separate au pair apartment downstairs. They had permits and did a beautiful job, even though legally six units. Why not just take out appliances and leave the plumbing? Why look for trouble?

  5. Posted by mikey woodz

    So if they were able to combine 6 units why the need to keep the 2nd (au pairs) unit? City said ok remove 4 units, but keep 2??

  6. Posted by Augustus

    That is the best use of the lower floor. The city said nothing as far as I know, but I am not in the loop, just a looker.

  7. Posted by BobN

    4. Removal of the units will bring the building closer into conformance with zoning
    RH-2 allows up to 2 units. It is not a requirement for 2 units.
    Given that the “Basis for Recommendation” is:
    . The project does not meet a majority of the dwelling unit merger criteria.
    the interpretation of RH-2 as a requirement rather than a limit seems particularly smarmy.
    On another note,
    There’s something odd about the history. If it was built as a single-family home in 1926 and converted in 1981, it’s a little strange that the two flats ended up with “identical floor plans”, each with three bedrooms. Either the conversion was a real rebuilding of the entire building or it was the addition of a second unit on the roof or in formerly attic space.

  8. Posted by Denis

    The DUM is sort of like the holy grail of permits… You’re going to spend ages fighting for it until you’re too old or burnt out to care anymore. I can’t imagine the planning will EVER approve any more DUMs. I think the buyers will have to configure the house as two units and then remove the appliances from one after the final inspection. Is it really worth it to even take this to planning? And with a tenant? That’s just a crash and burn scenario.
    So is that Jackson St. remodel still 6 units? I’ve seen a lot of homes where they cram a bunch of studios in the basement to qualify as a multi-family residence. It always makes for a bizarre floor plan.
    I always thought that a city who seems to regard the historical nature of its buildings above all else flips out over the return to original use. My thought: Homes that are in some fashion historical, whether through age or architectural significance, should be allowed to return to their original purpose as SFRs.

  9. Posted by abc

    As long as it is this difficult to convert homes back to SFR status, families will continue to leave the city….

  10. Posted by Augustus

    1823 Jackson is de facto two units, and legally probably six, but not sure. In any case, it will never again be used as six, nor should it be.

  11. Posted by eddy

    Both units are subject to rent control. This seems an attempt to prevent an Ellis act,but of course an Ellis act would make this all but mergable by the city. The tennant here better hire a lawyer.

  12. Posted by Augustus

    Why bother to prevent an Ellis Act? How does that harm the building?

  13. Posted by PN

    We recently completed a 2-1 DUM in Noe. The PC didn’t care about historical use. The winning argument for approval was the creation of “family-sized housing.”
    FWIW, keeping a small poorly-lit basement apartment won’t fly either. Light, ventilation, egress requirements have to be satisfied. I believe there’s a minimum square foot requirement, too.

  14. Posted by Brahma (incensed renter)

    I’m trying to understand why in the hell should we feel sympathy for the new owners of 2037 Jefferson. The policies in question haven’t changed in the last year and so the new owners can’t play, uh, dumb.
    Somebody who buys a two million dollar property presumably had a real estate agent in on the deal who advised them (because real estate agents are savvy “professionals” that know the law and local rules) that it would be very difficult to obtain a dwelling unit merger in The City, especially for one that had a tenant in it at the time of application.
    What, were there multiple bids for this place (in January, 2009 when the economy was still in mid-swan dive) and they (the new owners, the Banks’) had to charge in heedless otherwise the seller would have sold it to some other party? And even if they had a clueless real estate agent, they couldn’t have spent a few evenings at the law library or on the web doing some research before they plunked down a cool two million?

  15. Posted by reguru

    Why would anyone in their right mind try to do this with a tenant in place? Who advised these people?
    This is San Francisco, people. Rule #1 is that tenants have more rights than owners.
    Rule #2 is that when you mess with tenants, the tenant makes money and you lose money (or it costs you money)
    Just buy a single family home if you want one. Or, quietly live in, and use, both units. Turn the second kitchen into a really nice laundry room since it already has plumbing in place. I can think of many owners of multi-unit buildings I know who quietly have expanded into a former rental unit when the tenant vacated. Some use them as home offices, some as artist studios, or just more space for a growing family.
    Best to avoid DUM legislation…

  16. Posted by Fishchum

    The Buyer’s agent was David Banks of Princeton Investments, with an address on Sutter Street. Anyone care to give him a call or an email?

  17. Posted by formerly%whatever

    Not sure what happened here, but the Banks brothers are knowledgeable real estate guys. Out of town architect? Maybe a friend or relative?

  18. Posted by passerby

    I wonder if the new owner of 601-607 28th Ave, 94121 (http://www.redfin.com/CA/San-Francisco/601-28th-Ave-94121/home/1189768) will merge the units.

  19. Posted by R

    Not to go off on a tangent.. But ouch, those 28th Ave rents are horrible.. And smell a lot like 3/4 units are protected. What a PITA.

  20. Posted by passerby

    R, following on your tangent here. Yes, the rents only add up to $41k gross for the year. Given the lack of sales history, this unit was most likely owned for a very long time, so that rental income sounds decent.
    Hop on street view and check out the neighborhood. Directly neighboring homes look grand. And they look like single family residences. This DUM policy would adversely affect the pricing on this unit.
    Imagine: no rent control, no protected tenants, free and open market pricing on this 5,000 sq ft unit. I say the price could have easily been $1.3, if not more.
    Given the 256 results on craigslist for the neighborhood (http://sfbay.craigslist.org/search/apa/sfc?query=&bedrooms=&nh=26), I don’t think rental housing is an issue. It could be those low rates are now non existent, but that might also explain why this property, as grand as it is, looks so horrible on the exterior.

  21. Posted by R

    $1.3 is probably not far off… GRM at $800k is almost 20, which is crazy high.. But say it was vacant, you could likely get $1500-2000 for these places unrenovated, multiply by GRM of 15 you’d get a sale price of ~1.1-1.4.
    Seller could have bought the tenants out and would’ve made more money.

  22. Posted by sfrenegade

    “Imagine: no rent control, no protected tenants, free and open market pricing on this 5,000 sq ft unit. I say the price could have easily been $1.3, if not more.”
    Ahh, but imagine no Prop 13 and no artificial constraints on growth by the city, the Board of Supervisors, the preservationists, DBI, and general NIMBYs, and true open market pricing. The price could easily be a lot lower.

  23. Posted by resp

    this makes no sense. the owner bought last year when the building was vacant (according to the listing) beating out multiple offers. tenant entered under his ownership and now he makes the idiotic attempt at a DUM with a tenant which anyone should know is impossible in SF. no one can be this dumb. there must be more to this story.

  24. Posted by resp

    …and the owner is a real estate appraiser? wtf.

  25. Posted by Brahma (incensed renter)

    resp, the “more to this story” part of it is that the new owner is yet another San Francisco “owner/entrepreneurial” ad-hoc landlord who feels that real estate in The City is the best way to exercise his “Will to Power” as a an elite, supreme Nietzschean übermensch. That has to be why, even though the rules were in place prior to his purchase, and as a sophisticated real estate investor, he still thinks he’s going to win approval of the dwelling unit merger: The rules that apply to “little people” don’t apply to the real estate übermensch!
    In the unlikely event he gets turned down by Planning Commission, count on a new commenter on socketsite appearing, railing against the “socialist progressives” in City government infringing on the absolute, sacred property rights on which this entire county was founded and threatening to ‘go Galt’ in response.

  26. Posted by NOT DUM

    We had the same issue in the same neighborhood. Paid tenant (a young professional) to leave. Redid the house from the studs as two units, with a very small kitchen in the upstairs unit. After final replaced the small kitchen’s stove with washer/dryer and use as a laundry room with wetbar (legal). Removed 3 ft of wall by the front door to merge the units and sealed extra exterior door with a window (illegal but DBI is not going to harangue you about a small change like this if both units are owner occupied and no one is calling them to complain). Now have large SFR, and will just disclose above changes if/when we sell. Bonus: price/sqft in the Marina is higher for SFR than multiunit. So you can get done what you need to get done, but you just have to be creative and not poke the city & tenant advocates in the eye. It sounds like they thought they could get the house zoned back to what it used to be and use that as a lever to get the tenant out.

  27. Posted by Augustus

    There are many dozens of houses like NOT DUM describes, and there will be many more until the policy changes. It is interesting that other cities, even with left-wing governments, do not impose these limitations.

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