Legislation which would require special authorization from San Francisco’s Planning Commission in order to merge or remove any residential unit in the city – whether legal, illegal or demonstrably unaffordable – is working its way through the City’s Board of Supervisors.

And in addition to further restricting the merger of existing units, the proposed legislation now includes language that mandates the legalization of illegal units, requiring the owners to apply for building permits to legalize said units, “unless infeasible under the Building Code or the Planning Commission approves [their] removal.”

The Planning Code currently allows, and typically requires, illegal units to be removed and provides a blanket exemption to allow for the merger of a residential unit that is worth more than 80 percent of the single-family homes in San Francisco and is thus considered “demonstrably not affordable,” the threshold for which is currently $1.63 million.

Sponsored by Supervisor Avalos, the proposed ordinance is currently under review by the City’s Land Use and Transportation Committee.

UPDATE (12/8): As newly linked above, the demonstrably unaffordable mark in San Francisco has been raised from $1.506 million to $1.63 million.

48 thoughts on “Legislation to Mandate Legalization of Illegal Units, Restrict Mergers”
  1. ” …requiring the owners of noticed illegal units to apply for building permits to legalize the units, “unless infeasible under the Building Code or the Planning Commission approves [their] removal.”

    So does this essentially green-light unlimited dwelling units anywhere in the city? Could I build what appears to be a SFH, put in an internal corridor with multiple entrances, call them illegal units that meet the building code, and get them approved by right?

    1. Honestly, I wish it would green-light the dwelling units your talking about – but building code restricts most units you’re thinking of. See my comment below – it’s still extremely difficult to add a dwelling unit to a property in a cheap and innovative way, both due to the code and due to NIMBYs.

  2. Mergers are already restricted, but owners get away with it anyway – as an architect, it’s easy to falsify “existing conditions” and draw two units as one. The planning dept / building dept would never know the difference.

    Also, most illegal units are illegal because they violate building code – which is why the owner would avoid trying to get a permit. I’ve been the victim of this. Good legislation, but won’t actually increase the supply of units that *should* be legal (i.e. rear cottages, converted garages, etc.)

    1. True dat – I’ve seen it in several renovations in my neighborhood. The skeavy architect/contractor draws the plans to show existing condition to reflect what they want to build, so they don’t need to notify neighbors or get variances. DBI doesn’t check unless someone complains, and even then there is almost no sanction if caught.

      One contractor has been cited for doing work beyond the permit in more than 50% of his jobs over the previous 2 years (more than 60 projects), and yet they don’t get any more scrutiny. Only after neighbors took his permit to the Appeals Board did he hire a reputable architect and take down some of the “existing” work he had completed.

  3. The purpose of this proposal is not to increase supply since it does not. The purpose is to keep the tenants in the illegal units to live in the illegal units forever, since the landlord will lose the ability to remove the illegal units to comply with building codes.

    1. Right, make them legal, spend 10s of thousands doing so, then get saddled with a miniscule pass through rent raise. This legislation is going after mom and pop landlords with knives out. For shame.

  4. The harder they make it for owners to control their own properties, the harder it will be for renters to find & keep housing. The Board as always is moving in the WRONG direction.

  5. On second thought I will NEVER rent out my in law unit in my house. Not worth the risk of a tenant and City shakedown later.

    1. Me either. And it would be a perfect unit to rent out though. It’s in the heart of the city, super nice, renovated. No parking, but walk score of 99, transit score of 98.

      If I could rent it it’d be nice to get the extra income. But I don’t really need it, and with these laws on the books – hah! never. I’ll use it for an au pair instead.

  6. A phase out of rent control (existing renters grandfathered in) combined with significant changes in zoning and streamlining the building permit process is what San Francisco desperately needs. “Progressives” have failed to make the city “affordable.”

  7. Most “illegal” units done without permits and inspections are rampant with code violations involving “health, life safety and welfare” of occupants.

  8. Avalos must be smoking too much of that MCD stuff. $1.5MM as an affordable threshold to renovate? Can not merge unit back to meet legal zoning but must spend the $1.5MM to create additional housing? Avalos, you live in the excelsior. Lets see you spend the money to create a legal in-law unit to meet the housing demands. Put your actions and money where your mouth is.

  9. It looks to me like the major impact of this change would be to treat illegal units just like legal units with respect to the merger and removal rules. There is some sense to this – it seems a bit perverse to skirt the law and profit from an illegal unit for some period (also thereby avoiding a re-assessment and paying lower property taxes), and then because you broke the law, you have an easier time with a merger or removal.

    Generally, the law frowns on permitting one to benefit from an illegal act. So I certainly can’t say it is frivolous to force those who have an illegal unit to play by the same rules as those who followed the law. There are really two viable policy options (imho) to deal with an illegal unit: (a) force the owner to remove it, or (b) force the owner to make it compliant with the codes and permitting requirements, thereby “legalizing” it (which should, in my view, also include financial penalties, such as a retro-active property tax re-assessment). There are sound arguments for either route. This change seems okay to me.

    1. And yet this legis seems to deny your first option – to remove.

      There’s a certain fairness in “punishing” the original party that tried to provide housing (er, create extra ‘profit’ – or both). However, if the situation is inherited (recent purchaser), removal should be speedily allowed.

      But since many of these units (legal or illegal) were created post-’79, seems like they ought to fall outside the RC rules as ‘new construction’ – unless they’ve been there for decades. I mean, only seems ‘fair’.

    2. I understand – my point was that either option is a valid policy decision. I didn’t mean to suggest that both options must be offered, although that would also be a reasonable solution.

      The argument that removal should be allowed for inherited situations makes sense. But there are valid arguments on the other side – you inherited it (i.e. you bought it), you’re now stuck with it.

      I do agree with you on the post-’79 construction point (as a policy issue — but again, I see the arguments on the other side).

  10. This is not unrelated to cases like the Deb Follingstad and landlord Nadia Lama one in which the landlord took out an illegal unit, and then once the house was SFR, jacked up the rent under the RC exemption. Preservation of renter constituency votes.

    Probably not a large impact in the greater scheme of things – would make lot mergers more difficult too, I guess.

  11. I swear, in this town a Supe could introduce a measure to force feed rat droppings to school children, and if they called it the “Tenant Protection Act Against Greedy Landlords” it would bump up their street cred with the 65% tenant majority – they could fit the title of the Act on a flyer they’d hang on voters’ doors at election time.

  12. I dislike in-law units because they make my neighborhood full of single-family homes too dense (I am not on the ‘more units by whatever means necessary tip). I dislike that they aren’t enforcing against illegal in-laws in the first place. Do I like this legislation or not? I can’t decide. Should I, for its cumulative effect, if not the spirit it was drafted in?

    1. This legislation will make your neighborhood denser and make the higher density legal. As of now, illegal in-law units are removed by new owners. But this law will prevent the removal and will force the owner to make the single family house into a duplex or even a triplex.

      1. This sucks, if true. I hate this BOS. Some people seem to be arguing that this will be a disincentive to those living in single-family homes from renting out an in-law (because you wouldn’t want to get stuck with a bad tenant in your own basement). I guess in other cases, if the landlord doesn’t live in the house, this might incentivize (certainly not dis-incentivize) the creation new units. Does this sound right?

        I wish they would just enforce the damn laws as we have them.

      2. Most feasible illegal in-laws are already built. As of now, the trend is to remove the illegal in-laws and legalize the space and merge into the single family house. This is exactly what Avalos wants to stop. Avalos wants to keep all the illegal in-law and forbid merging the illegal space into the original single family house. His purpose is to make the tenants in illegal in-laws live in the illegal space permanently. The only purpose is to reduce “displacement” from illegal in-laws. This can become a problem for many neighborhood.

        1. Avalos has it backwards. The doubling of density in neighborhoods zoned for single family homes is a pox. Cars, noise, trash. It is a nuisance. Avalos has it backwards, as usual.

  13. I guess the purpose of this legislation is to prevent tenant evictions due to removal of illegal in-laws that are otherwise conforming with building code for electrical, plumbing, fire safety, egress, etc.

    But does this mean, if I am a single-family homeowner with an un-permited in-law unit in my garage or a rear cottage, which is otherwise conforming with building code, that I could submit some paperwork with Planning, they’ll come and inspect, everything will become legit, and my property will become ‘multi-unit’?

    What if I decide to build another one or two stories of separate dwelling units on top of my roof, all without permits, but still conforming, making my house a duplex or a triplex? As long as long I can get through construction without someone reporting me, then all is good and I can keep it?

    1. If you spend $200k to a second unit, your house will be under rent control and you will not able to convert it into a condo. Your property value will actually decrease a lot after a $200k spending on construction.

      1. Sorry Bayview, but your comment makes no sense.

        Sure, a building with weird legal restrictions on the units is worth less than an equivalent building with normal legal restrictions, but if my building doubles in size (or more), then why would property value decrease? Just because the pieces can’t be sold off separately?

        I don’t care if the new space is rent controlled, or if I can convert it to a condo, because I can rent it out and get at least $50K a year.

        You must be crazy if you would turn down that kind of ROI just because of some paperwork.

        1. anon2, are you new to SF? Rent controlled duplexes regularly sells much less than a comparable single family house. If your tenant stays long term, your rent will become much lower than market. Current buyers of duplexes are paying the price for the opportunity of future condo conversion.

          Take a look at the market, you can buy 10,000 sf multi-unit rent controlled building for $3M in SF. A 3000 square feet single family house can cost the same price.

          A duplex with rent control and with no possibility of condo conversion will be worth less than even a regular duplex.

          1. Bayview, I don’t think you read what I wrote.
            You’re saying that a house divided sells for less than an equivalent house united.
            Clearly. Of course it does.

            I’m saying, with this new law, if I were to illegally construct a 10-unit 5-story apartment building in my back yard, which would be clearly out of compliance with zoning and planning, I would still get to keep it as long as it was safe and habitable, because to remove that would reduce the city’s housing stock.

            Also, where are you finding 10,000 sq ft apartment buildings for only $3M? I’ll buy if you’re trying to unload one.

          2. anon2, there are a 12,825 square feet rent controlled building for sale at $3.5 million in the center of the city. Do you have the fund ready?

            Avalos welcomes you to build illegal in-laws as much as you want, as long as it is under rent control. However, I think that your neighbors will not allow out-law building outside the building footprint. Illegal in-law are mostly the garage space or storage space. Avalos is not powerful enough to allow you to construct new buildings in your backyard yet.

            Seem you do not understand rent control.

          3. Maybe most of the people do not really understand SF’s rent control, we can’t blame anon2.

  14. There is already a regulation which allows and encourages owner to legalize illegal in-laws. Of course almost no owner wants to spend a huge amount of money to reduce his property value by converting a good single family house into a rent controlled duplex.

    That’s why Avalos wants to FORCE owners to spend a huge amount of money to reduce his property value by converting a good single family house into a rent controlled duplex.

    1. Actually for non RC 2+ unit bldgs this is a bonanza. You get to legalize an additional unit and the full value of that, and you’re still off RC.

      That’s what I love about all these kooky SF ordinances; the unintended consequences can be very profitable to the right people!

      1. My read of the legislation is that it doesn’t confer on anyone any right to legalize an illegal unit. The city can still force someone to remove an illegal unit. What it does is prevent an owner from removing an illegal unit. I.e., if you want to remove it, you can’t. If you want to keep it, the city can tell you that you can’t.

    1. I don’t see how you can like it. If you want to keep the unit, it doesn’t really change much — the city can force you to remove it or to make it code compliant, just like at present. But if you want to remove it, it changes a lot. At present, you can simply remove it. With this legislation, you likely have to keep it AND pay to bring it up to code.

  15. This regulation will make the low end housing rent very expensive. Many illegal in-laws are rented for a very low rent due to its illegality and lack of high end finishes. After this law forces owner to legalize the in-law units, we can expect the these units become really nice brand new units with high end finishes. The rent will be very high for the new tenants for sure. This will gentrify the tenants for these units.

    1. This, like most proposals from the BOS, is not intended to address the concerns of future tenants. This proposal is designed to allow tenants currently in illegal in-law units to be allowed to remain in such units and to force the property owner to bring the units up to Code. And as an additional “bonus” for the property owner, the work to bring the units up to Code would not be eligible for a Capital Improvement Pass-through under the Rent Ordinance.

    2. Agreed. So our already un-affordable housing will get less affordable under the new City rules… Busines as usual in SF.

  16. With the types of legislation that have been passing lately I’m beginning to think that the only thing I would like out of future Supervisors is that they be – a little bit smarter. Campos/Weiner is a start. But Harvard guys. Not your London Breeds, your Aaron Peskins. It matters. Brainpower. C’mon, people. Not ideology. There are tons of super smart people in SF. We are not well represented.

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