Listed together for $5.5 million in October of 2013, the Royal Towers (1750 Taylor Street) one-bedroom unit #804 and adjacent, but not connected, two-bedroom unit #805 sold for a combined $4.6 million in January of 2014. From the listing at the time: “Combine these 2 apartments and have amazing space and incredible, dramatic views!”
Last year, an application for a Dwelling Unit Merger to combine the two units was filed with the City. And if San Francisco’s Planning Commission upholds its preliminary motion of intent, next week the merger will officially be denied.
While San Francisco’s Planning Code generally disallows the merger of a unit which isn’t deemed to be demonstrably unaffordable, the threshold for which is currently $1.63 million in San Francisco, units 804 and 805 were recently appraised for $1.695 million and $3.5 million respectively.
From the City’s draft motion to deny:
“Although the smaller unit exceeds the Numerical Criteria, the merging of two unaffordable units into one unit that would approach or exceed $5,000,000 and be unaffordable to a larger percentage of the population than the two individual units considered separately would not be in the best interest of the community.”
In addition, citing Mayor Lee’s 2013 Executive Directive that all housing, including owner occupied, should be preserved when possible: “While the applicant’s family would occupy the merged unit, there is no compelling reason as to why the family could not continue to occupy both units as currently configured,” and once the units are merged, “there is little chance that the City would recoup the loss of the unit.”
While the merger of demonstrably unaffordable units had previously not required a hearing or special approval in San Francisco, an interim zoning control was adopted last year but is set to expire at the end of 2016. That being said, legislation to permanently do away with the ability to ever “price out” of a hearing is in the works, as we first reported.