Legislation to Allow New In-Law Units throughout San FranciscoJuly 19, 2016
San Francisco’s Board of Supervisors is slated to approve legislation which will allow more in-law units to be added to existing buildings throughout San Francisco. And the bargaining chip ballot measure designed to put pressure on the Board’s passage of the legislation is slated to be withdrawn.
Under the refined Construction of Accessory Dwelling Units amendment to San Francisco’s Planning Code, which represents a compromise between competing amendments sponsored by Supervisors Peskin and Farrell and could be adopted this afternoon, existing buildings with four dwelling units or less will be allowed to add one in-law while buildings with five units or more will be allowed to add an unlimited number of accessory units.
But all the new units would have to fit within the existing envelope of the buildings (which includes the area under most decks and some lightwells) and each new would have to measure at least 350 square feet if a studio or 550 square feet if a one-bedroom.
New in-law units would not be allowed to be added to buildings from which a tenant had been removed by way of either an Ellis Act or Owner Move In eviction in the past 5 to 10 years or in areas principally zoned for single-family homes. And the new units would be prohibited from ever being registered for use as short-term rentals or (legally) airbnb’d.
Comments from Plugged-In Readers
Doesn’t the addition of an in-law unit provide that the entire building is now subject to rent control if it was previously a single family home? If so, I can’t imagine any informed owner would do such a thing.
NO informed owner would do this. However, not many single-family dwelling owners have any clue of what they’d have to deal with once they’re entire property gets converted to one which is completely under rent/eviction controls.
Friends shouldn’t let friends do this. Let your friends know.
Not my area of law at all, but it appears far from certain — perhaps even unlikely — that adding an ADU (in-law) in a single family home will subject anything to rent control. From a Planning Dept. guide:
“For ADUs in the Castro and those created under the seismic retrofit legislation, if the existing building is subject to rent control, then ADU would also be rent control and Costa Hawkins waiver would be required. If the ADU is being added to a single family home-which is not usually subject to rent control- the Costa Hawkins agreement won’t be necessary since the ADU won’t be rent controlled.”
Obviously worth paying a few bucks to a knowledgeable lawyer before making a decisions – pro or con – based on the perceived rent control impact.
However, from the Rent Board’s Fact Sheet:
“A single-family dwelling with a legal in-law unit constitutes a two-unit building and is not exempt. A single-family dwelling with an illegal in-law unit also constitutes a two-unit building and is not exempt, unless both units are rented together as a single tenancy”
Not easy to get clear guidance…
The question might turn on when the in-law is/was added. A newly added in-law may be exempt under Costa Hawkins. That would reconcile these two city documents. Or, one (or both) could simply be wrong. Dunno.
The new ADU would be exempt as a post-1979 unit with a new CFC, but if the formerly SFH unit was only exempt under the “separately alienable” provision of Costa-Hawkins, it becomes subject to rent control.
Open your wallets. All this RC language is ambiguous in general, which means only a lawsuit will settle the matter as soon as a tenant challenges the ordinance on eviction or rent increase.
A smart owner would be well advised to consult a “seasoned landlord” lawyer before wading into San Francisco’s snake pit of RC legislative quick sand.
Just kidding… found the language with the Costa-Hawkins waiver:
“(H) Regulatory Agreements. A Regulatory Agreement required by Subsection (c)(4)(G) as a condition of approval of an Accessory Dwelling Unit shall contain the following:
(a) a statement that the ADU(s) are not subject to the Costa Hawkins Rental Housing Act (California Civil Code Section 1954.50) because, under Section 1954.52(b), the owner has entered into this agreement with the City in consideration for a complete or partial waiver of the density limits, – and/or parking, rear yard, exposure or open space standards o[this Code or other direct financial contribution or any other form of assistance specified in California Government Code Section s 65915 et seq. (“Agreement”).”
Even if you consult with the best lawyers in town, you can’t get clear answers. The laws are subject to multiple interpretations, and no final answer on hundreds of rent control issues exist – and they won’t until each one is litigated and appealed.
Twice I’ve consulted with the best 3 attorneys I know of in SF, each time on a crucial issue to me. Both times all 3 agreed on one answer – and both times it turned out they were 100% wrong. The rent control laws were written either badly, or intentionally vaguely enough so that no clarity exists, giving Power to Rent Board bureaucrats, and $$$ to all the attorneys who helped draft the laws, knowing that they’d make money off of all the people who needed their “help” interpreting them.
One of my lawyers calls the SF Rent Ordinance “The SF Tenant/Attorney Full Employment Act”
“We can’t promise you anything except that it will cost $400 an hour to try to give it the old college try.”
$400 an hour? If you can find a time machine and go back to ask a lawyer in 2001 . . .
But seriously, that’s how it works when a legislature passes confusing, poorly worded and vague laws. I agree it is ridiculous.
Couldn’t agree more!
RC law in SF is a cottage industry to self indulging and predator tenant lawyers.
Been there…done that! Out of the SF landlord business for good!!
Does this actually do anything? This sounds like more patting themselves on the back while they pass legislation that doesn’t accomplish anything.
Peskin should lead the way. He can add to “our” rental stock by building a new rent controlled accessory unit in his property.
The news this morning said something ridiculous like “30,000 additional affordable units.” Yeah, right. This legislation won’t do much. I live in the Sunset where the avenues are filled with single-family homes and some have in-law units built mostly behind the garages on the ground floor. I’d like to know where larger buildings plan on adding potentially unlimited number of units to their existing lots. It’s not like there’s a lot of room to expand on most lots.
More in-laws will increase congestion & lower the number of garage spaces.
We don’t need more density when muni can’t handle the number of people as it is.
Huh? This makes absolutely no sense.
It makes perfect sense, and we’ve already seen it happen in some neighborhoods.
So, we can’t increase density in SF because MUNI can’t operate effectively? So, in-law units are to blame for congestion, but dozens of high rise condo buildings within a short distance of MUNI, BART, Caltrain and the financial district are not? Oh, okay.
You know the density decreases congestion, right? Not the other way around.
You are right. I’d forgotten that people just disappear when they don’t live in a high density environment. And those that don’t disappear certainly drive less. I don’t know what I was thinking.
Density only helps with congestion when it’s planned in unison with infrastructure. If you add population density but leave transit capacity the same, the result is obvious.
But it you add low-density growth and “leave transit capacity the same,” you get a better result? Again, your argument seems to assume that people just don’t exist if they can’t live in a dense neighborhood.
Regardless of whether transportation capacity is the same, or better, or worse, things are better if people consume less of that capacity per person. And that is what people in dense neighborhoods do.
the imapct of the bay area as a whole may be less, but the congestion in a given neighborhood gets much worse without transit improvement
Exactly, moto mayhem. Which is why pretending that density increases congestion overall is really just a disguise for nimbyism for those who don’t want to live in a dense area.
it will increase congestion in this small city, but maybe not Bay area as a whole. The suburban cities also need to densify
Suburban cities do not need to densify, or do anything. Let the city solve its own problems and leave us alone in our single-family homes on 5000 sq. ft. postage stamp lots. That’s how we like it down here.
In my neighborhood there are many illegal in-laws. Mostly rented to young tech workers. I suspect that is true in many parts of the City.
I doubt many of these existing illegal units will be made legal by their owners because:
Some units are not up to code or violate existing code – an illegal second kitchen having been put in. How much will it take to bring these up to code and will the owner be subject to a retroactive fine for violating the code in the past.
How will property taxes be affected? I assume a bump up only on the added value of making a legal second unit. Still that could mean thousands more per year in taxes. Another reason existing illegal units most likely will not be made legal.
Plus, as noted above, does rent control now come into play on a SFH that adds one unit? If so another reason for an existing illegal unit to remain that way.
Not only property tax, how many of these owners do you think are reporting the rental income on their taxes? Right.
They should be enforcing against illegal in-laws in the first place, not finding ways to cram every last living unit into neighborhoods that are already full.
Not to nitpick, but how could you know this:
“In my neighborhood there are many illegal in-laws. Mostly rented to young tech workers.”
This proposal does not address the existing Units (Illegal Units) that dot the Sunset and Richmond Disticts. They are not grandfathering in these Units. This only allows a property owner to add a new In-Law to their existing property.
Existing illegal inlaws have already been covered with previous legislation called something wonky like “legalization of existing unauthorized “in law” dwelling units.”
There are now 4-5 programs all basically doing the same thing. The one above, something special for the Castro (go figure), adding units while doing a seismic upgrade, and now this catch all one. Way to go sfcity, awesome way to make this complicated! AND, they all have subtle differences to boot. So far I’m digging the legalizing existing illegal inlaws one best. If the building is post 79, whamo, no RC for you. As I tried reading the wonky 157 page details on this current one, the city wants you to waive your Costa-Hawkins rights to get the privilege of adding unit? Meaning any newly added unit is under RC? WTF?
Converting a SFH to a legal 2 unit would be foolish, as both units would then fall under rent control.
Converting a 2-unit to a 3-unit would likely be cost prohibitive, as you then would need to retrofit sprinklers.
So maybe a few 3 unit and larger buildings add a unit.. hardly a tsunami of new affordable units.
Converting a 2 unit to a 3 unit would also eliminate fast-track condo conversion.
Yeah I know, it’s a tough call. Sprinklers are a good $30-35k, maybe more, to just do the new unit. But, you do add a 3rd unit and all that square feet at a value of $700-1000 psf, which is a pretty sweet ROI. If you plan to rent the prop out long term, it makes more sense.
But still, at best you’ll get a few hundred “new units” over the next several years. No way thousands. No way.
This is basically a good opportunity for a savvy rental prop owner to add a unit (not cheaply), but it will make sense to maybe 1/4-1/2% of the buildings out there. Wheeee!
Sprinklers are coming to apt bldgs near you, if Randy Shaw has any say. So don’t let that cost hold you back from considering an ADU
Mindless legislation without much thought. Owners will not change none rent control single family into rent control building, at the same time spending over 80k to make new unit
Exactly. Those owners of a SFH wanting to go the in-law route will simply continue to do so illegally. This, if anything, gives them a sort of cover.
If you’re starting with a SFH (or a condo building), the new unit can be added as a condo, so neither the new unit nor the existing dwelling would be subject to rent control.
I know of a number of small, older 2-4 unit condo buildings that have great potential for an in-law condo. But few HOA agreements address the addition of a new unit in common areas or beneath the existing living area of a unit. With such “new unit rights” being assigned to no one, I suspect that most potential in-law units in small condo buildings will never be built, because the condo owners won’t be able to agree among themselves how to allocate the risks and rewards, or how to compensate any unit owners whose privacy, quiet, or enjoyment of common space might be compromised by the new unit. Thus, while the upside from adding a new unit to a condo building is much stronger than the upside from adding a new unit to an apartment building (b/c of rent control), I bet that more units will be added to non-condo-converted buildings. Perhaps this is what some of the sponsors of the ordinance desire…
For a second I was excited that I would be able to add a third unit to a two-unit I am in the process of condo converting with my brother. Then I read that condo buildings that add a third unit have to restrict the third unit to 120% of AMI pricing and had to already be condos as of 7/11/16. Well I guess our basement is turning into my second story rather than a new unit. Oh the unit has to be rent controlled even if it’s a condo. WTF?
Wow, that is truly insane! So, if you have a 2-unit condo building, you could add an ADU that would technically be part of *one* of the two units and could be rented at market rates–but could only be subdivided from the unit to which it is “attached” if encumbered with a 120% of AMI deed restriction?
Worse yet, it looks like the Planning Commission interprets this ordinance as superseding the existing authorization for ADUs in districts 3 and 8, which does not restrict the creation of separable units in condo buildings.
From the language of the legislation (as linked above):
“…a lot with an Accessory Dwelling Unit [ADU] authorized under this Section shall not be subdivided in a manner that would allow for the ADU to be sold or separately financed pursuant to any condominium plan, housing cooperative, or similar form of separate ownership; provided, however, that this prohibition on separate sale or finance of the ADU shall not apply to a building that (i) within three years prior to July 11, 2016 was an existing condominium with no Rental Unit…and (ii) has had no [no-fault evictions] within 10 years prior to July 11, 2016, and provided further that any such ADU may only be sold to a household whose total household income does not exceed 120% of Area Median Income.”
From my read of it, if you built a unit within 2-unit condo building and subdivide such that it’s now a 3-unit building, it would be owned by the condo association, which in turn would have to sell it at the 120% of AMI BMR pricing. Also it has to have been a condo building as of 7/11/16, so future fastrack conversions like us are completely excluded from being allowed to subdivide. So if we condo convert this winter, and want to add a 3rd unit after eliminating rent control from both our units, if we wanted to add a third unit it would be rent controlled even though the other two units were not and technically it would be owned by the HOA. Very confusing. The law seems to be a little unclear if an existing condo property built third condo and collectively decided to rent it though, but again we are out of luck since we haven’t completed the conversion yet.
Oh and we were in district 8 so completely screwed on this one.
Legislation that has the superficial appearance of doing something while actually maintaining the status quo of keeping the City preserved in amber – an Aaron Peskin speciality. His other speciality is appearing to be “progressive” while in reality being a conservative reactionary.
Not true, he also kneecapped Airbnb here. When you can pass legislation that doesn’t help anyone while giving Airbnb the finger, you gotta do it!
Promising legislation but essentially pointless as the rent control factor will be a detriment for homeowners to build. Disappointing.
“New in-law units would not be allowed to be added to buildings …. in areas principally zoned for single-family homes. ” In other words those illegal units in all those Richmond and Sunset RH-1 homes will stay illegal and no new ones will be able to be added in any of those or any other single family zoned areas. This law will accomplish nothing.
UPDATE: The legislation has been approved by San Francisco’s Board of Supervisors.
Multiple “in-law units”?!!?!?
Instead of legislating the number one can build based on the current number of units in a building wouldn’t it have been wiser to introduce minimum requirements of each inlaw and then saying, builders/developers go for it? Yes, I know this legislation was a compromise but it is worthless. For example, as long as you create a new unit that meets this criteria: min x sq footage, has access to two fire escape routes, has exterior window of x sq ft size, has min height of say 7 ft and has properly coded wiring/plumbing/smoke detectors you can build all you want (as long as within the envelope of an existing building). This way, you let the owners choose how much to build based on their individual specific building characteristics. Don’t legislate to death so nothing gets done, unless that is your true intent.
Raise your hand if your stupid enough to create another legal rent controlled unit. For me, no thanks. I’ll just keep all the rc stuff vacant because the juice is already not worth the squeeze. After all, I have to try to do everything I can to price all the [liberals] out of the Bay. This is war and they forget who owns the assets. Some of us won’t play their game.
I never understand this strange mentality: why don’t you just sell up, cash out, put your assets in a regulatory environment you are comfortable with, and let liberal landlords like me play in the weird pond that is SF?
No – it is my property and nobody else’s despite what the communists on the BOS think. Money ain’t everything and I got enough in commercial game anyways. Let the tenants change the rules if they want to live in my properties. My position only gets stronger while others get weaker. If the city wants landlords they can incentivize us. Again, in the old neighborhoods there are plenty of vacant units as there are plenty of “us” that are misunderstood.
If you don’t understand my mentality then maybe you don’t understand the game. When was the last time you found a property for sale in SF where the price made sense relative to the rents? I dare you to become an SF landlord – you will lose your pants.
I am with you Hitman. I will not be screwed by the BoS. Non of my RC units will be long-term rentals.
Yes, by continuing to pay property taxes, insurance, and maintenance on empty units, giving up several thousand dollars a month per unit, that is really, um, teaching ’em a lesson.
Don’t worry – I can afford it and that is the point. Only those that can afford to resist capital controls will remain in SF.
I’m not a huge fan of the long term effects of rent control but I don’t really agree that “the juice is not worth squeezing”. At these rental prices, starting at market rate it doesn’t hurt me that my units are rent controlled. People who can afford my rent are the types who eventually want to own themselves for the tax advantage and benifits of home ownership in general. I’ve been an SF landlord for 6 years. Not one unit has stayed longer than a few years. If I could squeeze in another unit, I wouldn’t care that it was subject to RC.
Wow – a whole 6 years. If your property is halfway decent you are going to live a life sentence.
It’d been an awesome life sentence so far so I can only hope it continues. Your vacant units are really sticking it to ’em!
Picking-up pennies in front of a steamroller works until it doesn’t.
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