How to Play Planning and Mint a Few Million BucksMay 16, 2017
Purchased as two adjacent but completely separate units in the Royal Towers building at 1750 Taylor Street for a combined $4.6 million back in January of 2014, an application to legally merge the one-bedroom unit #804 and the two-bedroom unit #805 was soon filed with the city, citing a need to accommodate the buyer’s family.
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 was $1.63 million at the time, units 804 and 805 had been appraised for $1.695 million and $3.5 million respectively, and the Dwelling Unit Merger (DUM) was approved by San Francisco’s Planning Commission last June.
Keep in mind that the merger had been opposed by the Planning Department, which noted: “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, the Department noted: “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.”
Shortly after being merged and remodeled, the now four-bedroom unit simply known as 1750 Taylor Street #805 inexplicably returned to the market priced at $8.6 million, the sale of which has just closed escrow for $7.075 million ($2,141 per square foot).
As an aside, with the list price for the unit having been reduced to $7.298 million in February, the sale is officially “within 3 percent of asking” according to all MLS-based stats and reports.
Comments from Plugged-In Readers
I don’t see a problem here. I doubt that the “need to accommodate the buyer’s family” was the decisive factor; it was allowed under current law hence it was approved.
We don’t know all the facts, maybe the family had to leave town? Granted, it does look suspicious, though
Could not agree more. To a degree, this is like filing your tax return. The government designed a set of rules. The taxpayer followed the rules and used them to their maximum advantage. Don’t hate the player.
This thread is attacking the character of the flippers, and this is a pathetic defense: that something was not “wrong” because it was not illegal.
If this player doesn’t deserve any reproach, I invite you to consider some other ways you can follow the rules and do legal things to your own personal maximum advantage:
* Go to the SF-Marin free food bank and take a bunch of free groceries that you could easily afford but that are meant for less privileged people.
* Use the sidewalk to sit, take up space and soak up the sun at the expense of others’ free passage (in a city other than SF).
* Buy a fairly inexpensive piece of art, get it “appraised” for a really high price, then donate it to take a big tax deduction.
How do you feel about someone doing these things? They’re all legal.
As a society, we cannot construct intricate “rules” to cover every single possible corner case of conflict and appropriately incentivize the thing that is best for everyone. To actually a pretty large extent, our society hinges on relying on people to be decent human beings, and the fact that many Americans are pretty decent—regardless of the laws—yields a culture that’s pretty reasonable (there are countries on either side of us on the spectrum to compare to as well). Laws are a backstop that provide authority for enforcement when people cross the line.
So, I don’t know the actual circumstances, but to the extent they can be know, IF someone misrepresented their motives so they could get through planning and do something normally not allowed just to turn a profit in the face of a housing crisis .. yeah, I hate that player. Because they are an a**hole. And if they actually thought about what they were doing beyond lining their own pockets they would know that they were acting completely immorally, if legally.
“Acting completely immorally” is hyperbole. That phrase is applicable to us bombing 7 countries over the past 8 years – but combining 2 residential units? Nope. Not even close. People in Syria have a housing crisis. People in SF in 1906 had a housing crisis. Us? Now? Eh. Things are tight – but hardly a crisis.
Perhaps its a touch heavy, and I agree bombing civilians in another country is “more immoral”. By that measure, very little else in the world should be considered immoral, and that doesn’t feel like a useful worldview.
If you wish to focus on semantics, I invite you to consider how your statement reduced the weight of their action by calling it “combining 2 residential units” versus “lying to make money at the expense of the public”. Both are accurate descriptions, but the latter is what’s important for the judgment at hand.
Oh I’m sure a large family and their two dogs and a parrot bought the place, so it kept a family from leaving city. Just need to be careful with those three toddlers on the balcony.
Awesome views from the MBR.
This building has to cost a fortune to maintain, right? And It’s a total eyesore from the exterior. The interior looks quite well done, but for that chunk of change, why not buy in a more modern building? …I guess it’s probably tough to find 4bdrms in a highrise condo (which typically top out at 2-3 bdrms)
According to RedFin, the building is a co-op, and the HOA dues are north of $1,500 monthly. If you have to ask the price (of maintenance), you can’t afford it.
We can hope to be like when Dr. Zhivago returns home to Moscow and finds 13 families in his house. The comrades do let him continue to live in one of the rooms.
Why is San Francisco the only major city that controls private property in this way? Paris, London, New York and lesser places allow mergers at will, and it happens every day. All three of those cities, by the way, have mayors at least as liberal as ours.
True, there are rules that allow such things like this to happen. Citing a need to accommodate their family was the reason the monster on Lower Terrace got past all of the neighbors and planning. Then *oh!* suddenly when it was finished, the family was nowhere to be found!
I do love this place.
They should be required to maintain ownership for some significant period of time to avoid this.
What is wrong with large apartments and large houses?
“What is wrong with large apartments and large houses?”
Well, they contribute to the city’s housing crisis, for one thing. So I don’t have a problem with the idea that the City should discourage the merging of smaller units into larger, much less affordable units in most cases.
Note that I didn’t say “ban.” Just “discourage,” and “in most cases.”
Hey, conifer, let’s just agree that there’s nothing wrong with large apartments and houses, okay? That’s not what the objection is.
If the flippers on this unit had actually built a new, large apartment or house and added it to the stock of locally-available housing, everyone would be applauding them. They didn’t do that.
The objection is to speculators taking units off the market by combining smaller units into one large one to facilitate a “flip”.
Actually, I would object to people conning the system to get their projects passed. “My family is growing and we need a bigger home!” Who is going to deny a family the right to make their home bigger? But, when you use that ‘sob’ story to mask the real intention of flipping, then you’re just screwing everyone else.
That’s what my comment was about.
Taking smaller units off the market and creating larger ones does not contribute to the “housing crisis” as proved in New York and Paris which also have “housing crises.” These were two privately owned units in one of the most expensive buildings in San Francisco, and co-op to boot. If a government wants to solve a housing crisis it should enable developers to build more houses, not interfere with the use of privately owned apartments and houses. Socketsite readers know I have no great respect for flippers, but no one at all was “screwed” here.
If you do something wrong but it doesn’t affect anyone else, it’s still wrong.
This is the city not NASA. It doesn’t take a rocket scientist to maneuver and manipulate through the city’s bureaucracy.
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