SF Real Estate Renovation & Building 101

In our article In It To Win-Win It, we discussed opportunities to add value to existing multi-unit residential buildings by going the path of least resistance and keeping improvements within the envelope of the existing structure. Now, below, we take an introductory look at considerations in expanding habitable spaces and adding units via new construction. Persons interested in such extensive alteration of property are advised to review information available at sfplanning.org and speak with Planning staff directly.

Disclaimer: No legal or financial advice is given and no guarantees are made regarding building improvement possibilities. Information is believed to be reliable at the time of publication, and is subject to change. Home buyers and investors should always seek counsel from qualified professionals including attorneys, accountants, architects, contractors and municipal authorities.

Without further ado, here are eight factors that will define your successful building project:

EXISTING STRUCTURE

Is there a dwelling on the land? Knowing whether it is a single-family house, a duplex, triplex, fourplex, 5+ unit apartment building, or some combination of residential and commercial units (mixed-use) is the first step in identifying the minimum number of residential units that a completed building project will likely require. This Property Information Map is a good place to start. The San Francisco Planning Department is generally opposed to removing housing units from the market. Therefore, a structure recognized by the city as two legal units should have at least two units after renovation/building. Often, if an unpermitted (not legal) unit is known by the city, the owner of the property on which it exists will receive a Notice of Violation and be required to remove it or — more likely — legalize it with appropriate permits.

LOT SIZE

The standard lot size to permit detached single-family houses in San Francisco is 4,000 square feet. For other single-family houses and residential structures (both entirely residential and mixed-use), 2,500 square feet is standard. Existing structures are often on lots that are smaller than standard: those have been grandfathered. Other times, there may exist an oversized lot; it may be split into two or more lots according to the minimum standard sizes, with the exception of those located within 125 feet of qualifying intersections which may be smaller. Splits require that new lot(s) and the existing lot have a minimum 16 feet of frontage on a public street or alley, and for that reason they are generally limited to existing lots located at a streetcorner or stretching through an entire block. Once executed, a lot split may multiply the number of permitted units in accordance with the Zoning District.

ZONING

Zoning Districts dictate the land use and — considered alongside lot size — the maximum number of units that may be constructed. Within San Francisco’s residential districts, planning code standards for the most common properties are as follows:

RH-1(D): House, One-Family (Detached Dwellings) › One dwelling unit per lot

 

RH-1: House, One-Family › One dwelling unit per lot, up to one unit per 3,000sqft of lot area (maximum of 3 units with conditional use approval)

 

RH-1(S): House, One-Family with Minor Second Unit › Same as RH-1, or 2 dwelling units per lot with second limited to 600sqft of net floor area

 

RH-2: House, Two-Family › Two dwelling units per lot, up to one unit per 1,500sqft of lot area with conditional use approval

 

RH-3: House, Three-Family › Three dwelling units per lot, up to one unit per 1,000sqft of lot area with conditional use approval

 

RM-1: Mixed (Apartments and Houses), Low Density › Three dwelling units per lot or one dwelling unit per 800sqft of lot area

 

RM-2: Mixed (Apartments and Houses), Moderate Density › Three dwelling units per lot or one dwelling unit per 600sqft of lot area

 

RM-3: Mixed (Apartments and Houses), Medium Density › Three dwelling units per lot or one dwelling unit per 400sqft of lot area

 

RM-4: Mixed (Apartments and Houses), High Density › Three dwelling units per lot of one dwelling unit per 200sqft of lot area

Non-complying structures may be grandfathered. For example, a legal triplex may exist on a standard 2,500sqft lot zoned RH-2. In the event that the city has required an unpermitted housing unit to become legalized, the resulting structure may be non-complying as well if the density exceeds that allowable with conditional use approval.

SPECIAL USE DISTRICTS

Special Use Districts are an additional layer of  land use regulations — or relief from certain regulations — overlaid on Zoning Districts. To illustrate this, consider that the majority of the aforementioned zoning districts generally allow for structures to reach a gross square footage of 1.8 times the lot square footage (this floor area ratio is increased to 3.6 and 4.8 for RM-3 and RM-4 lots, respectively). Pertaining to lots zoned RH-1, RH-2 and RH-3, structures to be built on vacant land within the Corona Heights Large Residence Special Use District are restricted 3,000 gross square feet; expansion of structures is limited to a 75% increase in existing gross square footage if the project will result in more than 3,000 gross square feet; expansion of structures and adding dwelling units is limited to a 100% increase in existing gross square footage if the project will result in more than 3,000 gross square feet. Projects that exceed these and other limitations are subject to conditional use approval.

NEIGHBORHOOD NOTIFICATION

As required by Planning Code Section 311, Neighborhood Notification is conducted by the Planning Department for many discretionary permits including demolition and new construction and when there is an expansion of the building envelope, removal of an unauthorized unit, and a change in use. Removal of more than 75% of interior wall framing or 75% of existing framing will also trigger Neighborhood Notification. Once the Building Permit Application is complete and complies with all relevant Planning Codes and guidelines, the assigned planner will draft a notice describing the project. Neighborhood Notification is mailed to residents and owners of properties located within 150 feet of the subject property and registered neighborhood groups for a 30 day public review period. During the 30-day notification period, neighbors may contact the Project Sponsor or Planning staff to voice concerns or make comments regarding the proposal. A neighbor may file for a Discretionary Review, which is a request for the Planning Commission to review the application. If no Discretionary Review application is filed, Planning staff may approve the Building Permit Application after the 30 day notification period has ended.

HISTORIC PRESERVATION

It is generally advisable to retain and restore the facade of an existing structure exhibiting characterful architectural elements. San Francisco is known for its wealth of Victorian and early 20th century homes, and — from the perspective of resale value — the marriage of this vintage charm with thoroughly modern interior spaces is a proven winner. Moreover, when a project seeks conditional use approval and/or require Neighborhood Notification, thoughtful preservation of historical context may help the project move forward.

In accordance with Planning guidelines, structures more than 50 years of age and proposed for demolition or major alteration will have additional information requested to determine whether the property qualifies as a historical resource for the purposes of CEQA. Historical resources include properties listed in or formally determined eligible for listing in the California Register of Historical Resources, or listed in an adopted local historic register, and also include resources identified as significant in an historical resource survey meeting certain criteria. Additionally, properties which are not listed but are otherwise determined to be historically significant based on substantial evidence would also be considered historical resources. If a structure is found to be a historical resource, its proposed demolition or alteration will be evaluated to determine significant adverse change in those physical characteristics which convey the resourceʹs historical significance. It should be noted that projects involving new construction in a “Historical District,” even if the subject property itself is not a historical resource, will require evaluation under CEQA to determine if the project could have a substantial adverse change on the significance of the overall historic district.

MULTIPLE UNITS: ADU vs TIC vs CONDO

Property owners aiming to add one or more rental units or sell off units have several options assuming certain criteria are met. 

ADUs are accessory dwellings that are tied to a primary unit — they may not be subdivided or have ownership transferred separately. Essentially, they are designed to add longterm rental inventory. Per San Francisco’s Accessory Dwelling Unit Program, one ADU is generally allowed on residential lots with four or fewer existing units; an unlimited number of ADUs is generally allowed on residential lots with five or more units assuming they fit within building envelope and meets Planning and Building Code requirements. If a building is undergoing mandatory or seismic retrofitting, an unlimited number of ADUs may be added to the lot. ADUs may both generate income and add resale value to a building.

TICs are fractional ownership interests paired with an exclusive right for owners to occupy their designated units as mapped in a private Tenancy In Common Agreement. This is the easiest way to turn a building of two or more units into sellable parts. Day-to-day operations in a TIC building are very similar to a condominium HOA and units may even be financed with separately secured loans; however, items like property taxes and other assessments which are attached to a property’s APN must be privately divided by owners (TICs within a given building share an APN, they are not subdivided interests like condos). Buildings that meet certain characteristics and owner-occupier requirements may qualify to convert to condominiums.

New buildings to be constructed from the ground up where no dwelling units previously existed may be subdivided into condominiums pursuant to the California Subdivision Map Act, the San Francisco Subdivision Code, and the San Francisco Subdivision Regulations. Under certain circumstances, the addition of one or more units to single-family houses and/or extensive expansion of units in an existing apartment building may qualify for condo conversion without first becoming TICs.

EVICTION

Any history or no-fault evictions and/or tenant buyouts may limit the possibilities for adding ADUs, renting units, and condo conversion. Questions about landlord/tenant matters should be directed to a qualified attorney well versed in San Francisco laws including the Residential Rent Stabilization and Arbitration Ordinance.

We have access to an array of San Francisco multi-unit buildings full of possibilities. Contact us and we’ll share them with you > 415.715.9205 / hello@vulcca.com