Board Pkt 012825

File No. 240872 Committee Item No. 6 Board Item No. 5 COMMITTEE/BOARD OF SUPERVISORS AGENDA PACKET CONTENTS LIST Committee: Land Use and Transportation Date: Dec 9, 2024 Board of Supervisors Meeting: Date: January 28, 2025 Cmte Board Motion Resolution Ordinance -VERSION 3 Legislative Digest -VERSION 3 Budget and Legislative Analyst Report Youth Commission Report Introduction Form Department/Agency Cover Letter and/or Report MOU Grant Information Form Grant Budget Subcontract Budget Contract /DRAFT Mills Act Agreement Form 126 – Ethics Commission Award Letter Application Public Correspondence OTHER Planning Commission Transmittal – November 13, 2024 Updated DRAFT Notice of Special Restrictions Referral, Planning Commission – September 18, 2024 Referral BLA – December 10, 2024 Hearing Notice – November 8, 2024 Prepared by: John Carroll Date: December 5, 2024 Prepared by: John Carroll Date: January 15, 2025 Prepared by: Date: AMENDED IN BOARD FILE NO. 240872 1/14/2025 ORDINANCE NO. Mayor; Supervisor Dorsey BOARD OF SUPERVISORS Page 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 [Planning Code, Zoning Map -30 Van Ness Avenue Special Use District; Amendment of Agreement for Sale of Real Estate between the City and 30 Van Ness Development LLC] Ordinance amending the Planning Code and Zoning Map to create the 30 Van Ness Avenue Special Use District, in the area generally bound by Fell Street to the north, Market Street to the east and south, and Van Ness Avenue to the west; modifying the Notice of Special Restrictions related to inclusionary housing obligations under the Agreement for Sale of Real Estate between the City and 30 Van Ness Development LLC; affirming the Planning Department’s determination under the California Environmental Quality Act; making findings of consistency with the General Plan, and the eight priority policies of Planning Code, Section 101.1; and making public necessity, convenience, and welfare findings under Planning Code, Section 302. NOTE: Unchanged Code text and uncodified text are in plain Arial font. Additions to Codes are in single-underline italics Times New Roman font. Deletions to Codes are in strikethrough italics Times New Roman font. Board amendment additions are in double-underlined Arial font. Board amendment deletions are in strikethrough Arial font. Asterisks (* * * *) indicate the omission of unchanged Code subsections or parts of tables. Be it ordained by the People of the City and County of San Francisco: Section 1. Environmental and Land Use Findings. (a) On May 21, 2020, the Planning Commission, in Resolution No. 20707, certified the Final Environmental Impact Report for the Hub Plan, 30 Van Ness Avenue Project, 98 Franklin Street Project, and Hub Housing Sustainability District (“FEIR”) and related actions as in compliance with the California Environmental Quality Act (“CEQA”) (California Public Resources Code Sections 21000 et seq.). Mayor; Supervisor Dorsey BOARD OF SUPERVISORS Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (b) On May 21, 2020, the Planning Commission conducted a duly noticed public hearing and, by Resolution Motion No. 20708, adopted findings pursuant to CEQA, including a mitigation monitoring and reporting program, for the Hub Plan, 30 Van Ness Avenue Project, 98 Franklin Street Project, and Hub Housing Sustainability District and related actions. In Ordinance No. 124-20, the Board of Supervisors adopted the Planning Commission’s environmental findings as its own. In accordance with the actions contemplated in this ordinance, this Board relies on the environmental findings in Motion No. 20708 and concurs with the Planning Department’s determination that no further environmental review is required. Copies of Planning Commission Resolution No. 20707 and Motion No. 20708, and Ordinance No. 124-20 are on file with the Clerk of the Board of Supervisors in File No. 200556 and are incorporated herein by reference. (c) On November 7, 2024, the Planning Commission, in Resolution No. 21642, adopted findings that the actions contemplated in this ordinance are consistent, on balance, with the City’s General Plan and eight priority policies of Planning Code Section 101.1. The Board adopts these findings as its own. A copy of said Resolution is on file with the Clerk of the Board of Supervisors in File No. 240872, and is incorporated herein by reference. (d) Pursuant to Planning Code Section 302, this Board finds that these Planning Code amendments will serve the public necessity, convenience, and welfare for the reasons set forth in Planning Commission Resolution No. 21642, and the Board adopts such reasons as its own. A copy of said resolution is on file with the Clerk of the Board of Supervisors in File No. 240872 and is incorporated herein by reference. Section 2. Background and General Findings. (a) On February 21, 2017, the City and County of San Francisco (“City”) and Lendlease Development, Inc. entered into an Agreement for Sale of Real Estate (the Mayor; Supervisor Dorsey BOARD OF SUPERVISORS Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 purchase and sale agreement, or “PSA”) pursuant to which the City agreed to sell to 30 Van Ness Development LLC (“Developer”) the parcel of real property at 30 Van Ness Avenue (Assessor’s Block 0835, Lot 004) (the “Property”). The Board of Supervisors (the “Board” or “Board of Supervisors”) authorized the City’s execution of the PSA in Resolution No. 95-17. (b) Lendlease Development, Inc. assigned its interest in the PSA Developer pursuant to an Assignment and Assumption Agreement dated May 5, 2017. (c) Concurrently with the closing of the transaction contemplated under the PSA, the City conveyed the Property to Developer pursuant to a Grant Deed (Assessor’s Parcel No. Block 0835 Lot 004) dated May 5, 2017 and recorded in the Official Records of the City as Document No. 2017-K447786-00. (d) The Notice of Special Restrictions (“NSR”) attached to the PSA as Exhibit I and recorded against title on the Property as Document No. 2017-K447786-00 in the Official Records of the City requires Developer to satisfy certain inclusionary housing requirements if the Property is developed with 25 or more residential units. Specifically, if the Property is developed with 25 or more residential units, then Developer must satisfy the inclusionary housing requirements of Planning Code Section 415 et seq. by providing either (1) inclusionary on-site units in an amount not less than 25% of all residential units constructed on the Property, or (2) inclusionary off-site units in an amount not less than 33% of all residential units constructed on the Property. (e) Section 6 of the NSR provides that if Developer does not comply with the restrictions set forth in the NSR, it shall constitute a violation of the Planning Code. However, Section 6 further provides that, in the event that the applicable zoning standards (i.e., Section 415 et seq.) are “modified so as to be less restrictive and the uses therein restricted are thereby permitted and in conformity with the provisions of the Planning Code,” then the NSR would no longer be in effect and would be null and void. Mayor; Supervisor Dorsey BOARD OF SUPERVISORS Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (f) On October 17, 2018, in connection with its proposed development project on the Property, Developer submitted applications with the Planning Department for a Downtown Project Authorization, Conditional Use Authorization, Office Allocation, Shadow Analysis, and Transportation Demand Management. (g) On May 21, 2020, the Planning Commission adopted Motions No. 20714, 20717, 20718, and 20719, approving the entitlements for the Original Project and authorizing Developer to construct a new 47-story mixed-use building reaching a roof height of up to 520 feet (540 feet inclusive of rooftop screening/mechanical equipment) (the “Original Project”). The Original Project includes a gross floor area of approximately 720,000 square feet, with approximately 468,000 gross square feet of residential uses (333 dwelling units) within a tower situated atop a 9-story podium containing approximately 21,000 gross square feet of retail uses, 300 Class 1 and 72 Class 2 bicycle parking spaces, and three below-grade levels that would accommodate up to 146 vehicle parking spaces and 5 car share spaces. In accordance with the requirements of the NSR, 25% of the units in the Original Project were to be provided as on-site inclusionary units in satisfaction of Planning Code Section 415 et seq. (h) Developer commenced construction of the Original Project on July 18, 2022 and paid all development impact fees in connection therewith on March 14, 2023, which impact fees totaled $41,000,577.28. After diligently pursuing construction of the Original Project for 16 months, Developer halted construction due to feasibility concerns. (i) The Developer and City have worked over the last year to identify modifications that will improve financial feasibility and expedite delivery of the Original Project. Factors such as increases in construction and labor costs, rising interest rates, and a slowing of the real estate market have caused the Original Project to halt construction. However, advancing the Project is critical to meeting the City’s housing production goals and to contribute to the City’s economic recovery by generating jobs and growth in tax revenue. Mayor; Supervisor Dorsey BOARD OF SUPERVISORS Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (j) San Francisco is facing a shortage of all types of housing. To meet San Francisco's share of the regional need for housing between 2023-2031, the City must accommodate over 82,000 units, including 46,598 units for extremely low-, very low-, low-and moderate-income households. The lnclusionary Housing Program, Planning Code Section 415 et seq., is an important part of the City's overall strategy for providing affordable housing to very low-, low-, moderate-, and middle-income households, and has created more than 3,300 units since its inception. But the success of the lnclusionary Housing Program is contingent on the overall feasibility of residential development. For that reason, Planning Code Section 415.10 requires periodic review of the program's requirements. (k) From October 2022 through April 2023, the Controller and the Affordable Housing Technical Advisory Committee (“TAC”) reviewed the feasibility of the City’s inclusionary affordable housing obligations and found that none of the development prototypes studied were financially feasible at the inclusionary housing rates in the Planning Code. The findings suggested that residential development was, broadly speaking, not financially feasible under current economic conditions at then-current inclusionary housing rates. (l) On October 2, 2023, after Developer’s payment of development impact fees for the Original Project, the Board of Supervisors adopted Ordinance No. 201-23, which amended the Planning Code by lowering the inclusionary housing requirements under Section 415 et seq. to require “pipeline” projects in the same Planning Code use district as the Property to provide 12% of their units as affordable. The ordinance also reduced most impact fees by 33% with the purpose of improving the financial feasibility of both market rate and affordable housing (the “TAC Legislation”). The TAC Legislation also allows project sponsors to delay payment of impact fees until after project construction, rather than at issuance of the first construction document (the “Fee Deferral Program”). Mayor; Supervisor Dorsey BOARD OF SUPERVISORS Page 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (m) The TAC Legislation allows “pipeline” projects to qualify for its reductions in impact fee rates and inclusionary housing requirements only if the subject project received a “first construction document” (for the Original Project, the first addendum to its site permit) after November 1, 2023. The Original Project did not benefit from the TAC Legislation’s reduction of impact fee rates because Developer obtained its first construction document before November 1, 2023. (n) Developer paid impact fees prior to adoption of the 33% fee reduction and Fee Deferral Program and fee payment deferral, and began to construct the Project as part of its effort to advance an important new development in the Market and Octavia Area Plan. The Developer is not able to take advantage of the reductions and deferrals afforded by the citywide TAC Legislation and has now halted construction of the Project. (o) Developer seeks to modify the Original Project (as modified, the “Project”) to improve its financial feasibility. Developer proposes to reallocate 18,805 square feet of approved retail space to office space, which increase will require Developer to obtain a “large cap” office allocation for the project under Planning Code Section 322. To improve feasibility of the Project and in consideration of the impact fees already paid, Developer requests that the City agrees to (1) waive modify the requirements of Planning Code Section 415 et seq. for the Project through the creation of a new Special Use District applicable to the Property, and (2) modify the requirements of the NSR, to allow Developer to pay the Affordable Housing Fee, or to provide on-site or off-site Affordable Units at a reduced percentage. Section 3. Article 2 of the Planning Code is hereby amended by adding Section 249.99, to read as follows: ////