By Thomas K. Pendergast

San Francisco City Attorney David Chiu responded to a lawsuit filed against the City in state court by developers proposing a 600-foot-tall, 712-unit skyscraper on Sloat Boulevard.

The building would occupy the site where the Sloat Garden Center is today, at 2700 Sloat Blvd., across the street from the SF Zoo. The area is zoned with a 40-foot maximum height limit, which could accommodate a building up to four-stories tall. 

The lawsuit, filed by attorneys for 2700 Sloat Holding LLC, claims San Francisco Planning Department policies violate California’s Density Bonus Law (DBL) and that the department’s interpretation of the law is wrong. 

“This lawsuit is brought to put an end to two unlawful practices employed by the City and County of San Francisco that interfere with and are preempted by the DBL and thwart the production of much-needed affordable housing,” says the complaint filed with the court. 

The City responded that the court lacks jurisdiction over the claims alleged in the complaint and that it “denies each and every allegation.”

The developers, John and Raelynn Hickey of CH-Planning, argue the 50-story residential tower, which includes ground-floor retail, conforms to the DBL and thus allows them to exceed standard density requirements. It also claims that the department misinterpreted the DBL when it rejected the project. 

They allege the department essentially created a new “bulk limit” that “simply does not exist under the existing code” and is “inconsistent with how the City has applied the code for decades. It’s contrary to the intent of the bulk code and the General Plan policies, and finally, it will violate state law.”

The developers claim the department’s interpretation of the code was “effectively rezoning.”

Yet last summer at the San Francisco Board of Appeals, Zoning Administrator Corey Teague said the language of the Planning Code in question makes it “very clear that the bulk controls apply to a building and a building that has a podium and a tower.” 

The Board of Appeals upheld the department’s decision and rejected the developer’s appeal. 

Less than a month later the developers filed a lawsuit in the  Superior Court of the State of California, County of San Francisco. 

The lawsuit claims that in zoning districts using “form-based density limits” – which limit density according to the size and shape of the buildings allowable under applicable zoning regulations – calculating base density requires the developer to establish the base density through a density study depicting a theoretical, code-compliant building arrangement and then derive the number of units that may be constructed within that hypothetical design. 

“The City now requires that, to take advantage of a density bonus that is required by state law, the actual project applied for incorporate the shape and design of the hypothetical building or buildings depicted in the base density study. The City’s requirement is at odds with the DBL and designed to impose artificial constrains on the potential development capacity of sites zoned for residential uses,” the lawsuit claims.  

At the Board of Appeals hearing, however, Teague denied that the Planning Code prohibits the project from exceeding its bulk depicted in the base study because it “provides an outlet for any project that wants to do a larger bulk, more mass. It just requires additional approval, typically from the Planning Commission. 

“So, this isn’t a prohibition from maybe doing multiple towers that exceed your plan dimension. It just means that the base requirement is going to be that one dimension and you can’t fit multiple towers in that.” 

But the developer’s lawsuit also challenges the way the City imposes fees on housing development projects, claiming it “often times make just the permitting of new housing development projects cost prohibitive. In particular, the City conditions its grant of a density bonus on the developer’s payment of a local Inclusionary Housing Fee imposed on the density bonus units within a DBL project.

“The City also imposes affordable housing tiering requirements as part of its local Inclusionary Affordable Housing Program that conflict with state law. These practices are unlawful and preempted by the DBL.”

In its response, however, the city attorney’s office claims: “San Francisco proceeded in the manner required by all applicable federal, state and local laws and regulations; did not act arbitrarily, capriciously or wholly without evidentiary support; did not abuse its discretion; and made all required findings, which supported San Francisco’s actions and were supported by substantial evidence in the record, and to the extent any error was made, such error was not prejudicial.” 

The state’s DBL incentivizes the building of affordable housing by granting developers a density increase over the otherwise maximum allowable gross residential density in return for a commitment to provide affordable housing as part of a development project. 

Because CH-Planning will use the California State Density Bonus Program, the new building would include 115 affordable units of housing. The units will be offered at 80% of the Area Median Income (AMI) as calculated by the U.S. Department of Housing and Urban Development.

In San Francisco, 100% AMI works out to $97,000 annually for a single person, $110,850 for two people, $124,700 for three and $138,550 for a four-person household.

According to the developer’s complaint, on April 11, they submitted an amendment to an already pending housing development project seeking a density bonus permitted by the state’s DBL and provided the City with a base density study, consistent with the law, using a six-building model to calculate the maximum allowable residential density for the site. 

“A base density study is required in districts, such as the one that plaintiff’s property is located in, where there are no numerical density limits represented as a ratio of units to lot area, and, instead, density is regulated only by the shape and dimensions of the buildings allowed under local zoning standards,” the complaint says. 

“Plaintiff’s base density study depicted a code-compliant six-building arrangement consistent with applicable objective zoning standards to represent the realistic development capacity of the site.”

The complaint then goes on to state that on May 8, the City rejected the base density study, stating: “For projects seeking additional density or concessions and incentives under State Density Bonus Law in areas subject to form-based zoning, in calculating maximum allowable residential density or base density, the department must maintain ‘project details, except those that may be modified by waiver or concession to accommodate the bonus units,’ between the base project and bonus project.

“Thus, if the bonus project includes a single building, then base density will be calculated using a single building; if the base project includes multiple buildings, the bonus project must also include multiple buildings. The current proposal includes six buildings in calculating the base density, but the bonus project only includes one building, thereby not meeting the requirement.”

To which the developers respond: “The hypothetical subdivision and buildings depicted in the base density study such as that created by the plaintiff are not ‘project details’ and thus need not be maintained. A base study is intended to measure the ‘realistic development capacity of the site.’

“But in plaintiff’s case, unlike the base density study, the actual density bonus project included only a single tower. The six buildings in the base density study were not intended to depict the project. The six buildings were hypothetical and meant only to establish the realistic development capacity of the site,” the developers said. “The number of buildings was not a project detail.”