Planning Commission looks to better preserve rent-controlled homes

A residential development planned at 1463 Lombard St. involves demolishing two rent-controlled units and building 14 new homes, including three offered at below-market-rate. Courtesy rendering

A residential development planned at 1463 Lombard St. involves demolishing two rent-controlled units and building 14 new homes, including three offered at below-market-rate. Courtesy rendering

The Planning Commission wants to explore a policy to better preserve The City’s dwindling rent-controlled housing stock that could include requiring a certain number of below-market-rate units for projects that propose to demolish rent-controlled homes.

Such was the sentiment among commissioners Thursday when a project came before the Planning Commission that called for removing two rent-controlled units (both unoccupied) in exchange for building 14 homes — 11 at market-rate and three offered at below-market-rate.

The development at 1463 Lombard St. generated zero public comment and was unanimously approved by the commission Thursday. But the discussion of the project centered more on the need for a policy that would ensure projects that do remove rent-controlled units replace them with an adequate number of below-market-rate homes.

“Our housing stock is too precious. We’re losing it at such a fast rate,” Commissioner Dennis Richards said Friday. “We really can’t add rent-control units to the housing stock, we can only lose them, and that’s worrying me.”

In fact, The City’s rent-controlled housing stock is shrinking at a rate of 1 percent per year, according to data presented by Rent Board Deputy Director Robert Collins on Thursday.

Currently, residential developments with at least 10 units must pay a fee or, alternatively, offer 12 percent of the on-site homes or 20 percent of off-site units at below-market-rate. There is no additional below-market-rate requirement when rent-controlled units are removed.

The Lombard Street project initially called only for nine market-rate units, but city planners encouraged the developer to reach the 10-unit threshold that would trigger the inclusionary housing requirement.

The next proposal for the Lombard Street project included 11 units at market-rate and two at below-market rate, which would satisfy the inclusionary obligation. But Richards called the developer earlier in the week and recommended adding an additional below-market-rate unit to help make up for the lost rent-controlled units.

Commissioner Rich Hillis said at Thursday’s meeting that he would have supported the project with just two below-market-rate units, especially because by converting a market-rate unit to below-market-rate, the project had to trade a two-bedroom unit for two one-bedroom units.

“I appreciate the third BMR unit but we do lose a two-bedroom,” Hillis said. “We should look at this issue of lost rent control. What do we want in return for it? [And] maybe get a little more consistent.”

Two other similar projects that proposed to demolish rent-controlled units have come before the Planning Commission in the past year. The first, at 395 26th Ave., was narrowly approved by the commission on Sept. 4, 2014, but later unanimously overturned by the Board of Supervisors. The other, at 1126 Irving St., was continued by the commission on Sept. 3.

Vice President Cindy Wu emphasized that a project replacing rent-controlled units with below-market-rate homes is not the same as fulfilling an inclusionary housing requirement.

“BMR units are not the same as rent control, in some ways they’re more generous, but I appreciate the ability to do the inclusionary and do the replacement on top of it,” she said.

For now, Richards said developers must take creative approaches like the Lombard Street development to help satisfy commissioners. The project was allowed to increase its density because it added below-market-rate units, per legislation authored by Supervisor Scott Wiener last year.

“In this case, everybody can win,” Richards said.

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