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Bringing Down the Housing: How Builders Game the System 

Wednesday, Dec 19 2012
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Reached on his cell, Murphy said, "I have absolutely no comment on the matter. This is in the hands of the city of San Francisco." That's undeniably so. Murphy is pushing the envelope. But the city has deemed it can be pushed rather far.


Solving ancient Greek logic puzzles was not the intended purpose of Section 317 of the Planning Code, which addresses the "loss of dwelling units through merger, conversion, and demolition." Subsection nine of this code states that "where exterior elements of a building are removed and replaced for repair or maintenance," they shall not count against the threshold for determining a demolition. The intention, says Aaron Peskin, is clear. A homeowner or builder who discovers dry rot or some other malady in their walls ought to be able to replace them without triggering a demolition. This was not intended as a means to dismantle starter homes and erect monster homes. "There is only one way a reasonable human being should read this — the way the people who wrote it intended," says the former supervisor. "It takes a lot of chutzpah to interpret this the way they're interpreting it today."

Interpreting the planning code, however, isn't Peskin's job — and, he notes ruefully, the notion of "legislative intent" doesn't exist on the local level in California. Interpreting the code is the responsibility of zoning administrator Scott Sanchez. And he says his department's definition of "removal" allows "replacement of a wall in its location as long as it's not changing in its position." The department isn't concerned with why walls are replaced. "Repair and maintenance" could permit the removal of a sturdy wall that's perfectly suitable in a smaller structure — but would need to be brought up to code to support the much larger building envisioned for the site. This, says Sanchez, is how the department has been interpreting the rules since their implementation in 2008. But that doesn't ring a bell for the former senior planner who wrote the rules and served as the department's "demolition guru" until 2010.

"Remember," says Craig Nikitas, "the key word is 'repair.' If the wall is functional or competent and you remove and replace it, it should count toward the demolition threshold." If a wall is being removed, he continues, there ought to be something demonstrably wrong with it — and the Planning Department can request a test report. "There needs to be a reason to remove and repair the wall other than just replacing it in kind." A desire to build a far larger structure requiring sturdier walls without triggering a project-killing demolition shouldn't be good enough. But, per the department, it now is.

If you can remove and replace the parts of the building you're retaining, aren't you simply taking a building down to the ground and calling it a remodel? Sanchez doesn't deny this. But in such a scenario, he claims, the Building Department would intervene. "The Building Department always has the first crack at this," he says. "I'd assume that if they were reviewing plans, and if everything was being taken down ... they'd require a demolition permit regardless of where the walls were being reinstalled."

Several veteran Building Department officials, however, said Sanchez was far too optimistic in his assumption. Plan reviews, they say, are often cursory at best, and documents are routinely forwarded along to the Planning Department essentially sight-unseen. One longtime building inspector, a former contractor, waxed nostalgic about the many homes he'd demolished and rebuilt under remodeling permits.

Asked if it's possible to level a building, construct a new one, and define this as an "alteration" or "remodel," 125 Crown Terrace designer Drake Gardner confirms it is. "But you can't do it all at once," he says. "You'd have to do it piecemeal. ... They've got codes that overlap and cross each other. So you try to fish through it all, get it approved, build it — and then not get in trouble with the inspector for taking out more than you designated you were going to."

A local builder estimated perhaps 70 percent of his colleagues really are encountering dry rot or other unforeseen conditions before requesting to tear out more than the plans said they would. But many never intended to go by the plan: "Thirty percent are savvy developers or architects or permit expediters working the system."

Unlike mere mortals, those savvy, well-connected parties can pass through San Francisco's overlapping regulations like water through a sieve. Being charged with an illegal demolition is the nightmare of any builder in the city. The guilty party may be hit with a five-year moratorium on developing the site. But, notes a longtime Building Department higher-up speaking on condition of anonymity, leaving a derelict building or hole in the ground for years just punishes the neighborhood. So, an in-the-field compromise can be worked out with builders nabbed taking out more than they ought to have. "We might impose more rigorous standards to make a trade-off," notes the higher-up. Seismic or other upgrades could be tossed into the mix. "We may ask you to do a few extra things."

Of course, he continues, it always helps "if you have the right connections and you funnel things to the right people. We might agree to whatever the Planning Department said — whether it's in the building code or not." The Building Department, he concludes, "is an amazing place."

And this is an amazing city.


The Big One in '06 proved that San Francisco real estate adheres to the law of gravity. But its behavior since then indicates the local housing market is not easily explained via the conventional laws of economics. When the housing supply goes down, demand goes up. But when the housing supply goes up, demand goes up more.

About The Author

Joe Eskenazi

Joe Eskenazi

Bio:
Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" was a staff writer and columnist for SF Weekly from 2007 to 2015. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers.

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