A San Francisco lawmaker is pushing back against what he says is the growing trend of real estate speculators illegally knocking down homes and replacing them with much larger and more expensive “monster” houses.
On Tuesday Supervisor Aaron Peskin will introduce the Housing Preservation and Expansion Reform Act, legislation that increases fines for illegal demolitions and also requires a conditional use authorization for any home expansion that increases the square footage by more than 10 percent.
The bill comes after several high-profile, historic homes have been essentially demolished through “serial permitting” — a practice of pulling multiple permits for smaller remodels that if, taken together, are tantamount to allowing a new building.
The legislation is “aimed at preserving the most affordable housing that San Francisco has, creating incentives for more density at neighborhood scale, and punishing and holding accountable bad actors who have been demolishing some of the city’s most important housing stock,” Peskin said.
Examples of homes that have been demolished without permits include a Willis Polk-designed home at 950 Lombard St. on Russian Hill and the 1935 modernist home at 49 Hopkins Ave., which was designed by Richard Neutra.
At 49 Hopkins, which was a 1935 modernist residence just east of Twin Peaks, an investment group that bought the property filed an application to demolish the home but not until two months after it had already been knocked down.
In the case of 950 Lombard, developer Troon Pacific purchased the home for $4.5 million and proceeded to remove all of the building’s exterior walls and windows, even though the permit mandated that the northeast and west facades be preserved, including the windows. The developer eventually agreed to pay a fine of $400,000 for the illegal work. The home is now on the market for $45 million.
The legislation comes at a time when the city, over the past 10 years, has averaged the loss of about 350 rent control housing units a year through a combination of evictions, mergers and demolitions. That represents about six units lost for every new affordable housing unit created, according to a recent city housing balance report.
“The biggest piece to take away is that this will help preserve existing housing that our city can’t afford to lose to the speculative market,” said Maya Chupkov, a spokesperson for the Council of Community Housing Organizations, which advocates for affordable housing and supports Peskin’s bill. “Monster homes fuel speculative development and the displacement of residents in our neighborhoods.”
The legislation also takes aim at developers who use “dry rot” as an excuse to tear down homes. Under the legislation, a city inspector would have to inspect the dry rot and sign off on a plan to remove it. It also targets “sham mergers” — where two or three units are essentially morphed into a single jumbo unit even though the units are still legally separate.
“You don’t technically lose a unit if it shrinks to 10 percent of it’s original size, but for all intents and purposes, it’s lost,” said Lee Hepner, an attorney and aide to Peskin who spent a year working on the legislation.
Peskin said that inconsistent definitions of “demolition” and inadequate penalties are “actually incentivizing rampant abuse of the planning and building codes.” The legislation would make the definitions of “demolition” consistent, expanding it to mean any loss of residential housing, irrespective of means of removal.
In addition to a $500,000 administrative fine, property owners found to be have done an illegal demolition would be subject to fines of up to $2,000 a day.
Kathleen Courtney of the Russian Hill Community Association said the legislation would give city planning and building staff a tool to stop illegal demolition and enforce current laws.
“The demolition of historic properties and not-so-historic properties is occurring throughout the city,” she said.
Peskin emphasized that the purpose of the legislation is not to suppress housing development. In fact, projects that expand the number of units would be fast-tracked through the approval process, although the additional units created would have to be of a similar size of the existing unit.
“We are not trying to inhibit or prevent development,” Peskin said. “We are absolutely willing to see expansions that add units of housing.”
A building trades representative had some doubts about the proposed law.
“After being briefed on the legislation there are parts that I will not like,” said Sean Keighran, president of the Residential Builders Association. “However, something needs to be done about the mostly out-of-town developers who come in and perform illegal demolitions because they are not aware of San Francisco’s policies and rules. This type of behavior casts a dark cloud over the entire industry.”