· Unlike many other California cities, Conditional Use and Discretionary Review applications comprise the majority of items considered by the Planning Commission in San Francisco. These cases give the Planning Commission broad latitude including not approving development projects otherwise allowed by the Planning Code or approving projects without consideration of their precedent setting cumulative impacts. The fact that 60 percent of all cases heard by the Planning Commission in 2001 were Conditional Use and Discretionary Review cases is an indication of Planning Code shortcomings, adds significant cost and time requirements to the approval process and lends to the perception of an arbitrary and political approval process.

· Because of the frequent use of Conditional Use approval or Discretionary Review, approval of many planning projects is uncertain. Significantly, one goal of the Better Neighborhoods Program, which will add new neighborhood plans to the Planning Code, is to reduce uncertainty for planning projects in the neighborhoods. The Better Neighborhoods area plans will use a program Environmental Impact Report (EIR) and a development and zoning plan for the neighborhood. If a proposed project complies with the program EIR and neighborhood development and zoning plan, then the project would be approved administratively. These new plans should also result in a reduction in Discretionary Review applications as acceptable development standards will have been defined by the community.

· The Planning Code needs review to identify instances when allowing projects through Conditional Use approval could result in failure to conform with the General Plan or the intentions of the Planning Code. The Planning Department should identify and propose revisions to the Planning Code that would result in firmer zoning controls that allow Code compliant projects to be approved administratively by the Department. Such a review should include a community planning process, such as community planning committees in which communities can participate in defining acceptable development in their areas.

The purpose of the Planning Code is to implement the policies of the General Plan. The General Plan lays out the general planning policies for the City and the Planning Code defines specific zoning requirements, including which types of projects and uses are allowable in zoning districts. The Planning Code defines "use" as the purpose for which land or structures, or both, are designed, constructed, arranged or intended, or for which they are occupied or maintained, let or leased.¹ The San Francisco Planning Code identifies many different use districts, ranging from residential, neighborhood commercial districts and mixed-use districts to special use districts. Each district defines the permissible use for development within that district. When the Planning Code permits projects outright, the Planning Department staff can approve the project without further review. In some instances, the Planning Code may permit a project but requires the Planning Commission to review the project for Conditional Use approval.² In 2001, the Planning Commission approved 77 percent of the projects that were presented for Conditional Use approval.

Some development projects permitted under the Planning Code are subject to Discretionary Review. The Discretionary Review process was established in the 1970s, allowing the Planning Commission to impose controls or stop development projects entirely. Discretionary Review can be initiated by the project sponsor if the sponsor disagrees with a Planning Department recommendation, by neighbors, or by Planning Department staff. Planning Department staff initiate Discretionary Reviews in certain circumstances based on Department policy, such as projects in industrial protection zones or dwelling unit mergers.

Together, projects requiring Conditional Use approval or Discretionary Review made up 60 percent of Planning Commission agenda items in Calendar Year 2001. Through Conditional Use approval and Discretionary Review, the Planning Code allows the Commission to review proposed projects on a case by case basis, ensuring that these projects will not have an undesirable impact on the community.

By subjecting projects to Conditional Use approval or Discretionary Review, however, the Planning Code also gives the Planning Commission latitude to not approve specific projects that are not prohibited by the Planning Code in the zoning district. The Planning Commission also has discretion to approve projects without considering the precedent-setting cumulative effect of these projects.

Lack of Planning Code and General Plan Compliance in Conditional Use Determinations

The General Plan establishes eight priority policies to which development projects must conform. These eight priority policies require that:

1. existing neighborhood serving retail uses be preserved and enhanced,

2. existing housing and neighborhood character be protected to preserve the cultural and economic diversity of neighborhoods,

3. affordable housing be preserved and enhanced,

4. commuter traffic not impede Muni transit services or overburden neighborhood,

5. industrial and service sectors be protected to preserve a diverse economic base,

6. the greatest possible preparedness be achieved to protect against loss from earthquakes,

7. landmarks and historic buildings be preserved, and

8. parks and open space be protected from development.

When development project applications are submitted to the Planning Department for review, the sponsor must address the ways in which the project conforms to the eight priority policies. Planning Department staff review those applications to determine compliance with the Planning Code and conformity with the General Plan. When a planner submits a case to the Planning Commission for Conditional Use approval, the planner cites the ways in which the proposed project conforms with the General Plan. A review of a sample of development projects that required Conditional Use approval conducted as part of this management audit found potential or actual problems, resulting in lack of compliance with the Planning Code, failure to conform with the General Plan, or both. Although the Planning Code may permit an individual project subject to Conditional Use approval, the precedent-setting cumulative effect of following the precedents established and approving multiple similar projects can result in failure to conform with the General Plan.

Live/Work Projects

As discussed further in Section 3 of this report, the cumulative impact of live/work projects fails to conform with the General Plan. The Planning Code currently permits live/work projects in industrial zones, industrial buffer zones, and mixed use zones. Numerous changes in regulations have been imposed over the last few years in an attempt to better control the development of live/work units. In 1998 the Planning Commission implemented mandatory Discretionary Review for new live/work projects in IPZs. In 1999, the Planning Commission implemented interim industrial protection zone controls for two years, prohibiting new live/work projects in the IPZs, requiring Conditional Use or Discretionary Review for live/work projects in industrial buffer zones, and permitting live/work projects in mixed use zones. Independent of the Planning Department and the Planning Commission, the Board of Supervisors adopted a six-month moratorium on construction of new live/work units in the City in February 2001.

Between 1997 and 2000, more than 1,400 live/work projects were completed and 3,148 were in the pipeline. Although in some instances, the Planning Department approved live/work projects administratively (such as live/work projects in mixed use zones) and in other instances, live/work projects were prohibited (such as live/work projects in the IPZs after the imposition of interim zoning controls in 1999), many live/work projects were subject to Planning Commission Conditional Use approval or Discretionary Review. Although the Commission found that individual live/work projects that they approved conformed with the Planning Code and the General Plan, the cumulative impact of constructing approximately 1,400 live/work projects between 1997 and 2000 failed to conform with the General Plan. Specifically, as discussed in Section 3 of this audit, live/work developments cumulatively did not conform with three of the eight General Plan priority policies, including:

· Policy 2, requiring that existing housing and neighborhood character be conserved and protected in order to preserve the cultural and economic diversity of neighborhoods;

· Policy 3, requiring that the City"s supply of affordable housing be preserved and enhanced; and

· Policy 5, requiring that the diverse economic base be maintained by protecting industrial and service sectors from displacement due to commercial office development.

Review of Selected Conditional Use Development Applications

A number of randomly selected Conditional Use Planning Commission cases were reviewed as part of this management audit. In reviewing case documents and interviewing the staff planners who processed these cases, we found that specific projects may have conformed to the General Plan or the Planning Code, but the cumulative impact of approving such projects often failed to conform with the General Plan or Planning Code.

Approval of a retail establishment in the Upper Market Commercial District exceeding the maximum square footage allowed by right under the Planning Code

In Case 01-0471, the Planning Commission approved a Conditional Use application to expand a retail store in the Upper Market Commercial District exceeding the maximum square footage allowed by right under the Planning Code. This was the fourth large commercial establishment in the Upper Market Commercial District exceeding the maximum permitted square footage. These four establishments resulted in an increasing number of large establishments in a district zoned for moderate-scale development. In this case, the project sponsor requested Conditional Use approval to remove a demising wall³ and increase the size of the existing retail store. In the report, the planner wrote that the Upper Market Street controls were intended to promote moderate-scale development and to preserve the existing mix of commercial uses. The planner noted that three other businesses in the zone exceeded the maximum square footage limit. Additionally, the planner cited Planning Code Section 303 (c) to determine if the larger use would foreclose the location of other needed neighborhood-serving uses in the area; if the proposed use would serve the neighborhood and the nature of the use requires a larger size; and if the building preserved the neighborhood character. In citing "Neighborhood Commerce, Objective 6, Policy 1", the planner writes, "Although the proposed expansion will reduce the overall number of commercial spaces in the district, the proposed use does serve the neighborhoods serviced by the Upper Market Neighborhood Commercial District. Furthermore, recent projects in the neighborhood either recently completed or under construction promise to add additional commercial space". Three neighborhood organizations submitted letters of support for the project, stating that they did not oppose the development, but that they were concerned about the loss of extra commercial space. The neighborhood organizations wanted the demising wall to be restored on vacation, and the Planning Commission, when adopting the Conditional Use motion, required the demising wall to be restored on vacation.

In deciding on the Conditional Use application, the Commission allowed the retail space to be expanded beyond the maximum square footage allowed by right in the Planning Code. By not prohibiting larger scale commercial development, the Planning Code opens the door for project approvals that are inconsistent with the Code and the General Plan. In this case, the planner wrote that the presence of other large size businesses was one reason to approve the Conditional Use request. If the Planning Commission were to continue to approve large size businesses using this logic, the cumulative effect would be a greater number of large size businesses than intended by the Planning Code. Additionally, if the Planning Commission were to approve other large size businesses, the cumulative impact of these approvals would be a neighborhood inconsistent with the original intent of the Planning Code restrictions and lack of conformance with the General Plan. Specifically, the cumulative impact would not conform with General Plan Commerce and Industry Element, Objective 6, Policy 1, ensuring and encouraging the retention and provision of neighborhood-serving goods and services in the City"s neighborhood commercial districts. Nor would it conform with Commerce and Industry Element, Objective 6, Policy 2, promoting economically vital neighborhood commercial districts which foster small business enterprises and entrepreneurship and which are responsive to economic and technological innovation in the marketplace and society.

Approval of a housing project exceeding the 40 foot height limit permitted in the Planning Code

In Case 01-0329, the project sponsor proposed to construct a 50-foot tall, 8-unit residential building in a Residential-Commercial Combined zoning district on Van Ness Avenue. The proposed project was subject to Conditional Use approval because the Planning Code requires such approval for projects in this district exceeding 40 feet in height, although the maximum height allowed in the zoning district is 80 feet. The Planner determined that the proposed 50 foot residential building was compatible with the use, density, scale and character of the surrounding neighborhood. Although the Van Ness Avenue Area Plan of the General Plan encourages housing development, the proposed residential project could not be approved administratively because of the Conditional Use approval requirement imposed by the Planning Code. Generally, buildings along this portion of Van Ness Avenue vary from two to five stories in height. If the Planning Code were to set a firm height limit more consistent with the character of the neighborhood, rather than allowing an 80 foot height limit feet, and allowed for the administrative approval of projects that conformed to the height limit, residential projects such as the one proposed in Case 01-0329 could be approved administratively, reducing the uncertainty and length of time for approving the housing project and the associated costs.

Approval of an office building at 350 Bush Street

The Planning Commission approved the Conditional Use application for 350 Bush Street, a 352,725 square foot office building with ground floor retail, located in the area covered by the General Plan"s Downtown Area Plan. The project sponsor was required to obtain Conditional Use approval because the project proposes approximately 32,340 square feet of parking space⁴, which exceeded the amount of allowable parking space of 24,115 square feet under Planning Code Sections 157 and 204.5. Because this is a downtown project, the Planning Code limits allowable parking to 15 spaces or to 7 percent of the project"s square footage, whichever is greater. In addition to the parking, the project also includes two large two-way parking entrances, which create conflict with pedestrian traffic and detract from pedestrian visual entrances along the Bush and Pine Street frontages. General Plan policies are to limit the number of auto trips to and from downtown, reduce the need for new or expanded parking facilities, preserve pedestrian-oriented building frontages, minimize obstructions to pedestrian movement on sidewalks, and ensure that commuter traffic will not impede the Municipal Railway (Muni).

Conditional use approval of parking spaces at 350 Bush Street alone may not greatly increase downtown traffic. However, by allowing new parking space construction through Planning Commission approval, the Planning Code provides opportunity for the Planning Commission to approve more parking spaces than would conform with the General Plan. For instance, if the Planning Commission also approves the Conditional Use application of the Hearst Parking Garage on Third Street to expand from 801 parking spaces to 1,044 parking spaces, a significant number of new parking spaces would be added to the downtown area.

Discretionary Review

Discretionary Review is a process in which building permit applications that would normally be approved administratively by the Planning Department are instead subject to review and approval by the Planning Commission. These approvals are triggered by Planning Code requirements⁵ that notice of building permit applications in residential and neighborhood commercial districts (R and NC zoning designations, respectively) be sent to all neighbors within 150 feet of the project site and posted on the site. A thirty day period then follows during which the project sponsor, a neighbor, or any citizen can request Planning Commission review of the proposed project, even if Department staff has already determined the project consistent with the Planning Code, Residential Design Guidelines and the required General Plan priority policies.

The Planning Department policy is to try to discourage Discretionary Review applications. The Department"s Discretionary Review application form suggests that applicants first try to resolve their concerns about the proposed project with the project sponsor before filing a Discretionary Review application. Applicants are instructed that, pursuant to a 1954 City Attorney opinion, reaffirmed in 1979, Discretionary Review is only supposed to be used if there are exceptional and extraordinary circumstances. The application form requires the applicant to describe the exceptional and extraordinary circumstances of the case.

The Department reports processing 254 Discretionary Review applications in FY 2000-01, significantly more than in the previous three years. The Department"s Time Accounting system reports that 6,452 planner staff hours were allocated to these applications in that year, or 3.6 full time equivalent positions (FTEs). Exhibit 2.1 shows the number of Discretionary Review applications processed over the last four fiscal years and the number of Planner staff hours allocated each year.

Exhibit 2.1
Discretionary Review Cases
Processed by Planning Department
Fiscal Years 1997-98 - 2000-01

A review of Planning Commission minutes from all 2001 meetings shows that the Commission reviewed 118 Discretionary Review applications. Exhibit 2.2 presents the results for 113 of those cases where final action was taken by the Commission. As can be seen, most projects were approved, but the majority of them were approved with modifications to address applicant concerns. As shown, ten of the projects were not approved.

Exhibit 2.2
Disposition of Discretionary Review Cases
Acted on by Planning Commission
Calendar Year 2001

Source: Planning Commission minutes, 2001

Of the 118 cases reviewed, threat to neighborhood character was raised as a concern in 42 cases, the most common concern at the hearings. Following this was the loss of light, which was raised as a concern at the hearings for 24 of the 118 cases.

The Planning Code provisions regarding neighborhood character and protection of light are apparently not sufficient in some zones, at least in the view of some residents. Since most Discretionary Review cases are approved, in spite of the objections of neighbors, the Commission could be approving projects that are inconsistent with General Plan policies calling for preservation of neighborhood character. The high number of Discretionary Review cases also illustrates the need for firmer design guidelines in the Planning Code and more controls to protect light in certain areas. The Discretionary Review process is project specific and does not account for the cumulative impact of project approvals in terms of issues such as neighborhood character and preservation of light.

Conclusion

The Planning Code subjects certain projects within specific zoning districts to Conditional Use approval by the Planning Commission, rather than permitting administrative approval of these projects by the Planning Department. Planning Commissions typically use Conditional Use approval as a mechanism to oversee developments that are permitted but may have an adverse impact on the zoning district. In San Francisco, the Planning Commission also conducts Discretionary Review of specific projects, permitting the Planning Commission to impose more restrictive conditions than the Planning Code. Together, Conditional Use applications and discretionary reviews make up 60 percent of the Planning Commission"s agenda.

By subjecting projects to Conditional Use approval or Discretionary Review, the Planning Code gives the Planning Commission latitude to not approve specific projects that would otherwise be permitted in the zoning district. The Planning Commission also has discretion to approve projects without considering the cumulative effect of these projects. Because of the frequent use of Conditional Use approval or Discretionary Review, approval of many planning projects is uncertain. Significantly, one goal of the Better Neighborhoods Program, which will add new neighborhood plans to the Planning Code, is to reduce uncertainty for planning projects in the neighborhoods. The Better Neighborhoods area plans will use a program Environmental Impact Report (EIR) and a development and zoning plan for the neighborhood. If a proposed project complies with the program EIR and neighborhood development and zoning plan, then the project would be approved administratively by the Planning Department.

The Planning Code should be reviewed for instances where application of Conditional Use could result in failure to conform with the General Plan or comply with the intentions of the Planning Code. Such instances could include the Planning Code"s requirement of Conditional Use approval for constructing buildings exceeding certain height limits, constructing parking spaces in the downtown area, and expanding commercial space beyond the allowable maximum in a neighborhood commercial district. As an outcome of the Planning Code review, the Planning Department should identify and propose revisions to the Planning Code that would result in firmer zoning guidelines that allow projects meeting the guidelines to be approved administratively.

Review of the Planning Code to identify and revise problematic application of Conditional Use should be part of a community planning process. Planning Code revisions would require the effort of both long range and current planning staff. Ideally, if the Neighborhood Planning Unit staff were able to develop more consistent neighborhood interaction, they could lead the process. Alternatively, if the Board of Supervisors adopts our recommendation in Section 4 to establish community planning committees, the Citywide Policy and Analysis and Neighborhood Planning staff could work with the community planning committees to identify and revise problematic applications of Conditional Use in the Planning Code.

Recommendations

Based on the above findings, we recommend that the Director of the Department of Planning:

2.1 Review the Planning Code to determine instances where application of Conditional Use could result in failure to conform with the General Plan or comply with the intentions of Planning Code regulations, particularly on a cumulative basis;

2.2 Assign Citywide Policy and Analysis and Neighborhood Planning staff to work with community planning committees to identify and propose Planning Code changes that set firmer zoning requirements for projects within specific zoning districts; and,

2.3 Present a proposal, including goals, timelines, and measurable results, to the Board of Supervisors during the FY 2002-2003 budget process for the review of the Planning Code application of Conditional Use.

Costs and Benefits

The above recommendations would increase overall conformity with the General Plan and reduce inconsistencies between the General Plan and the Planning Code by setting clearly-defined limits for projects in each zoning district and reducing the number of projects approved on a case by case basis. Further, the above recommendations would allow more consistent community participation in identifying the types of projects suitable for their zoning district. A reduction in the number of Discretionary Review cases should also result as community members are allowed to define acceptable development for their neighborhoods.

The Department should incorporate the proposed process for revising the Planning Code into existing or proposed Department community planning programs and to adjust the annual Work Program to accommodate the Planning Code revision process.

¹ Planning Code Section 102.28

² Planning Code Section 303

³ A demising wall is a wall that structurally separates two units within one building.

⁴ The proposed 32,340 square feet allocated for parking would accommodate approximately 101 parking spaces or 136 valet parking spaces.

⁵ Planning Code Sections 311 and 312