The story of 660 Third Street is a case study in how property owners seem to think they can violate the rules at will, and get away with it

Zoning Administrator Scott Sanchez convenes a hearing on an illegal office conversion
Zoning Administrator Scott Sanchez convenes a hearing on an illegal office conversion

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MAY 21, 2015 — The battle over regulating Airbnb has spotlighted the problematic enforcement of San Francisco’s zoning laws.

But the fight is just one spectacular instance of the city’s chronic difficulties in this regard.

Since last spring, 48 hills has been following a textbook case of a less-conspicuous but equally consequential kind of lax zoning enforcement-cum-big business refusal to obey the law: the rampant illegal conversion of properties zoned for industrial use—in local plannerese, Production, Distribution, and Repair—into offices.

I refer to the ongoing situation at the handsome brick-and-timber building at 660 Third St.

The building owners said there was no loading dock at the building -- but we found one pretty easily
The building owners said there was no loading dock at the building — but we found one pretty easily

As we most recently reported, on April 4 the Planning Department sent the building’s owner, the multinational industrial liquidator, Orb Partnership/Rabin Worldwide, locally run by the Rabin family for more than 60 years, a Notice of Violation (NOVP) for failing to evict the office users on the first two floors of the building and to seek light industrial tenants for the space, as per the conditions imposed by the Planning Commission on September 11, 2014.

In the mid-Nineties the Rabins had illegally converted the industrially zoned building into offices (for almost a decade, it housed the headquarters of Wired).

That’s a common practice in San Francisco and a major factor in the drastic shrinkage of the city’s blue-collar jobs and in the dire shortage of light manufacturing space, which has been well publicized by SFMade.

In May 2013, the Rabins asked the city to legalize retroactively the conversion of 660 Third into offices. The Planning Commission, however, said that only the top two floors could remain offices; the bottom two would retain their official PDR zoning.

That was last September.

As of late April, the bottom two floors were still occupied by office users, including the building’s property manager, Polatnick Properties.

The city cracks down; nothing happens

Hence the Notice of Violation. The Rabins had 15 days from the April 2 date of the notice either to correct the violation or to appeal the NOVP, after which they would incur fines of up to $250 a day. The Planning Department had already charged them a fee of $1,238 for Time and Materials to cover the cost of correcting the Planning Code violations.

To my astonishment, the owners didn’t pay the fines. Instead, they appealed the Notice of Violation and asked the city’s Zoning Administrator, Scott Sanchez, to hold a hearing on at which they could present information to demonstrate why they believed the Notice had been issued in error.

The hearing, a publicly noticed event, took place on the afternoon of May 19 around a conference table in a small meeting room in the Planning Department.

Twelve people attended:

Planning staff

  • Zoning Administrator Scott Sanchez
  • Sanchez’s assistant Dario Jones
  • three members of the city’s Code Enforcement Team

Manager Christine Haw

Planner Chaska Berger, who oversees the Southwest Quadrant of the city

Matthew Dito

  • Planner Rich Sucré, who presented 660 Third to the Historic Preservation and Planning Commissions

Representatives of Rabin Worldwide

  • Daniel Rabin
  • Ariel Rabin

Attorneys representing the Rabins

  • Ruben’s colleague David Silverman, who represented the owners before the Historic Preservation Commission and the Planning Commision

Members of the public

  • SoMa Leadership Council President Jim Meko
  • Myself

As Sanchez noted at the start, Zoning Administrator hearings are relatively informal affairs. There are time limits on comment—the project sponsor had five minutes to make a presentation and three minutes for a rebuttal. But people were also allowed to interject brief replies and comments—which they did, occasionally to eyebrow-raising effect.

The hearing followed two threads. One dealt with the Rabins’ appeal. At Sanchez’s invitation, Reuben set forth their case.

“A couple of years ago,” he said, “Danny and Ariel came to me and showed me 660 Third Street.” They wanted to make sure that “all the i’s were dotted and the t’s were crossed.”  With his assistance, they decided that they had four alternatives:

  1. “Do nothing.”
  1. “Go into Planning and submit a grandfathering application. We think we have grounds” for doing this,” but it’s “difficult to convince Planning” in such matters.
  1. “Hand-given [?] to us: legalize the building,” that is, legalize the illegal conversion from PDR into offices. “We’d taken a number of buildings through that process.”

They chose option three and prepared an application to the city.

As to why they’re appealing the Notice of Violation: first and last, Reuben alleged “an abuse of discretion on the part of the Planning Commission.”

In support of this charge, he did not cite a single provision of the City’s Planning Code or a single approved permit for office conversion. Instead, he described precedent and process.

He noted that in 2013, the commission had authorized the illegal office conversion of a former PDR building across the street at 665 Third.

Historic preservation?

He also noted that before going to the Planning Commission, Silverman had asked the Historic Preservation Commission to declare 660 Third a contributing resource to the South End Historic District. That’s because 660 Third sits in a zoning district, SLI (Service/Light Industrial), that prohibits general offices unless a building has been designated an historic resource. On February 19, 2014, the HPC unanimously approved such a designation for 660 Third.

Armed with that designation, Silverman turned to the Planning Commission. Reuben observed that the staff report that appeared on the May 1, 2015 agenda recommended that the commission issue a conditional use and an “office development” allocation. Indeed, he noted, the hearing appeared on the commission’s consent calendar, indicating that staff expected approval without discussion.

“No finding in the Planning Commission’s [September 11, 2014] decision,” Reuben asserted, “provides support for their decision” to authorize conversion of only the top two floors into offices. “All the material supports the whole building. Absent findings to that effect, the Planning Commission has abused its discretion.”

Sanchez asked: “Did you appeal the decision last September?”

Reuben replied: “We didn’t appeal the decision. We were a little bit flabbergasted at the time.”

Though it didn’t come up at the hearing, it’s worth noting that the deadline for appealing office allocations that come with a conditional use authorization is 30 days after the Planning Commission takes action (Sect. 308.2 of the Planning Code).

Reuben then allowed that there had been a fourth alternative: “Wait for the Central SoMa Plan” to wipe out the current zoning with regulations that upzone the entire area to allow offices. “It looked as if [the plan] would have been approved by now. That would have been the cleanest, most direct and most expedited way to go.”

Wait — maybe the law will change!

The draft Central SoMa Plan was published in April 13, 2013; the plan has yet to be finalized, much less approved, by the Planning Commission and the Board of Supervisors. It is tentatively scheduled to appear as as an information item on the commission’s July 25 agenda.

In fact, in keeping with the city planners’ customary, questionable citation of land use plans that have yet to be passed by the Board of Supervisors or the Planning Commission—in this case, that have yet even to be deliberated by either body—the May 2014 staff report noted that

660 3rd Street is located within the the proposed Central SoMa Area Plan, which is currently under review and development by the San Francisco Planning Department. According to the Draft Central SoMa Plan, the project site would be rezoned from SLI to MUO (Mixed-Use Office). Within the MUO Zoning District, office use is a principally permitted use.

No doubt the foregoing gave Reuben and company additional reason to think that their application would be approved.

Sanchez: Have there been any permits convert [the building] to office use?”

Reuben: “Yes, I believe there are some permits. I don’t know that they were signed off by the Planning Department.”

As 48 hills reported, as of late April 2014, since 1984 the Department of Building Inspection had issued 65 building permits for work at 660 Third costing millions of dollars.

But as Reuben himself intimated, building permits are very different from approval by the Planning Department proper.

Sanchez continued: “What’s the current makeup of the building?”

Reuben presented a chart showing the current tenants. The first floor now houses Heathline, described as “similar to a Web MD;” Juice Box Games, which designs games for mobile use; Building Management, i.e., Polatnick Properties. A 6,000 square foot space is vacant. Healthline also rents the second floor.

Sanchez then asked if the members of the public would like to comment.

Was the building really vacant?

Meko recounted his online exchange with Planning staffers Haw and Sucré four days after the Planning Commission’s September 11 decision. In response to Meko’s query—“[T]he bottom line is that [the office uses] are going to have to vacate two entire floors—right?—Haw replied: “We’ll investigate and check the square footage of the floors prior to any determination.”

Meko also noted that there’s an office tenant in a space that opens onto the back of the building at 345 Ritch.

Then I spoke up. I said that the reason that the Historic Preservation Commission designated 660 Third as an historic resource was because “Mr. Silverman told them that the building was vacant, and that the owners couldn’t find any PDR tenants.” That  description, I said, was “inaccurate.” Nevertheless, it went unchallenged at the HPC, which reasoned that if  no PDR tenants could be found, what’s the point of keeping the PDR zoning?

Reuben turned to Silverman and asked if he’d said “the building is vacant.” Silverman denied it and claimed that what he’d really said was that “the building was vacant”—in other words, it was empty, before they’d rented it out as offices.

After the meeting I checked the official transcript of the hearing at the Historic Preservation Commission. According to that document, Silverman said:

There’s no PDR being lost because the building is vacant. It’s a very hard building to find tenants for.

At the hearing, I forgot to add that Silverman also made a written submittal to the Planning Department in which he claimed that the building lacked loading capacity, thereby making it unsuitable for PDR use. A cursory glance at the building’s plan shows that 660 Third has two freight elevators and a loading dock in the rear.

The second thread that ran through the meeting concerned the way the owners and their attorneys feel about the Planning Commission’s decision. They’re deeply aggrieved. This seems to have nothing to do with the legality or illegality of their actions; it’s about what they consider equity: They think the city has singled them out for harsh treatment.

When he began his presentation, Ruben said that “in 30 years,” he’d “never done a Zoning Administrator hearing.” His clients’ goal was “to legalize the old building, not [to] be here, which is a little bit bizarre.” He couldn’t find “a single prior application [of the sort his firm had filed for 660 Third] that had been denied in the past.” In his rebuttal, he averred that “there’s never been a No vote under the Code section” at hand.

It wouldn’t surprise me if this really was Reuben’s first Zoning Administrator Hearing, and that he found being there “a little bizarre.” I also believe him when he says that he and his clients were “a bit flabbergasted” when the commission only allowed them to convert the top two floors at 660 Third into offices. Based on precedent, that outcome must have taken them aback.

That said, not only did they fail to appeal the Planning Commission’s decision; by December 29, 2014, they’d presumably recovered sufficient equanimity to pay the city the $660,487 in impact development fees that the commission had imposed in connection with the partial change of use it had approved.

The poor “picked on” landlords

The most heart-felt expressions of resentment were voiced just after the hearing, in the hallway outside the meeting room. There Daniel and Ariel Rabin told Meko and me that they felt “picked on.” They didn’t say that what they’d done was right; in so many words, they just objected to not having gotten away what they’d done, when others had done so.

Reuben asked Meko: “Did you protest 665 Third?”

Meko: “No.”

At which point, I said: “Believe me, if we had the resources, we’d go after every single illegal conversion. Don’t take it personally.”

Ruben shushed up the Rabins and shooed them away.

Then he and his clients got into one elevator, and Meko and I into another.

Sanchez said he would issue a decision within 30 days. That decision may be appealed to the Board of Appeals within 15 days of its date. Stay tuned.

 

  • GarySFBCN

    I occasionally watch the Planning Dept meetings and Board of Appeals meetings on SFTV. If you only own a family home or a small business, you are subject to regulation and fines. If you have money (Academy of Art) or are well connected (Mel Murphy) if justice is slow or non-existent.

    Give that planning has contributed to the mess in the city, I think it is past time to fire everyone and start fresh.

    • sffoghorn

      And to make sure that the Planning Department plays no role whatsoever in rezoning the Mission during the moratorium….MEDA and the nonprofit corps, too. Anyone who got us into this mess has to be marginalized from participating in getting us out of it.

      • R94110

        So you want to exclude anyone who disagrees with you?

        How democratic of you.

        The Planning commission is appointed by those we elect. Who elected you?

        • sffoghorn

          The process would be included into the moratorium and approved by the voters. That is more directly democratic than the indirect Planning Department and Commission.

          But then again, you hate San Francisco voters.

          • R94110

            I am not aware that the voters have decided any such thing. Certainly the Supervisors have not.

            Did an election happen and I missed it? I certainly see a lot of building going on from my leafy vantage point above the Mission flatlands.

          • sffoghorn

            The moratorium would be approved by the voters, this Board of Supervisors is not approving anything. You are trolling again.

          • R94110

            Ah yes, the city will be exactly the way you want it any minute now. All we have to do is wait, and you will be vindicated. The revolution is always tomorrow.

            But just in case that doesn’t work out, you have your fatass condo you can sell and be in pig heaven anyway. Woop de boop.

          • sffoghorn

            A moratorium on market rate housing in the Mission that is supported by 2/3 voters in a recent poll is hardly the revolution.

          • R94110

            Why would anyone outside the Mission vote for a moratorium only in the Mission? If they dislike development then that would guarantee more development in their own neighborhood, so they would vote no. While if they like development then they wouldn’t support it anyway.

            Planning is a city-wide function. You need a city-wide moratorium. But actually a moratorium is irrelevant. If you want to have a debate about new homes, we can have that now. What are you waiting for? Let’s debate.

          • sffoghorn

            Apparently 2/3 of voters are inclined to vote for such a measure.

            The more appropriate question would be why are you so out of touch with the electorate on this and so many other policy matters?

          • R94110

            That’s odd because everyone I have talked to thinks it is a dumb idea.

            Although as the owner of a property portfolio in the Mission, I would of course profit from it. Too bad about all the evictions and rent hikes it will cause, but you don’t have to worry about that do you?

          • sffoghorn

            You are a lot like the progressive stalwarts who never get outside of your comfort zone except to yell.

          • R94110

            I am comfortable either way. You and I make make more money if no new homes are built. The difference between us is that I want to see more homes in the Mission despite that.

            But you, having got your Mission condo, want to close the door on other white male tech workers like you from doing the same.

            Hypocritical. And bad for the low-income people of non-whiteness who will be displaced as a result.

          • sffoghorn

            So you only trust the voters when they vote for a conservative mayor?

          • R94110

            So you only trust the voters when they don’t?

            The city economist is preparing a study and a report which will quantify the effect of a moratorium. I expect it will clearly show how it would drive up rents and evictions as the would-be renters and buyers of those new units instead chase after existing homes, thereby displacing or outbidding local low-income people of non-whiteness.

            Just like you did.

          • sffoghorn

            It will show that taking a time out now and raising the bar on developer fees will create more affordable housing in the long run and how a moratorium will put the brakes on speculation that displaces.

          • R94110

            Creating an artificial shortage of homes can only further reduce supply and increase housing costs.

            Which of course is exactly what owners of Mission real estate like you want, so you can cash out at higher prices.

            Developer fees can be negotiated at any time. No need to stop anything to achieve that, if it is possible at all of course.

          • sffoghorn

            A moratorium is a temporary thing, any economic impacts will be merely termporary.

          • R94110

            If a moratorium has little impact then there is no point in it.

            Two thirds of SF voters support our pro-development mayor. That must drive you mad.

            Everyone knows you only support building nothing to drive up the value of your cndo

          • sffoghorn

            If a moratorium has little economic impact then there is no reason to lose your shit over it, much less oppose it.

            A moratorium has other impacts, such as a chance to reevaluate zoning that has led to such a pathetic production of affordable housing and to reconfigure the parameters to produce more.

          • R94110

            If a moratorium is a trivial thing, as we both agree, then there is no reason to do it. There is duplicity if you present it as trivial while secretly intending it to be significant.

            We can re-evaluate zoning without artificial gestures. Why are you scared to have that debate without something that you admit is trivial?

            Voters will smell something very fishy here unless it is presented more honestly than you are doing. I also recommend that it is NOT advocated by someone who stands to financially gain from no new supply, which rules you out on credibility grounds

          • sffoghorn

            The economic impacts are neither significant nor permanent.

            The moratorium provides time to do planning right.

          • R94110

            OK, so your argument to the voters is that the moratorium isn’t significant and that it is significant.

            And that building no new homes will help with the housing shortage by building even fewer homes.

            And that you cannot discuss planning unless something totally unrelated and trivial also happens.

            And meanwhile we will lose developer fees for affordable housing

            Good luck with that. And don’t quit your day job.

          • sffoghorn

            The voters are way ahead of you on this. The sky will fall no more than it already is if the moratorium makes the ballot and passes.

          • R94110

            The voters have said nothing. You ate citing one badly-worded question from a biased source and extrapolating that to the real decision makers.

            I cannot imagine who would vote for a freeze on just one neighborhood. Certainly not anyone who lives outside that neighborhood. Planning and housing are city-wide issues and not subject to the whims of petty fiefdoms.

            It has no chance and in fact I doubt it will even be on the ballot if the Supes don’t put it there. This is no 8 Washington. It will crash and burn – better have a plan B

          • sffoghorn

            I trust the polling, not what your ideologically biased might imagine.

            It must really grind your gears knowing that the voters, if given a chance, would kick everything you stand for to the curb. Again.

          • R94110

            The poll was defective and biased. Ask people if they would like to see less homes they cannot afford and more homes that they can afford, of course they will say yes. They would also vote for motherhood and apple pie.

            Most voters probably don’t even realize that most of the money for affordable homes comes from unaffordable homes. You had better hope developers spend absolutely nothing on educating the voters on basic economic realities. It’s your best shot.

            You had your day in the sun with 8-Wash. It’s over. I thought I would lose that one. I know I won’t lose this one. (Not that I am a developer anyway).

          • sffoghorn

            Basically, since you disagree with what the poll says the voters support on policy reasons, therefore the poll is defective and biased. Proof?

          • R94110

            Proof? We’re just expressing opinions. You think this would pass. I do not. You think the poll question was fair and I think it was a leading question.

            The difference is that you don’t have a Plan B if it fails. I am comfortable either way.

            So I win regardless.

          • sffoghorn

            Your opinion on the validity of a poll is meaningless absent any supporting evidence. You’ve made no substantive criticisms of any aspect of the poll, there is no evidence, there are no arguments, just verbiage.

          • R94110

            There has been no evidence offered by anyone here for any position here, either in the article or the comments. It’s all just wild speculation.

            But I’m looking forward to how much egg will be on your face in six months time when all that you claim will happen turns to shit.

          • sffoghorn

            There are published polling results that you’ve not refuted on the merits and you’ve got nothing.

            I doubt that a substantive measure will make it to the ballot because the Mayor has no intention of allowing that and those who have seized control of politics in the Mission have families to feed.

          • R94110

            That outlier poll has been widely refuted here and elsewhere. I know you know that and so am not going to waste time repeating the reasons why.

            There is quite simply no way that anything other than a small extremist minority think that the solution to a shortage of housing is to build even less and lose the BMR funds.

            Nor do they think that any one neighborhood should be singled out or excused the burden of carry the weight.

            What is your Plan B? Or don’t you have one?

          • sffoghorn

            Yes, planning is a citywide function and voters citywide appear poised to adopt a moratorium on market rate housing in the Mission by a margin of 2:1. Problem?

  • chris12bb

    “Believe me, if we had the resources we’d go after every single illegal conversion.” so by that I presume you would have gone after Peskin, who took a unit of the market with out permission. Rather than being the free PR machine for him?

  • Jorge Carolinos

    Whats the big deal “undocumented” offices.

    • R94110

      Yes, 99% of SF residents don’t give a crap if some scrubby under-utilized building is used to provide some jobs to people. But to Redmond this is a major issue.

      There was a time when Redmond actually covered major issues. Now it’s all this petty crap like zoning technicalities or someone occasionally sharing their home.

      • Jorge Carolinos

        There needs to be a score card.

        What constitutionally defined federal laws we should ignore, what local petty non sense we should be outraged about.

        • R94110

          Apparently blocking transit and squatting in buildings are perfectly acceptable behaviors. But creating jobs for local residents and offering to share your home are not.

          It’s just so complicated to keep up