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

By Zelda Bronstein

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

But the Airbnb 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

  • James Reuben, principal at the law firm of Reuben, Junius & Rose
  • 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.

I haven’t checked out Reuben’s claims about prior approvals, but it wouldn’t surprise me if what he said was largely or even totally true. The Planning Department has a long record of either actively expediting the illegal conversion of PDR-zoned property into office space and/or looking the other way, and Reuben Junius & Rose is the go-to firm in the city for clients seeking to have the Planning Commission retroactively authorize these illicit changes of use.

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.