Design by Andrew J. Nilsen
Nestled into the rugged hillside high atop Twin Peaks, 125 Crown Terrace boasts a breathtaking panorama of the city below. It is the embodiment of the real estate cliché: a million-dollar view. A million-dollar view in San Francisco, however, doesn't necessarily mean so much. And the view on Crown Terrace is tempered somewhat by the sight of the home itself.
A historical review of the 1941 structure undertaken when its owner applied to demolish it reveals the original inhabitants were Ruben and Elizabeth Burrow; rather callously the report concludes that neither they "nor any of the subsequent owners/occupants of the property were found to be important in our local, regional, or national past." The house was built by Ruben Burrow himself, a printer by trade. "He is not a master in the field of architecture," the report concludes. This is, no doubt, accurate.
And yet, current owner Mel Murphy's demolition permit was roundly rejected. Aesthetics aside, 125 Crown Terrace was a deemed a structurally sound, affordable home occupied by rent-controlled tenants in a city where such things are exalted. Preserving such structures is — at least on paper — one of the Planning Department's foremost goals. So, when Murphy applied to raze the home, "all the red flags went up," according to one Planning Department observer. Longstanding city policies have rendered the demolition of a sound, rent-controlled structure nigh-impossible — at least when approached in a straightforward manner.
Murphy's plan to demolish the 854-square foot home and replace it with a 4,019 square-foot residence for his family was deemed wholly incompatible with the city's housing policies. So, the prominent local developer and past president of the Building Inspection Commission submitted a new proposal. Rather than demolish the home, he would simply remodel it — to 5,139 square feet.
And this the city approved. An eviction notice affixed to the front door of 125 Crown Terrace flutters in the breeze. Visible through the front window, a bare mattress rests on the living room floor, and DVDs are strewn about the premises. It's a view that feels a million years from a million dollars.
San Francisco is a city of paradoxes. It prides itself on its inclusivity, but is the exemplar of the exploding gap between America's rich and poor. Preservation of affordable housing is enshrined as a top priority in the city's General Plan, yet housing in San Francisco is historically unaffordable. Demolishing a modest, rent-controlled home and erecting one five times larger is unthinkable — but remodeling it into a structure six times larger is okay.
In San Francisco, residential demolitions have been deemed antithetical to this city's ethos, and largely phased out. The city demolished 84 housing units last year — more than in recent years, but only a tenth of what was going down in the 1970s. The city's definition of a "demolition," however, is remarkably malleable and ever-evolving. San Francisco is flush with onetime starter homes that, via a "major alteration," have been augmented to double, triple, or more their original sizes — and subsequently sold for double, triple, or more their original prices. These so-called affordable homes, ostensibly within the reach of the city's fleeting middle class, are gone for good as assuredly as if they'd been dynamited. The city maintains its pious policies regarding the retention of its affordable housing stock even while allowing broad leeway to those scooping it up and building it into luxury dwellings. And everyone is left to ponder why middle-class residents and families are fleeing San Francisco, the city with the nation's highest home prices and lowest percentage of children.
Four years ago, the Board of Supervisors passed an ordinance amending the planning code in an ostensible attempt to close loopholes regarding residential demolitions. But closing loopholes in San Francisco is often akin to jumping on a puddle — instead of one big one, you create multiple little ones. Per the planning code, a building undergoing a renovation must retain a percentage of its "exterior elements" to avoid the declaration of a demolition. Planning Department officials confirm to SF Weekly, however, that these elements — the very portions of a residence retained specifically to avoid triggering a demolition — can themselves be taken down and replaced. This can be undertaken even if only to bolster otherwise sturdy walls in order to support the much larger structure to be built atop them. The possibility exists to essentially dismantle an entire structure, erect a new, far bigger one, and deem the action an "alteration."
"This is tortured beyond a Kafka novel," fumes former Board of Supervisors President Aaron Peskin, a strong backer of the '08 ordinance. His onetime colleague, former Supervisor Jake McGoldrick, avoids literary allusions: "It's bullshit, bullshit, total horseshit. A total deception."
Despite its professed zeal for preventing demolitions, San Francisco appears to have demolished the definition of what a demolition is.
Puttering around on a tour of things that aren't there anymore is a pastime in many cities. San Francisco natives can take you to the former sites of places like Seals Stadium or Playland at the Beach. They can also take you to the sites of formerly affordable houses. You don't find so many moderately priced homes anymore in San Francisco. Not coincidentally, you don't find so many natives, either.
San Franciscans hoping to purchase a so-called starter home in the city not only have to contend with free-spending competitors but investors bidding on the land — not the home. At 449 Chenery in Glen Park, the 935-square foot house was purchased in 2008 for a gaudy $905,000. But that was money well spent — the structure was more than tripled in size via a remodel to 3,300 square feet and sold in 2010 for $1.6 million.
In nearby Noe Valley, Stephen Fowler and Renee Stephens — who earned a degree of Internet infamy following an agonizing appearance on Wife Swap in which they conformed to every negative stereotype of San Franciscans — petitioned their neighbors to allow a massive addition to 479 Douglass. Signers were urged "to support families who want to stay in San Francisco." (The couple, meanwhile, served octogenarian Bob Hanamura, a city native and upstairs tenant in the home since 1978, with an eviction notice.)
In desirable neighborhoods — and few are more desirable than Noe Valley — the petition repeated a familiar refrain. Real or hypothetical families are trotted out to justify gargantuan home expansions. Potentially lucrative in-law units are pitched as a necessity, as the extended family intends on visiting — often! Once the projects are complete, the in-laws may or may not visit, and families may or may not take up residence in the homes supposedly built to keep them in this city. But smaller, more affordable housing is assuredly gone.
"Tons of people do this," says builder and contractor John Pollard. "You can dig six or nine feet in the basement and add 2,000 square feet. In the attic, you can put some dormers in and add 1,800 feet. A couple rooms in the attic, a little deck, a garage — hey, it's worth it."
Indeed: Fowler and Stephens purchased 479 Douglass for $850,000 in late 2009 and more than doubled its size to some 3,200 square feet, according to the realtor who facilitated its sale in April of this year for $3 million. Fowler is currently applying to demolish a 1,896-square-foot house and erect a 4,105-square-foot home and a 490-square-foot second unit in Mill Valley; in that nearby city, speculators needn't cloak the destruction of smaller homes and erection of larger ones under the rubric of a remodel. The transformation of San Francisco's most modest homes into high-end housing stock remains a thriving business — the city's demolition interdictum be damned.
The interplay between the city and those seeking to knock down and build up its housing stock has long resembled the relationship between a sports league and its doping athletes. The latter always seem to be one step ahead of the former.
Tearing down Victorian cottages was a cottage industry of its own for decades in San Francisco. By the 1980s, however, Westside neighborhood groups objected to the razing of single-family homes in favor of large, ungainly — and highly profitable — "Richmond Specials." Former longtime Residential Builders Association President Joe O'Donoghue smiles at the memory. When the city took steps to curtail demolitions, he and his colleagues began undertaking "de facto demolitions." O'Donoghue proudly notes that this is a term of his coinage.
"We were doing de facto demolitions all the time. We were building a new building because it was easier to just do it that way, you see? You knock the entire building down to just three studs — and that's how you'd get around the demolition ordinance," he recalls with a laugh. "The demolition ordinance was being circumvented. Legally!"
After the city's rules regarding demolitions tightened, builders' responses became more creative. When a heavier percentage of a structure was required to be retained, "You'd keep all the old studs. You'd move the new studs right up along the old ones," continues O'Donoghue. The load-bearing elements the city insisted on preserving were rendered merely cosmetic. O'Donoghue chuckles. "You see? You're keeping crap! But, again, we found a way around it. If you won't allow us to demolish it, then we're basically able to build a new building to take the place of the old."
This is still happening, even as San Francisco churns out more complex rules regarding demolitions. The morass of regulations add time and cost to construction jobs. Reckless or ignorant builders will be tripped up by the reams of arcane stipulations and may face the wrath of the city. But the well-read, well-connected, and well-heeled are able to pull off "major alterations" that triple, quadruple, even sextuple the size of a home.
"I always said there was nothing wrong with making the rules complex — because if you're the only ones who understand them, you do away with the competition," says O'Donoghue with a grin. With the city's current reading of its rules, "You'll have more of these de-facto demolitions happening, no question. And I'm in support of that."
A public hearing on Twin Peaks' 125 Crown Terrace project was held before the Planning Commission in late October. It was the final agenda item during a six-hour meeting and, itself, occupied more than two hours of the commission's time. In many ways, it was an exhibition typical of what you'd expect in a tony, residential San Francisco enclave: Neighbors harped on views and noise and doggie runs and the felling of much-beloved trees. There was little mention of the cognitive dissonance of a project rejected as a demolition growing larger as an alteration.
Two hours into the proceedings, Commissioner Hisashi Sugaya asked Planning Department manager Delvin Washington why this project wasn't simply a de facto demolition. "This was evaluated by our demolition experts on our staff," Washington replied. Based on the percentage of exterior walls and floor plates being retained, the project "did not qualify." Sugaya followed up: Would the floor plates, the joists, the foundation "have to remain?"
Washington's answer was intriguing. He replied that they both would — and would not. Elements must stay "in their current location. ... You can conceivably take a wall down, repair it, replace it, and as long as you're locating it in its exact same location it will be a qualifying wall."
The mind-blowing concept of subatomic particles apparently existing, simultaneously, in multiple states led to the "Schrödinger's cat" paradox. In this city, however, it's walls that can simultaneously be retained and replaced. Walls can be both there and not there. San Francisco has devised Schrödinger's walls.
The Planning Department's enigmatic pronouncement also parallels the "Ship of Theseus" conundrum proposed by Plutarch 2,000 years ago. If the Athenian ruler's vessel is wholly rebuilt over the course of a journey, with the crew removing "the old planks as they decayed, putting in new and stronger timber in their place" — is it still the same ship? Per the city, the answer is yes — Theseus would get his building permit. By a 5-2 vote, so did Mel Murphy.
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.
"If you look at housing production in San Francisco, the more we produce, the higher prices go," says Teresa Ojeda, the manager of the Planning Department's information and analysis group. A near-insatiable demand for high-end housing has crowded out those seeking any other kind. "Prices are pretty much determined by ability to pay. If people have money to pay, prices will go up."
People have money. People have so much money, John Pollard says, they're paying millions for century-old cottages, outbidding builders like him who'd blow those shacks up into luxury homes for people with even more money. A bidding war between profligates willing to pay through the nose for the San Francisco lifestyle and house-flipping entrepreneurial builders is just the latest factor driving the teachers, bus drivers, and other salt-of-the-earth types referred to in local politicians' speeches out of this city. As San Francisco becomes the bike-friendly, walkable, green metropolis it aims to be, housing costs will further skyrocket. For decades, however, the city has served as a virtual test case on how to price real estate out of the reach of ordinary people.
Even in the 1970s, San Francisco was still one of the cheapest places to live in the Bay Area. But the demise of the city's industrial economy flipped the script. San Francisco became a corporate hub of the FIRE economy (finance, insurance, real estate), and has now laid out the tax-incentivized red carpet for tech and biotech firms and their well-compensated workforces. In The Transformation of San Francisco, Chester Hartman noted that the typical price of a San Francisco home in 1965 was only $3,000 more than the national average — but $53,000 more by 1980. According to the real-estate website Trulia, the median San Francisco home sale price hit $735,000 in late 2012. The U.S. median is $178,000, per the National Association of Realtors.
The city's indignant nudists recently claimed that an ordinance requiring them to cover their genitalia in public marked the loss of the free-spirited San Francisco of yore. The stark numbers above reveal that city was lost long ago. Unlike development-friendly, sprawling towns like Phoenix, Houston, or even San Jose, vast swaths of San Francisco look roughly similar to how they did generations ago. But looks can be deceiving. This city isn't just inhabited by different people than it used to be, but different kinds of people doing different kinds of jobs and using the city and its housing stock in different kinds of ways. Between the 1960 census and the 2010 edition, San Francisco gained 65,000 residents while losing 31,000 families. All the while, the ratio of renters to homeowners remained constant at 65:35 — though San Francisco is now the nation's most expensive rental market, catering to a far different crowd. It brings to mind, once again, the Ship of Theseus: Does a city remain the same when its residents are replaced in this way? In San Francisco's case, it's hard to argue that's so.
Despite clearly prevailing trends, San Francisco's civic boosters like to claim that ours is a city of socioeconomic diversity. There's even something about valuing that in the General Plan, along with preserving affordable housing. Census data, however, reveals the heavy majority of San Franciscans — some 58 percent — are now impoverished or wealthy. Wealthy people seem to be doing fine and, to its credit, city government has been aggressive about providing housing for the needy. Since 1985, some 1,100 units have been generated via fees paid by office developers. Since 1992, residential developers have been mandated to build or fund an "affordable" unit for every 10 they construct; this has led to 1,600 units. Nice — but 2,700 units represent 0.7 percent of the city's housing stock. And the teachers and bus drivers aren't staying — a thirtysomething couple with those professions might earn in the neighborhood of $130,000 or $140,000 per year. That's too much to qualify for the city's affordable housing programs — but too low to outbid the nouveau riche or developers jockeying for a modest home.
Those who aren't affluent or in abject poverty will find it increasingly difficult to establish roots here — and abject poverty is hardly an aspirational state. Much of the family-sized housing in this city is being built by Pollard and his colleagues, atop the ruins of the city's starter homes. "Families with three kids won't buy a 1,000-square-foot house," he says, "unless they have someone like me to turn it into a 3,000-square-foot house." Soon enough, every homeowner in San Francisco will have a million-dollar view.
The city's semantic games and logic puzzles regarding home demolitions haven't prevented the wealthy from consuming the city's most available real estate and hawking it to the wealthier.
It's their world — and everyone else is just paying rent.