By Tracy Thompson
In the August 2023 issue of the Sunset Beacon, Supervisors Myna Melgar and Joel Engardio expressed concern for the aging population of San Francisco, concerned that they won’t have the money to afford “disability upgrades” “so that they can stay in place” in their “big house with a low tax base,” otherwise defined as private property.
These two claim that their newly crafted “The Family Housing Opportunity Special Use District Ordinance” will allow the elderly to afford these disability upgrades by renting out their property in either the form of a room or newly constructed “Additional Dwelling Units (ADUs).”
This ordinance not only “gives people more options,” stated Melgar, “but also allows you to stay in place.” This legislation goes so far as to allow the building of a total of four units on one parcel of land keeping in mind the need to supply the much-needed housing on the west side and all of San Francisco.
Engardio claims that we can all live with our families and that they don’t have to move away and never see each other. Each family member “can live in their own separate unit” and the aging parent can have the money to accommodate their approaching disability with newly added handicap ramps, elevators, etc. Maybe they’ll even have some money leftover to go out for Sunday dinner! Only if the aging parent(s) plays their cards right. Melgar and Engardio are promoting the building of three units to the existing Single-Family Resident (SFR) under the guise of concern for the elderly and families being able to “stay together.”
But what Melgar and Engardio have failed to mention is the (not so) subtle attempt for city officials and departments, specifically the Rent Stabilization and Arbitration Board, to resume ownership of your private property should you build these units.
Here’s how it works: Once you build an ADU, your SFR is now a two-family dwelling or “multiunit” property. All the ADUs are now legal units. Not only will your property be re-appraised at a significant increase in value with an increase in property tax, but the Rent Board will now resume operation of your new unit(s) as well as your old unit. Yes, that is correct.
The completed ADU goes on the radar with the Building Department; the fantastic news of an additional unit has been added to the housing inventory. You will then receive notification from the Rent Board that you are required to report not only the amount of rent you are receiving from the new unit(s), but you will also be required to report how many people live there, who lives there, what is the square footage, and how long everyone has lived there and when it becomes vacant.
We have Sandra Fewer – former Richmond District supervisor – to thank for pushing through this invasive legislation during the pandemic, just before she opted out of her position and moved to Marin.
They will tell you who you can rent to, they will tell you that you have no right to screen certain aspects of the tenant’s application – including income verification. They will tell you that you have no right to enter the property, they will tell you that you are not allowed to maintain the property and when the tenant decides to leave on their own accord, the Rent Board will help this vacating tenant execute a buyout which will cost you thousands if not hundreds of thousands of dollars, even though they are not being evicted. The Rent Board will send you legal notices that you are a landlord attempting an unlawful eviction when the tenant decides to breech the lease as if your lease agreement is not a legal contract, which in fact, it is. If that weren’t enough, they’ll tell the tenant that they don’t have to pay rent when Supervisor Dean Preston comes along with another unconstitutional ordinance during the next pandemic. All of this will probably happen in your backyard.
What you have decided is that you just want family members to live in your units, having taken into consideration Engardio’s concern that family should stay close to one another. However, Engardio has conveniently omitted information from Preston’s newly passed, voter approved legislation, (called Prop. M) how you will be slammed with a hefty vacancy tax for the unit(s) you have built and have allowed family members to occupy. By hefty, I am referring to the $2,500-$5,000 per year per unit for the first year of declaring a unit completed and habitable and increasing thereafter.
And by vacant, I am referring to his legislation, unanimously passed by the Board of Supervisors, which does not consider family members or relatives legitimate “tenants” whether they are paying rent or not. Thus, the elimination of your Proposition 13-based property tax, which Melgar thought was too low to begin with. This just adds another line item to your property tax bill if you haven’t been already subjected to the seven or so line-item parcel taxes already.
We realize that families living together for a certain amount of time, especially with in-laws and in such tight quarters, is only good for so long until your about to do away with each other, and you all decide that the situation isn’t working out anymore and something has to give, In the end, family members move away (like they were always supposed to when flying the coup), and you think you’ll leave your property vacant. Well think again.
Once vacant, from your illegitimately occupying family members, plan on receiving an inventory questionnaire from the Rent Board. “What are you doing with your units?” Our constitutional rights of owning property are no longer in accordance with the true definition of owning real estate: The exclusive right to use and enjoy the property as long as ordinances such as building codes and zoning regulations are obeyed, an owner may do as they please with their property. This real estate definition of property ownership and constitutional rights does not apply in San Francisco.
The Rent Board will continue to assume operation of your property,
Consider the following: You decide that Engardio and Melgar are full of insight and you “could use that money and rent out three additional dwelling units in your old age.” Multiply that one problem tenant by three when the next pandemic comes along and Preston decides that those people living in your back yard not only don’t have to pay rent, now they don’t have to pay electricity and gas.
This gets even better. You build those additional units on your tiny parcel of land thinking that you could sell your multifamily residences at a higher price than the SFR it once was. Both Melgar and Engardio, along with the other nine Board of Supervisors members, will tell you that first you must offer your property to a “non-profit” if they are able to make a bid that is comparable or greater than the asking price-called first right of refusal.
If you think this shouldn’t be a problem, think again. Restraints such as timing, notifications and waiting will undoubtedly interfere with the selling of your private property and even turn off qualified buyers, making this even more stressful than selling a Single-Family Resident in the City. At this point, you are just playing into their hands, increasing your tax base AND having your rights to ownership diminish with their unconstitutional legislation such as buyouts, inability to collect rent when due or evict a nuisance tenant under their compromised definitions, and finally hindering the selling your property.
As it stands now, offers through the COPA, OPA legislation are not working out as well as Preston thought for multi-unit buildings for three-plus units. As a result, they are now targeting the SFR, which will be more affordable for nonprofits to make offers and resume ownership.
Melgar and Engardio’s new ordinance will help tenants achieve the dream of homeownership, especially when they can’t afford it, by taking over private property which has been legalized in San Francisco (but illegal in the rest of the nation) in the form of a lifelong lease. Your home and backyard, once peacefully enjoyed for decades, will be occupied by tenants, as you have waived your rights under the Costa Hawkins when you signed up to build the ADUs. Not only do they know it, but they probably have already spent the money from the projected increase in property taxes they forecasted from such an idea. They’ll be no increasing that rent to cover the expotential increases in utilities and maintenance once the first set of tenants move in (and move out).
I’m not finished yet (but wish I were). The city officials including but not limited to Engardio and Melgar don’t really care about your projected disability upgrades; they care about the bottom line of increasing the property tax base of your “low tax based” property. They care about increasing housing density, they care about controlling the rents and they care about gaining complete and absolute control of your property.
What do you get out of it? You get a place to live with a big gigantic headache in your old age.
Tracy Thompson has lived in San Francisco for 30 years. She has her real estate license focusing on landlords, tenants and property management for more than 20 years, is active in the Small Property Owners of San Francisco.
Editor’s note: To read District 4 Supervisor Joel Engardio’s response to this commentary, please follow this link.
Categories: From a Reader
Richmond Review/Sunset Beacon 
It is interesting that someone who appears to work for a corporate conservative law firm would object to legislation passed by two other conservative legislators — Melgar and Engardio.
Nobody is forcing anyone to build these units. But it is unlikely that they will be subject to rent control.
It is hard to understand what the actual situation is here, because the source appears to be highly prejudiced!
Did Fewer really move to Marin? She really did a hatchet job on Golden Gate Park!
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Harry, that is incorrect. Joel Engardio is a moderate at best, left leaning. Look at his voter record and platforms on his website.
Myrna Melgar is a declared Socialist. Far Left Socialist. Also look at her voting record and her website, her speeches at BOS meetings. Her endorsements and who she supports. She has supported “abolishing the police, ending merit based apps, voted for Cindy Elias and Honey Mahogany, etc.”
You are correct, Sandra Lee Fewer did a ‘hatchet job’ on many SF projects, people…then moved to Marin. But she’s still trying to slowly destroy SF with the help of her student, Connie. We must fight Communism even on the Westside.
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Harry, I think you would appreciate going to the SFPLANNING.ORG site and in the search field enter Accessory Dwelling Unit. There you will find that under Local Program section, “A Regulatory Agreement will be created adding the new ADU(s) under rent control”. This can be found under Single Family Tab which also includes” Draft of ‘Regulatory Agreement’: If the subject lot includes rental unit(s) (as defined by Section 37.2(r) of the Administration Code and planning code waivers are granted, the new unit(s) will be subject to rent control. Generally speaking, these existing buildings are already subject to rent-control. A Regulaatory Agreement will be created adding the new ADU(s) under rent control.”
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-Once a property becomes a multifamily unit-two family dwelling or more, it is subject to the Local Ordinances of the Rent Stabilization and Arbitration Board. FACT.
-It is hard to understand how these pieces of legislation intentionally omit other pieces of legislation that exist; this article connects the dots; and the BOS knows that no one is connecting the dots so as to fulfill their housing mandate AND take over private property all at the same time. FACT.
-Melgar and Engardio are not conservative or even mainstream moderate. FACT
-Search final version of Prop M legislation.
-Nobody is forcing anyone to build these units. Once someone does, they need to be aware of the FACTS and how they and their property will be treated and many do not understand this.
-Thanks for the complement; not a lawyer who works for a corporate conservative law firm.
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That is scary with the city’s attempt to raise more revenue to fund the many frivolous City “good idea” programs which causes the city to go into debt without beneficial returns. Meanwhile, higher taxes with fewer or poor quality govt services.
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Tracy:
You forgot to mention, once the non-profits (or The City – yes the City purchases apartmnet buildings), purchases the apartment buildings, the tenant no longer get rent control protection. The City and the Non Profits both get to raise the rent on the previous rent controlled protected tenants! FACT
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Scary story. Small time property owners are not rich. This is a cautionary tale. Thank you to the well-informed writer. This will have a chilling effect on potential expansion of existing properties, and rightly so. I believe the LW.
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I would like to clarify some points in this article. First, it is important to note that the Family and Senior Housing Opportunity Special Use District (SUD) was unanimously supported by the Board of Supervisors, including the members of the Land Use Committee: Supervisor Melgar, Supervisor Dean Preston, and Board President Aaron Peskin
This SUD doesn’t change baseline zoning, which is still single family residential for most communities across the westside. It creates a local density bonus program to allow for the construction of a few additional units where single family homes are permitted.
Couples, aging parents, and young families now have options to build generational wealth through their single family homes: there’s a state density bonus program that allows the construction of non-rent controlled ADUs, and there are several local density bonus programs that allow the construction of additional units under rent control.
Everything in this SUD is voluntary. It allows private property owners to decide for themselves what they want to do with their property. The SUD doesn’t require any single-family homes to build three or four new housing units per lot. It doesn’t require anyone to accommodate an ADU in their backyard.
It’s also important to note that the SUD did not change 2022’s Prop M residential vacancy tax and residential unit registration requirements. If a spare unit is occupied by friends, family, or neighbors for half the year, it is not considered a “vacant unit” and won’t be taxed. Lastly, the SUD can’t change the rules around property tax re-assessments, which are enshrined in California’s state constitution.
This SUD provides solutions that can benefit families who choose to use it. For some, this SUD allows single family homeowners the flexibility to build generational wealth and add new housing in the westside communities they love. Everything about the SUD is voluntary and if a family wishes not to use it, that is their right.
We have a lot to fix in San Francisco and that’s why I ran for supervisor. I believe we should address today’s challenges and not leave them for future generations to deal with.
I welcome constructive dialogue on our city’s most pressing issues. I welcome everyone who wants to bring solutions to the table and help fix our city. Learn more at engardio.com.
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Dear Mr. Engardio, I went back to the August 5, 2023 article “Supervisors Pass Ordinance to Increase Housing Options and Density” and could not find one reference that you make concerning promoting generational wealth the cause of building one or two ADU’s under your ordinance. My article does not state that we are being required, forced, or even mandated to build ADU’s. My article addresses the consequences once those units/rooms are built. Of course it’s voluntary if you can afford to build ADU’s to your parcel of land. But let’s not get distracted by this sort of rhetoric. The article dated Aug. 2023 quotes Dean Preston as saying “What I appreciate in this legislation is the attempt of adding a bunch of units on the west side and gain some of the community benefits, particularly through having the added units as rent controlled units. And the Amendments strengthening some of the anti displacement language and tenant protections.”
Please explain why its Ok to have our friends, family, or neighbors stay on our property for only half a year? Why not the whole year or maybe two? It’s because one will not be taxed if the unit is vacant for that long but after 182 days (half the year), the vacancy tax kicks in with restrictions on who is considered a legitimate tenant. I think constructive dialogue would be productive if the truth was spoken with relevant facts. It’s important to address the fundamental issues of the consequences that people will face IF they build these units.
It’s unfortunate that the president of the SFAA only statement is that “We don’t know her” instead of addressing some of these serious issues facing property owners that are her members. Off hand, she may not know me. I attend important public hearings and support their stance in the public comment forum promoting their dialogue which is handed to me from her staff. I never said I was a member for either organization. Sadly enough I am only one of three people who attended the last hearing where you voted YES to Peskin’s new ordinance not allowing property owner/landlord to pass through General Bond infrastructure measures to tenants. Another example of property owners shouldering the cost for everything in the City.
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I am an architect practicing in San Francisco and was disappointed to find this article in the Richmond Review. The Planning code provides several options for adding dwelling units above density and it would be more useful for the public to know their options, and the various pros and cons of each program. To begin with, adding a “dwelling unit” vs. adding an “accessory dwelling unit” are different actions with different parameters. Section 249.94 (Family Housing Opportunity SUD) and Section 207 (ADU program) are different programs with different parameters. So, while it is true that adding an ADU turns your single family home into a 2-unit building, it is not always true that this unit is rent-controlled. Most ADU projects that come to our office can be added through the State Program and these are not required to be rent controlled. Nor are you required to report who lives there. And, while it is true that your property is reassessed if you add a unit, this is also true for any type of remodeling or addition work that isn’t just a pure repair (like roof replacement). So that point in and of itself is not really relevant.
I don’t think that any one of these programs will solve the housing problem on its own. But, I do believe that having a variety of options gives us a chance. I am appreciative that the Board of Sups, Planning & DBI (and the State) are helping move San Francisco towards solutions.
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I understand why a project architect who designs and manages all phases of remodels, additions and new construction for residential customers (i.e. Camile She), you stand to loose a chunk of change not to mention business if people realized what they were getting into should they decide to add and build additional/accessory dwelling units on the parcel of land they own whether it be a single family resident or two family dwelling which the sunset/richmond districts are zoned. The information is available for people to decide for themselves. It is under SFPLANNING.ORG and into the search field enter Accessory Dwelling Unit. There you will find that under the Local Program keeping in mind the Single Family (top bar) where you will find Draft of Regulatory Agreement which states “If the subject lot includes rental unit(s) (as defined by Section 37.2 (r) of the Administration Code, and planning code waivers are granted, the new unit(s) will be subject to rent control. Generally speaking, these existing buildings are already subject to rent control. A Regulatory Agreement will be created adding the new ADU(s) under rent control.” And it continues ” This program offers waivers, or exceptions to some Planning Code requirements for ADU(s), added to existing buildings. When the waivers are granted, a Costa Hawkins “Regulatory Agreement” maybe be required, which subjects the ADU(s) to rent control. Taking into account Camilles statement if it comes through the “STATE” Program so it won’t be subject to rent control-truth be told, I doubt if there is any “grandfathering in” of any unit built locally for the life of the building or owner under state “program.” Please look into your options and the consequences before proceeding. And make sure you look specifically into the Costa Hawkiins “Regulatory Agreement.”
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