Supervisors Will Consider Legalizing San Francisco In-Law Units

San Francisco supervisors have begun considering a proposal that would allow landlords to voluntarily legalize in-law units, or secondary apartments, that make up a shadow housing market where some of the city's most vulnerable tenants live, sometimes in substandard conditions.

The measure by Supervisor David Chiu is an effort to preserve one of the city’s largest stocks of affordable housing. City officials estimate there are up to 40,000 in-laws, often in the garages or basements of single-family homes, which make up about 10 percent of the housing supply.

A public hearing on the proposal Monday before the supervisors' Land Use and Economic Committee was dominated by questions about how it would affect property owners, who would pay for potentially expensive upgrades to bring the units up to code, and complaints from residents in the city’s western neighborhoods who fear increased density.

As we reported in December, low-income families and seniors, including many recent immigrants, are often in-law tenants. Some don’t have signed leases and can be kicked out without any repercussions for landlords, who can easily put units back on the market and raise the rent. Some units lack basics, such as kitchens and stoves.

The measure, according to Chiu, could bring thousands of illegal units up to code, protect tenants and “help homeowners make a long-term investment in affordable housing.” Landlords would be allowed to legalize one unit per lot, which would be rent controlled. It would prohibit them from legalizing if they have issued a no-fault eviction within 10 years. After a unit is upgraded, a property owner would be prohibited from converting it into a condo for sale.

At the hearing, some property owners testified that landlords shouldn’t have to shoulder the entire costs of bringing a unit up to code. Under the legislation, those costs could not be passed on to tenants, whom Chiu said are often struggling.

But some homeowners are elderly and “really depend on the rent from the tenants, who tend to be younger and better employed, to keep up the property,” real estate agent Dena Aslanian-Williams testified. “Not letting that homeowner pass on the cost of legalizing that unit is punitive and it’s actually regressive politics because it’s punishing the elderly homeowner.”

Chiu countered that sort of landlord is exactly the kind of homeowner the legislation is meant to target.

“If DBI (Department of Building Inspection) were to send out an inspector, they could shut that down and that elderly homeowner wouldn’t have access to that rent income,” said Chiu. “I’m trying to help protect the status of the tenant to live there, but also the ability for that elderly homeowner to have a legal stream of rental income so they can live in your neighborhood.”

Chiu said the measure had been carefully crafted after more than a year of input from tenants rights groups, property owners, neighborhood groups and others. It passed the San Francisco Planning Commission on a 6-1 vote.

For decades, San Francisco officials have tried but failed to pass legislation addressing in-law units, but with the city’s worsening economic inequality and housing displacement, Chiu argues the time is right to finally tackle the problem.

"We really tried to strike a balance here by making this voluntary. We’re allowing owners that have the ability to make the life safety changes that they need to," he said.

Some homeowners who live in the city's more suburban neighborhoods were worried the measure would change zoning codes, allowing more density in areas with mostly single-family homes. They also complained the measure would not allow a homeowner to convert back to a single-family home after an in-law is legalized.

“How do you prevent the proliferation of rental units in our neighborhoods, cherished for friendly family dwellings and the safe community it fosters from known neighbors, who have a stake in the property as well as respect for the values of the district?" said resident George Wood.

Chiu has stressed the legislation covers only existing units. "The unit must have been built prior to this year, so we do not encourage homeowners to add more units without going through the required planning and building process,” Chiu wrote in a San Francisco Examiner op-ed earlier this year. “The legalization program includes a pre-screening phase to allow a homeowner to gather information about the legalization process without fear of automatic enforcement.”

While Supervisor Jane Kim agreed the legislation is important, she was concerned about how many landlords would actually take advantage of the program. She questioned what incentive there would be for homeowners to legalize.  “It’s unclear to me what impact this legislation is going to have," she said.

“The idea is to take care of a good percentage of secondary units that really need very minimal changes done in order to be legalized," Omar Calimbas of the Asian Law Caucus responded. His organization was part of a working group that helped fashion the measure.

Chiu said the program would be reevaluated every six months, and suggested that in a few years officials could consider whether the city or other lenders might help homeowners pay for the costs of upgrading.

Tim Colen, executive director of the San Francisco Housing Action Coalition, said the problem has persisted for far too long and urged supervisors to pass the legislation.

“Maybe it only has a modest effect, and there’s not going to be a flood of people running to the front to have them legalized, but from the city’s perspective, I don’t understand what interest is served by keeping something illegal and having a rule that’s widely flouted or ignored, " Colen said. "I think this is a very sensible step forward in the right direction.”

Unless there are complaints, city building inspectors don’t go after illegal units. Every year the department takes about 100 units off the market for code violations.

At the end of the hearing Monday, the committee voted to move the legislation to the full Board of Supervisors without a recommendation of support.  Supervisors Kim and Malia Cohen said they still have several questions, while Supervisor Scott Wiener said he supported it. The board is expected to consider it at its meeting next Tuesday.