Did You Know? San Francisco's Soft Story Retrofit Program
A Guide to the City’s Requirements for Seismically Sound Apartment Buildings
Do you have a notice of violation that requires you to seismically retrofit your property?
What is the Mandatory Soft Story Program?
San Francisco's Mandatory Soft Story Program (MSSP) is rooted in the city's commitment to enhancing structural safety and preparedness. Following the 1989 Loma Prieta and the 1994 Northridge earthquakes that caused significant damage to wood frame buildings, San Francisco began to study proactive measures to address potential vulnerabilities inherent in buildings featuring a soft story condition—essentially, those with a fragile first-story structure. As a result, the City of San Francisco unveiled a list of properties deemed susceptible to substantial seismic damage in 2013. Subsequently, property owners of these identified structures were mandated to undertake seismic retrofitting by specific deadlines, varying according to the severity of each property’s structural deficiencies.
How does the City of San Francisco Determine What Properties Need to be Seismically Retrofitted Under the Soft Story Retrofit Ordinance?
The City of San Francisco determined that soft story retrofit work must be completed on wood-frame buildings with 5 or more units, 2 or more stories, and a 'soft' or 'weak' story. A soft/weak story is one where the ground floor has windows, openings, large garage doors, etc. that makes it more prone to damage in an earthquake. The Department of Building Inspection (DBI) screened thousands of buildings in San Francisco using permit data to identify soft-story buildings potentially at risk.
Buildings smaller than 5 units are not subject to mandatory seismic retrofitting.
How can a Landlord Determine if Their Property is on the Soft Story List?
The Department of Building Inspection has a map of all properties identified as these at-risk buildings. A landlord can access the following link to determine if their property is on the Mandatory Soft Story Program list. The list also shows what properties have completed soft story work - https://data.sfgov.org/Housing-and-Buildings/Map-of-Soft-Story-Properties/jwdp-cqyc
What does a Landlord Need to Do if They Own a Property on the Mandatory Soft Story Program List?
Once a landlord receives notice that their property is part of the mandatory soft story retrofit program, they must follow a structured sequence of actions:
Noticing and Screening: The city issues notices to applicable wood frame buildings. Building owners must complete a screening form, assessed by a licensed design professional, even if the property has been retrofitted before. Depending on the screening results, buildings can opt-out if they meet specific criteria.
Permits for Work: Buildings that are screened into the program need to obtain permits for retrofit work based on their assigned compliance tier. There are four tiers, each having specific requirements and deadlines. The DBI Soft Story Mandatory Retrofit Program Database provides details about permit application procedures. Engaging appropriate engineering guidelines and design professionals is crucial.
Completion of Work: Retrofit work must be fully completed and approved, culminating in the issuance of a Certificate of Final Completion (CFC) by the specified compliance tier deadline.
How Much Does Soft Story Retrofitting Typically Cost?
Costs vary greatly depending on the size and seismic retrofit requirements for a given property. According to SPUR (the San Francisco Bay Area Planning and Urban Research Association), the average cost of soft story retrofit in San Francisco is $104,000 for a 5-14 unit building and $158,500 for a 15-20 unit building.
What Can Landlords Do to Reduce the Costs/Financial Burden of Soft Story Retrofitting?
The City offers a public financing solution through AllianceNRG/CounterpointeSRE to aid property owners in making affordable soft story retrofit enhancements. This PACE Financing initiative, which doesn't involve traditional loans, adds a non-ad valorem assessment to property taxes, supporting a wide range of risk mitigation, energy efficiency, and conservation improvements. The CounterpointeSRE Program offers loans that mature from 5 years up to 30 years with fixed interest rates and no balloon payments.
Landlords may pass on 100% of financing, including interest, to tenants in the form of a passthrough amortized over 20 years.
When is the Deadline to Comply with the Mandatory Soft Story Program?
The deadline to complete permits and retrofits in accordance with the Soft Story Ordinance has passed for all compliance tiers.
What Happens if a Landlord Misses Soft Story Retrofit Deadlines?
Failure to comply with the program leads to San Francisco Building Code violations. The Department of Building Inspection (DBI) administers fines, notices, and placarding for non-compliant buildings. Those found in violation are placarded with an "Earthquake Warning" notice to inform the building's occupants and the public about associated risks.
In the most extreme cases of non-compliance, a property owner could receive an order to address the issue, and this order may stop them from renting, selling, or using the property as loan collateral. They may also face legal action from the city attorney's office.
What are Some Other Issues Related to the Soft Story Ordinance that a Landlord Should be Aware of?
If a tenant's lease specifies a certain value for parking, the tenant should receive that exact amount as compensation for the parking they've lost. In cases where the lease doesn't mention a specific parking value, the tenant is still eligible for compensation. They will be given money equivalent to the cost of finding a replacement for the lost parking, but this replacement cost cannot exceed 15% of the tenant's monthly base rent.
Mandatory seismic retrofits of properties with commercial units may trigger the need for disabled access improvements in commercial areas. A couple of key points to remember: (1) Residential areas in buildings constructed before March 13, 1991, are not required to comply; (2) For private buildings with ground-floor commercial spaces, if the construction costs fall below $139,934.96 annually, San Francisco Building Code, Section 1134B mandates that 20% of these costs must be allocated for disabled access improvements; (3) San Francisco Building Code, Section 1134B allows for Unreasonable Hardship Requests (UHR) to be approved.
If the landlord needs to do major earthquake retrofit work on a rental unit that would make it unsafe to live in, they might need the tenant to move out temporarily. This is called a temporary capital improvement (TCI) eviction. The landlord has to get permits for the work and, if it takes more than 3 months, they need permission from the Rent Board. They then have to give the tenant notice to move out (usually 60 days), and if the tenant doesn't leave, the landlord has to go through a formal eviction process.
But after the work is done, the tenant has the right to move back in, according to Rent Board Rule 12.16. This right even survives an eviction in some cases. The landlord also needs to pay relocation assistance to the displaced tenant, which could be around $6,000 per tenant (more for disabled, elderly, or families with children), or a daily rate if the work takes less than 20 days.
If the building is designated as a historic landmark or located in a historic district, retrofitting might be subject to additional regulations and approvals. Landlords need to be aware of any historic preservation considerations that could affect the retrofitting process.
Retrofitting work could impact a building's insurability or affect liability coverage. Landlords should consult with their insurance provider to ensure they are adequately covered during and after the retrofitting process.
Sources:
https://www.structuremag.org/?p=14310
https://sfdbi.org/softstory
https://sfdbi.org/soft-story-faq
http://costa-hawkins.com/mandatory-seismic-retrofit-work/
https://www.spur.org/news/2023-08-07/multifamily-seismic-retrofit-program-secures-15-million-state-more-investment
Follow LL CRE on LinkedIn to Receive the News, Listings, and Guides on Commercial Real Estate
LL CRE provides commercial real estate investment services for the San Francisco Bay Area. Are you looking to sell your property? Want to know the value of your assets in today’s market?
Take advantage of our 60+ years of market knowledge and obtain a free broker opinion of value from us.