upheld the project, finding that was contexture with the district. very modest three single-family dwellings. no variances were required for any of the work propose. after the commission approved it, we approved the subdivision. the subdivision was appealed to the board of supervisors. the board of supervisors unanimously upheld the subdivision. building permit was subsequently issued an appeal to the board of appeals. it was scheduled at the beginning of january. a few days prior to the appeal, the ceqa appeal was filed and heard by the board of supervisors in march. that was unanimously upheld by the board of supervisors. so we went to the hearing last night at the board of appeals, and they unanimously upheld the commission's decision, said that is where we are with that project. i think most of the appeal options are exhausted at this point, although they can request a re-hearing within five days. the final item is a very it's

decision that i heard earlier this year. it was a lot line adjustment, not a subdivision. it is a unique situation where we had two single-family dwellings, and two small lots, and they actually straddle the property line. so what this project did was to make it such that each of the single family dwellings would be on their own separate properties. we felt that the fact that the buildings troubled property lines was a hardship and justifiable and require a very it's because one of the loss was slightly shrunken by this. at the hearing, we heard testimony from a concerned neighbor about the project. they were worried about future developments on the lot. there was no development proposed here. possibly the line adjustment. so we put a condition of their that future development would require a variance, and this is a pretty exceptional condition. we do not typically placed back the strict.

it was appealed by a different neighbor who wanted the condition changed to new construction at all. the board heard this matter last night and unanimously of health the variance with the existing condition. commissioner borden: can you explain -- i'm talking about the los palmos case now. whether the time limits for the different pills. it seems like this project has had many bites at the apple and the appellate process. sounds like they went to the board on something else -- can you explain that? >> the building permit was first filed and heard here. there was associated subdivisions. subdivisions are appealable to the board of supervisors. i believe they have 30 days. so they went on the subdivision, and then the building permit was issued. i believe it has been practice of the city attorney to allow ceqa appeals to be filed up

until the final administrative action of the city, which is usually the board of appeals hearing. so they waited until the very last minute. they actually filed the appeal right before the board of appeals hearing was going to be held in january. commissioner borden: so there is no time limit generally? >> to clarify, the time limit is on negdex. the eir has a time limit. >> i do not understand why a sequel appeal -- a ceqa appeal would not have a time limit. commissioner olague: thank you, commissioners. we can now move on to your general public, a category that has a time limit of 50 minutes. members -- >> thank you, commissioners.

we can now move on to your general public comment category that has a time limit of 15 minutes. for this category, each member of the public may i address you for up to three minutes, keeping in mind that the entire category has a 15-minute time limit. i have no speaker cries. commissioner olague: is there any general public comment? seeing none, general public comment is closed. >> thank you. commissioners, we can now start your regular calendar with items six, business and informational presentation on the annual limit program. >> commissioners, good afternoon. planning departments that. we are here this afternoon to give you a brief update on your annual limit program, bring you up to speed with where the

program is today. in response to your questions, the item is informational only. no action is required of you today. madam secretary, when you have a moment, the overhead would be fantastic. in terms of the -- thank you -- in terms of how we would like to structure the next 10 minutes or so, we're going to give you a bit of background, talk about the process and a few notable projects and will want to the sponsors of two particular projects. we first need to answer the question of what is the annual program. this is something that does live in the planning code and is that -- designed to meter of office development to help smooth out the typical real-estate cycles and avoid overproduction of office space and associated possible impact. it does apply throughout the city. this is not limited to just the downtown area, and it does apply

to projects of more than 25,000 gross square feet of office space. the annual limit works by maintaining a pool of office space that the commission can then draw from to make allocations to particular project. each year on october 17, that pool is replenished. we're just shy of 1 million square feet of additional space. 75,000 square feet of that are set aside for use in small office projects. we call this a small cap, kamen -- and it can be used for small projects between 25,000 or 50,000 square feet of space. the remainder of the annual replenishment goes into the large cap, which is projects with more than 50,000 square feet of office space. one thing of particular note here is that the unused square footage in both the small and

large caps -- this carries over from year to year. so in bad economic times, there can be a substantial accumulation of unallocated office space. quick word about how we got here, the history of the annual limit, the program did come to be as a result of the department's 1985 downtown plan. at the time, it did apply only to projects with more than 50,000 square feet. it also had a specific expiration date just a couple of years after it came into effect. prop m, which can about the following year and passed with 51% of the vote, lowered the floor to its current 25,000 square feet, and it also very importantly did away with the sunset provision. also of particular note here, like anything enacted by the voters, it cannot be changed except by a new vote of the

people. this slide was a fun one for me to put together. i'm not even sure it is legible, but what this is is a series of arguments that appeared in the 1986 voter pamphlet, arguments in favor of proposition m. this is sort of -- well, these may be familiar to you. these arguments speak to closing loopholes and limiting the potential for abuse, addressing overcrowding and impact to transit, lack of parking, high rent, stopping the loss of affordable housing, supporting small businesses and neighborhoods, dealing with evictions and displacement, and lastly, preventing the threat of manhattanization. let's move on to the next trunk of the presentation. the actual process involved in an office allocation. commissioners, right now, office allocations are made on a first- come, first-served basis.

you come into the apartment and file your application. we review it, and it comes before you for your approval, should you choose to make that. in years where demand outstrips supply -- and of course, we have not had many of these of late, the commission holds a hearing, what we call a beauty contest, in which the limits where footage in the cap is focused on the large cap, is allocated only to the very best product. you see almost every allocation, commissions, and the annual limit. they appear on your agenda, and the only exceptions you can see on slide right now deal with state and federal office buildings, redevelopment project area buildings, port jurisdiction buildings, and also city office buildings. these are projects where we do not hold a hearing, but with the exception of city office buildings, where we do deduct the square footage out of the

cap. once a project receives an allocation, there is an 18-month timeline, during which construction must commence. in each of the recent recessions, the commission has articulated policies on this time line. in 2002, you recognized the bad economy and instructed us to monitor but not revoke active projects. again in 2009, you recognized the horrific economy, and while you reaffirmed the earlier 2002 policy, you did also state that projects which were not active should in fact be revoked. the next slide is our last on the process out of the house. here is where the annual limit program stands today. we have about 1.2 million square feet available in the small cap. in the review pipeline, the small private department, we know about 250,000 square feet

that will be seeking allocations. this includes both projects that have already filed for an allocation and those that have yet to file. on the lower half of your screen, the large cap, we have 2.9 million square feet of office space available for allocation. the only application we have on file to use any of that space is for a 260,000 square foot office building for cpmc's proposed van ness avenue campus. we are aware of an additional 2.8 million square feet projects associated with the transbay development that have not formally requested a location yet but are in the pipeline. to sum this up, as of today, 4.1 million gross square feet total in both the small and large cap awaiting allocation. looking forward, looking ahead, even if all the projects in both the small and large caps that

are currently on file were to magically be approved today, there would still be a huge amount of available square footage remaining. more than 1 million square feet for the small-cap and about 2.6 million for the large cap. looking even further down the road, and assuming all of the pre-application cases are approved, and this probably will not happen until at the very earliest, the next allocation cycle, we do still see notable excess capacity. over 1 million square feet would remain in the small cap, and 700,000 square feet in a large. let's move now to the last part of your update today, particular projects of note. i will zoom through these with as much speed as possible, so if you are curious and would like more information, please just say so. despite the current situation with the economy, commissioners, in the past year-and-a-half or

so, the city has approved more than 2 million square feet of office space. as you can see, this project are really scattered throughout the northeast part of the city, frankly, and beyond. treasure island, mission bay, south of market, the downtown core. in your most recent resolution relating to the annual limit, you asked that we as a staff follow-up on a handful of specific projects that appeared to be enacted, and look at those with an eye towards holding. here are two of them. market street would have constructed a new office space at fort st. behind the old navy. this project had an 18-month time when that concluded in 2002. we reached out to the project sponsor who confirmed that the project is no longer active, and

as such, the project has been relinquished. 120 howard street, which is the vertical addition to an office building on spear, is now actually under construction. so that is now off of your revocation radar. here are another two projects of particular note, both in the transbay area, both very old allocations, and both which you will hear about. both were called out in 2009 as being an active, and as far as we can tell, 48, and 525 howard continue to remain inactive. putting aside the projects we have just mentioned, these projects are the only office allocations that are in excess of their 18-month timeline. for the most part, they are not substantially over that limit, but unless they are questioning

with respect to their conditions of approval in the planning could. the department has received updates from some project sponsors, indicating that despite being slowed by the current state of the economy, both projects are in fact moving forward. barry last slide here -- 350 bush, 500 kind -- these are two connected project located between montgomery and current street. together, they account for about 400,000 gross square feet of office space. as requested in the commission's most recent policy statement, we will hear an informational update from the project sponsor as part of this item in just a minute. so, commissioners, that is where your annual limit program stands. thank you for allowing me to take up so much of your time. of course, happy to answer some of your questions now, or if you would rather, we could wait to hear from the project's sponsors first. commissioner olague: i think we

can hear from the project at this time. i cannot see any names of at the moment. does it have to be called? i think we will hear from the project sponsors at this time. >> good afternoon. we represent lincoln properties, who since september 2007, is the owner of an untitled site. they go together. fairly complicated situation. for our purposes, i think it is important to note that the activity that has occurred, which is, i think, what you are interested in -- commissioner olague: was called into the record? >> [inaudible] >> as i understand it, this

particular item as part of your informational presentation. separate line items. commissioner olague: yes, that is fine. >> as i mentioned, the property was acquired as an untitled side by lincoln properties and its partner in september 2007. lincoln is a developer. builds buildings. they bought and tired site. the market, as you recall, was roaring around pretty well at the end of 2007. immediately after that, my firm was brought on. we paid the affordable housing fees of $5,153,000 in change and paid the affordable housing fees on pine street, paid back in september right after buying the properties with the intent to

get going and build those properties out. we acquired all of the remaining tbr that needed to be required -- acquired, and importantly, from my point of view, although the entitlements were complete, the deal with the recreation and park commission to allow for the expansion of what is st. mary's park, which is part of the complicated way in which these two projects were related, have not been completed and turned out to be an extraordinary effort, but we undertook to engage with rec and park and the board of supervisors that we got a deal done to expand st. mary's park at 500 pine street, all with the idea that soon after that, we would be able to proceed to build those projects. site permits were submitted, and they have been submitted or submitted after we acquired, but not cold, and heller was engaged

to complete the construction drawings. then the market tanked, for lack of a better term. nobody was building anything. by 2008, the middle of 2008, it was obvious that we were not going to be able to proceed to build the building at the time, even if we had wanted to. there was no financing available, and attendance, and no reason to proceed. nevertheless, since that date, we pursued actively and seriously the gsa lease that you are probably aware of that recently -- last week, i think, landed in their existing space, which is the hines space. there are hundreds of millions of dollars spent in the architectural, and in the first round of the gsa lease, we were the chosen building. there was a protest, they backed off. until last week, we thought we

had a chance to win that lease, which would have gotten a building built, in my view, and it would have been good for the san francisco economy. i am sure that you are also aware -- could i get the overhead? that is the site, 350 bush. which if you drive by, now sits out there vacant. it requires support, care, it requires us to continue to take care of that landmark asset until we can build the building, which is here, which will support that exchange building for the ages. so we have been continuing to do that and will continue to do that until we can finally build this building. the lastly, john, who is the

lincoln property representative is here and can answer questions, but we have been pursuing all kinds of resources out in the absence of institutional financing in the u.s. i have something that is a little off topic, but i thought i would show it to you anyway because it is something our office generated. it is an internal chart that shows you the dates of the receipts of the prop m allocation against the dates that construction actually started, and then the status of the buildings that were built. all of these buildings have actually been built. but 560 mission, and i credit hines with this, they actually got the entitlement and built the building in the same cycle, and they are the only ones on that list that were able to do that.

the rest of them range from 17 months to 98 months. president olague: thank you. >> you are welcome. president olague: opening up for public comment at this time. >> sue hester, i appreciate the staff report, and i appreciate the recognition that one of the effects of prop m was to even out the boom bust cycles. that is one of the problems in san francisco. we have a boom or bust economy. we had it in housing, we had in the early 1980's when sfrg was

forcing this on a very unwilling planning department. that is interesting to hear these updates. i would be interested in getting a copy of that chart you were just shown. but at some point, we have to recognize that we still have office development problems. we have shifted the location. when the downtown plan was it thought through all those many years, the guiding downtown buildings, the assumption was we were going to shift the office development segment to the immediate area south of market. when i say immediate, i mean the market to howard street. now if you look at where the offices are being developed, particularly the smaller buildings, their way far away from market street, -- they are

way far away from market street. bart was the rationale. the increased capacity downtown and the increased capacity for the office development was bart. it was muni, but there was a bigot recognition that the work force was going to live outside -- but there was a big recognition that the work force was going to live outside of san francisco. we have incredible development, way out of the bart service and wait out of muni, and we have not solve the transit and of this. as the dot com boom still happen did north mission, looked at the addresses on small-cap products. look at the addresses deep south

of market. we don't have a transit system that functions at the level the city was making assumptions when we allocated office buildings. we're going to get people out of cars, and that part has fallen by the wayside. that is the responsibility of the planning department to talk about. you need to say, hey, there are a lot of people coming out, but you cannot get to the t east/west, because there is no transit sections. thank you. president olague: is there any additional public comment on this item? seeing none, public, disclosed. commissioner antonini? commissioner antonini: remember the 1980's and remember prop m, and while it did many things that are beneficial, the one that really got the attention was the office space allocation. there are some who oppose the

argument that propped m, the office space allocation, killed the growth in the financial district that had been quite robust at that time. other people say, well, the economic cycle is what really terminated the growth at that time. it was not the limit on how much you could build per year. however, there was a limit, because we were building a lot per year. at the whole theory behind the bay area, or we finally did regional planning, we said downtown office space should be in san francisco. we built the bart system, and this was a contributor to the suburbanization of a lot of office space. when the cycle came back and they began building office space, they build a lot of office space in the east bay and other places that are not accessible to transit as is downtown san francisco, and it

has certainly caused a lot of sprawl and bad things. there was a desire for broader floor plates and other things that we probably could have addressed in some of our areas of the city. i am not saying this was the wrong thing, but there is a feeling that it did have a negative effect on growth at that time. as you know, there is a special provision and ring can't fill -- in rincon hill which only get 12 months, which is very short, unrealistically so. i think 18 months does not make a lot of sense based on what we have seen. most of the projects, by the time to go through the entitlement process, unfortunately the economic cycles have passed and it is not until the next cycle that it's

built. there could be some thought for that time to be longer, or if we don't increase that time, we have to take that into consideration. if there is active work being done by the sponsors. the final thing was, as we see, there is lots and lots of available office space presently. even though we are going to consider some that have not move forward at all, i don't see any harm with those as they come forward. but if there is any activity at all or any desire at all for private sponsors to move forward in the future, we should continue these entitlements in most instances. finally, as we noticed on that chart that was presented, a very high percentage of what was approved was actually built. it was not built immediately, but over the course of 10 years,

most of it was built. a small percentage of projects did not get built. commissioner moore: i appreciate the update. i think that clearly demonstrates that prop m and a good downtown plan is a tool to keep the city viable, free of vacancies, and always pushing for development and the movement when necessary. i also believe the discussion and explanation of the entitlements keep us fresh, allow us to monitor developments, but continued to keep the backlog of space available, updated, and plentiful. the question i would have is, when we are reusing buildings, is that an amount of office space that will be counted against this, or is