Board affirms Planning Department’s Class 1 CEQA exemption for 435–437 Potrero Avenue despite neighbors’ generator, air-quality concerns

The San Francisco Board of Supervisors on Tuesday affirmed a Planning Department Class 1 categorical exemption for a proposed internet co-location facility at 435–437 Potrero Avenue, rejecting an appeal from nearby residents who said the project could worsen air quality and noise in an already impacted neighborhood.

At a three-hour hearing, appellants and neighbors described previous diesel-generator operations at the site and presented soot samples, noise complaints and medical letters they said show the generator emitted harmful particulates when the building last operated as a telecommunications hub. “The ill effects on health and the environment are known,” appellant Micah Ringle told the board, and he argued the project represents a change from the site’s former utility use to a commercial server/data center that would have different emissions and operating patterns.

The Planning Department’s environmental review officer, Sarah Jones, said the department considered the facility an existing use eligible for legitimization under the Eastern Neighborhoods program and that the generator is part of the environmental baseline. “The effects of the 400‑kilowatt generator on the existing facility are part of the environmental baseline,” Jones said, and she noted the Bay Area Air Quality Management District (BAAQMD) regulates backup diesel generators through its permitting process.

Attorney David Silverman, representing the project sponsor, said the application involves a change of operator rather than an expansion. The sponsor, Arman Khalili, said the project will replace older rooftop equipment, add more efficient cooling and install filtration on the backup generator. “We will be installing filters on the generator to reduce the amount of soot,” Khalili told supervisors, adding the generator is intended only for emergency backup, with on‑site batteries to cover short surges.

Supervisors heard more than a dozen public speakers. Neighbors described soot accumulations at windowsills and recalled continuous noise, vibration and black smoke when the prior tenant ran the generator. A physician who lives nearby urged review under CEQA; other residents said the neighborhood already faces significant air-pollution burdens from nearby traffic and industrial uses.

Board members pressed planners and the sponsor on mitigations. Planning staff said the Planning Commission added conditions requiring noise and vibration controls, equipment replacement and efforts to reduce emissions from the backup generator; Mr. Teague, the department’s Assistant Zoning Administrator, confirmed conditions addressed an older generator model and rooftop HVAC vibration. Sponsor representatives reiterated a plan to install a diesel particulate filter, replace HVAC equipment and minimize generator test hours; Silverman said testing would be significantly less than the 20 hours per year that BAAQMD permits for an emergency generator.

After discussion Supervisor Cohen moved to affirm the Planning Commission’s Class 1 exemption; Supervisor Kim seconded. The board took a roll‑call vote and recorded 11 ayes. The motion affirms the Planning Department’s determination and closes the CEQA appeal. The board did not rescind the Planning Commission’s conditional‑use approval; instead, staff and the sponsor will implement the conditions imposed by the commission and the sponsor’s additional commitments.

Board members and neighbors said they will watch compliance. “We will be paying attention and … if you are behaving badly, we’ll come after you and get you,” Supervisor Cohen said, addressing the sponsor.

The hearing transcript and submissions show the dispute largely hinged on whether the proposed operation is an existing, legitimized internet service exchange (eligible for a Class 1 exemption) or a new/expanded use that would require focused environmental review for local stationary emissions and cumulative impacts. The board’s action upheld the department’s legal interpretation and relied in part on the existence of BAAQMD permitting for the generator and on the conditions imposed by the Planning Commission.

Next steps: the sponsor may proceed under the conditional‑use approval; neighbors and supervisors indicated they will monitor the promised equipment upgrades, filter installation and limits on generator testing as enforced through the Planning Department and BAAQMD permits.