Planning Commission approves merger of two units at 765 Market Street after debate over affordability threshold

At a Planning Commission meeting, the commission voted 6–1 to approve a proposal to merge two condominium units (Units 22A and 22B) at 765 Market Street, a decision that will remove one dwelling unit from a 139-unit building.

Staff recommended disapproval, saying the smaller unit did not meet the planning code’s administrative threshold for being 'demonstrably not affordable' and that the merger would reduce the building’s net unit count, contrary to Mayor Lee’s Executive Directive 13.01 and Planning Code Section 3.17. Planning Department staff told the commission the administrative threshold is calculated as the 80th percentile of single-family home sales and was set at approximately $1,506,000, a figure used only to decide whether a merger qualifies for administrative approval.

Paul Hajdu, the project architect representing owner Grigori Zikon, urged the commission to consider other factors. He noted that Unit 22B carries homeowner association (HOA) fees of over $1,700 per month and that the owner’s tax assessment dated June 2013 listed a value of $1,830,000, higher than recent appraisals. “It’s a bit confusing and I think we’d all like some clarity on that,” Hajdu said, arguing appraisal methodology and comparability between small condos and freestanding single-family homes are not an apples-to-apples comparison.

Commissioners debated those points. Staff explained the code’s numeric threshold is intended to be a simple, replicable bar for administrative approval and “does not mean that any unit just below that number is affordable,” a staff member said. Several commissioners said the 4 Seasons condominium tower where the units are located is a high-end building and that the merger did not reflect a loss of affordable housing in context. Commissioner Moore said he wanted clearer metrics from the mayor’s task force before ruling on similar cases and voted against approval.

The motion on the floor — described in the record as not taking administrative action and approving the project — passed on a roll-call vote, 6–1, with Commissioner Moore voting No. Commissioners voting Aye were Antonini, Borden, Hillis, Sugaya, Fong and President Wu.

Votes at a glance from the same meeting included continuances of other items and unanimous approvals of consent items and a conditional-use permit for a hair salon at 3571 Sacramento Street (see separate item). The commission noted it will revisit administrative-review criteria in a scheduled discussion on May 15 to consider which mergers should be administratively approved in the future.

The commission’s approval allows the owner to proceed with the merger subject to any conditions included in the decision; the file will be processed according to Planning Department procedures.