Is your building prepared for the next earthquake?
San Francisco has some of the most stringent seismic safety regulations in the United States, and investors are required to comply with one of the most consequential regulations; the Soft Story Retrofit Program, formally known as the Mandatory Soft Story Program (MSSP).
Originally adopted in 2013 after lessons learned from the 1989 Loma Prieta earthquake, the program requires many older multi-unit residential buildings to undergo structural upgrades that reduce the risk of collapse during earthquakes.
For landlords and investors, these retrofits are not just a compliance issue. They influence:
Understanding how the program affects operations is essential for anyone who owns or is considering purchasing rental property in San Francisco.
As
local property management and real estate experts, we’ve put together a guide that explains how the soft story program works, which buildings are affected, and how owners should adjust their management strategies to prepare for retrofits and maintain compliant properties.
| Your Takeaways: |
|---|
| - Soft story buildings historically have ground floors that are structurally weak. |
| - Most buildings that require extra inspections and compliances are wood, were built before 1978, and have a soft, open, or weak ground floor. |
| - Engineering solutions are required to meet retrofit standards. |
| - Costs vary widely depending on building size and engineering needs and financing options are available through the city and various lenders. |
A soft story building has a structurally weak ground floor, typically because it has large openings like garages, parking, or open commercial space at street level, with heavier residential floors above. These buildings perform poorly in earthquakes because the weak ground floor can collapse, causing the upper floors to "pancake" down. The 1989 Loma Prieta earthquake destroyed thousands of such units in San Francisco.
Not every building falls under the soft story program. The MSSP specifically targets structures that meet several criteria. Most affected buildings are:
Many properties in neighborhoods such as the Mission District, Richmond, Sunset, and Marina fall into this category. The city identified eligible properties and divided them into compliance tiers based on risk factors such as:
Property owners should verify their building status through the San Francisco Department of Building Inspection (DBI) soft story database. Even if a building has already completed retrofit work, maintaining documentation is essential when selling or refinancing the property.
The goal of the retrofit is to strengthen the ground floor so it can resist lateral forces during an earthquake.
Typical engineering solutions include:
The exact retrofit design depends on:
Most retrofit projects require structural engineering plans, permits, inspections, and contractor work.
Soft story retrofit expenses vary widely depending on building size and structural complexity. Recent estimates we can share from the California Residential Mitigation Program look like this:
Additional costs may include:
Because of San Francisco’s high labor and permitting costs, retrofit budgets should include at least a 10–20% contingency.
Recognizing the financial burden of retrofits, the city created several financing and cost-recovery mechanisms.
1.Property-Assessed Clean Energy (PACE) Financing
PACE loans allow owners to finance retrofit work through property tax assessments over long repayment periods, sometimes up to 20 years.
2.Bank Loans and Lines of Credit
Many lenders offer seismic retrofit loans designed specifically for MSSP compliance.
3.Capital Improvement Pass-Through
Under San Francisco's rent control laws, landlords can petition the Rent Board to pass through a portion of retrofit costs to tenants in rent-controlled units. The rules are complex, but generally landlords may recover costs over a set amortization period through small monthly rent increases, subject to Rent Board approval.
Beyond construction costs, the soft story program has significant operational implications for landlords. We’re here to help you understand what’s required and how to proceed.
1. Long-Term Capital Planning
Investors should treat retrofits as major capital expenditures similar to roof replacement or foundation work. A well-managed property portfolio should include:
For new buyers, retrofit status should always be part of due diligence during acquisition.
2. Tenant Communication and Legal Compliance
Retrofit projects often require temporary disruptions such as:
Property managers must provide clear written notices and comply with San Francisco tenant protection laws. Some projects require tenant relocation assistance, particularly if units must be vacated during structural work.
Failure to follow proper procedures can lead to disputes or penalties through the Rent Board.
3. Insurance Considerations
Buildings that complete seismic retrofits may benefit from:
While standard property insurance usually does not cover earthquake damage, insurers often view retrofitted buildings as lower risk assets. Owners should notify their insurer once retrofit work is completed and request a policy review.
4. Construction Management and Contractor Selection
This is where investors are most likely to ask for our help. Soft story retrofits involve specialized structural work. Owners should prioritize:
Because retrofit demand surged after the MSSP was implemented, contractor availability can sometimes be limited. Planning projects early helps avoid delays. Working with property managers Iike us can also help. We have good relationships in place with outstanding contractors already.
5. Property Value and Marketability
Although retrofits require significant upfront investment, they can improve property value in several ways:
Many investors now prefer buildings that have already completed retrofits, which can make compliant properties easier to sell.
For investors evaluating San Francisco multifamily properties, the soft story program should be part of the acquisition analysis.
Key questions include:
Buyers will want to request documentation such as:
Failing to account for retrofit costs can significantly impact investment returns.
The MSSP established multiple compliance phases, and many buildings have already completed retrofits. However, not all properties finished on time, and enforcement continues.
Owners must maintain records proving compliance, including:
Buildings that remain non-compliant may face penalties or restrictions when attempting to sell or refinance.
Q: When Should I Conduct Structural Assessments?
A: Early. If you own an older building, consult a structural engineer even if the property was not originally flagged by the MSSP.
Q: What Kind of Records Must I Maintain?
A: Detailed compliance records are essential. Keep all retrofit documentation organized. These records are essential for refinancing, insurance, and resale.
Q: Will Additional Seismic Improvements Be Needed Later?
A: It’s possible, so budget for that. Earthquake preparedness should be treated as a long-term asset protection strategy, not just a regulatory requirement.
Q: Who Should I Work With?
Start with a property and project manager. Retrofit projects involve coordination between engineers, contractors, city inspectors, and tenant representatives. Choosing experienced professionals can reduce delays and cost overruns.
The SF Department of Building Inspection (sfdbi.org) and the Earthquake Safety Implementation Program are the best official resources for current compliance deadlines, enforcement status, and updated guidance, since some details (especially enforcement timelines) have evolved since the program launched.
If this seems overwhelming, we can help. Contact us at Luminor Real Estate, whether you’re a new investor or concerned about your ownership of a building that may need a soft story retrofit.
