San Francisco is used to fighting its housing wars under the gilded dome of City Hall.
No longer: Now all eyes are on Sacramento.
On Tuesday , in a dramatic one-two punch, the state Department of Housing and Community Development announced that it was initiating a review of San Francisco’s housing approval and permitting process, an intervention meant to cure the city of its addiction to the endless debate, legal wrangling and community process that has made the city dead last in California when it comes to approving projects in a timely manner.
In a related matter, HCD also told the city it had to go back to the drawing board on its so-called housing element, that once-every-eight-year residential development plan every California city must provide as a road map to reaching state housing goals. The housing element must be certified by Jan. 31 of next year.
While the investigation of the city’s housing practices will likely take more than a year, the housing element is more pressing. San Francisco planners have five months to sell state housing officials on one simple idea: that the city has a realistic plan to build 82,000 housing units by 2030.
That effort will in part succeed or fail based on the city’s ability to convince the state that the 72,000 units in San Francisco’s pipeline can be converted from architectural plans to actual apartments.
In other words: How real is the plan to redevelop Parkmerced, slated for 5,600 apartments, which sits dormant more than a decade after it was approved? Will the dream of the 12,000-unit community at the Shipyard and Candlestick Point — stalled due to economic downturn and a scandal involving the clean-up of toxic waste — ever get back on track? What about the 1,700 unit at Schlage Lock, on the Brisbane border?
While the HCD had kind words for much of the city’s housing element — saying it “proposed bold and meaningful actions to reduce barriers to higher-opportunity neighborhoods” — it suggested that city planners were perhaps over-reliant on the pipeline.
In a letter to the city HCD said city planners must come up with a Plan B in case those mega-projects don’t work out. The element directs the city to come up with “alternative actions” — including additional rezoning — “if assumptions are not realized.”
Laura Foote, executive director of YIMBY Action, said HCD had “poked a hole in the city’s pipeline capacity claim.”
“San Francisco is claiming credit for 35,000 units that are in the pipeline but functionally dead,” she said. “HCD is saying, ‘No the pipeline is imaginary.’ ”
Chris Elmendorf, a professor at UC Davis who focuses on housing law, said San Francisco planners are not being realistic about how many of the approved units will materialize.
“The city is using really far-fetched projections to avoid to committing to rezoning,” he said. “The reality is a constellation of city requirements and fees and mandates have cumulatively made development economically infeasible in most of the city.”
Elmendorf said the city should “analyze the accumulative effect of all these development restrictions and come up with a plan” to make projects work. That could involve deferring fees or lowering affordable housing requirements.
Planning Director Rich Hillis said the notion that the pipeline is imaginary is misleading. Big, multi-phased projects require years of planning and infrastructure, but once vertical construction starts — actual buildings rising from the ground, as opposed to streets or sewer lines — production can be rapid. That was the case with Mission Bay, which went through decades of debate, multiple economic cycles and doubts about its viability, before taking off. That neighborhood has produced more than 6,000 housing units.
And some of the city’s most complicated and long-stalled mega-projects have finally started rolling. On Treasure Island as many as 1,000 units should be complete or under construction by the end of the year. Infrastructure work is under way at Pier 70 and the adjacent Potrero Power plant. And 537 apartments are under construction in two towers at Mission Rock, a multi-phased development across from Oracle Park.
Even without the pipeline, plans to rezone transit corridors around the city would add about 20,000 units.
“Pipeline or no pipeline, we are being aggressive in our housing element to add capacity, particularly in high-resourced areas that have not seen much housing,” Hillis said.
Rudy Gonzalez, secretary treasurer of the San Francisco Building Trades Council, said that he doesn’t have a problem with the state’s aggressive stance but said the city should force property owners to act.
“I’d like to take it one step forward and put a timeline on breaking ground,” Gonzalez said. “Cracking down on approvals sounds good, but let’s be clear that entitlement doesn’t equal production.”
Meanwhile, the state’s push to force San Francisco to speed up approvals and plan for a lot more housing is an unwelcome intrusion for city progressives who have long used the politicized process to squeeze developers for more low-income units, open space and funding for nonprofits.
Lee Hepner, an attorney for the American Economic Liberties Project and former aide to Supervisor Aaron Peskin, said the state is “beholden to developer interests who are maximum profit at any cost.”
“They would be better off directing that energy to cities like Milpitas and Cupertino that are way less dense and adding thousands of jobs while failing to build the housing to house those workers. That burden is put on San Francisco.”
He added: “We are exceeding our market rate housing goals by a long shot, but that doesn’t seem to be enough for the state. It’s frustrating.”
In a letter to HCD, Supervisor Dean Preston criticized the state for appearing to “conflate all forms of housing, a favored framing of the luxury housing developer lobby, but not what one would expect from an affordable housing agency.”
“There is certainly a discussion to be had about luxury housing development in an expensive city like San Francisco, but it would seem strange if that were your priority at a time when most of the working class cannot afford a roof over their heads,” he said.
Preston called the state’s approach “neo-liberalism at its worst.”
While San Francisco will always receive heightened scrutiny as the economic center of the Bay Area, its housing production — affordable and market rate — has actually been significantly better than other parts of the region.
In the current housing cycle, San Francisco exceeded requirements “above moderate rate” goals by 39%, producing nearly 18,000 units of market rate housing. On affordable housing, the city fell well short of its goals, producing 4,700 units of “low income” and “very low income” units. But that output — 33% of its very low income goals and 58% of its low income goals — far outpaced other regional hubs. San Jose, for example, produced 4% of its low income goals and Oakland came in at about 12%.
If the city doesn’t get state approval for its housing element it risks losing billions in state affordable housing money. Supervisor Ahsha Safai said that his fellow board members will have to recognize that.
“We have supply-side deniers in our city, and many on the board of supervisors, who believe at the end of the day there will be no consequences for our actions,” he said. “And now the state is saying, ‘There will be consequences.’ ”