By Alena Botros

Thu, October 26, 2023

California has a bold plan to reverse its cost-of-living crisis and stem the exodus of residents leaving the Golden State for regions like Florida and Texas. It’s vowed to create 2.5 million new homes, one million of them affordable, over the next eight years. So, what’s getting in the state’s way? First on the list: the city of San Francisco.

The city by the bay has some of the biggest barriers to building housing. The state Department of Housing and Community Development wrote as much in a scathing, first-of-its-kind report on Wednesday that painted the city as Ground Zero of the state’s housing crisis—and San Francisco’s mayor London Breed agrees.

“The state sent a clear message that San Francisco needs to do better on housing,” Breed said in a Medium post. “No more delaying and denying the changes we’ve committed to make in our Housing Element to build housing faster.”

In its report, HCD argued that many local practices actually violate state law, while also citing a complicated permitting process, too much deference to local politicians, and skyrocketing construction costs.

“San Francisco has the longest timelines in the state for advancing a housing project from submittal to construction,” the report found. Just to get approved, or “entitled” in the city’s langage, takes 523 days on average, 50% more than the next-slowest jurisdiction. After the approval, it takes another 605 days—that’s nearly two years—to issue other building permits.

That’s thanks to local control, and a discretionary process that can override essentially any development, even those that conform to existing zoning regulations—meaning projects can be delayed by officials’ demands or by a single community member unhappy about some aspect of the development.

Following the report’s release, in a statement, California Gov. Gavin Newsom said: “California’s affordability crisis is one of our own making—the decisions we made limited the creation of housing we need. Nowhere is this fact more evident than in San Francisco.”

‘Affluent NIMBYs’ derail housing

“San Francisco is an outlier on housing approvals, in part because of how it applies a blanket discretionary review process to all building permits,” the report found. The city’s “housing approval processes are also notoriously complex and cumbersome, creating unpredictability and uncertainty,” it found, creating an environment where only seasoned developers have the know-how to navigate the process, while new ones don’t even try.

While that crushes housing development, it also means the housing that does make it through is very expensive, as previously reported—because only luxury developers can afford the drawn-out process.

In theory, the community input requirement “allows groups without power to shape zoning to advocate for their neighborhood needs before a development is built,” the report says. But in reality, “‘affluent NIMBYs’ can, and do, weaponize these process requirements to block housing,” the report concludes. That leaves the city in the worst of all worlds: The existing zoning, which the report calls inequitable, doesn’t change, and little new housing is added.

Examples of such delays abound. Earlier this year, the city’s Board of Supervisors halted a plan to replace a single-family home in Nob Hill with 10 townhomes, in part over locals’ concerns about the shade the building would cast on a nearby park. And two years ago, supervisors delayed a nearly 500-unit building that was destined for a parking lot used by Nordstrom shoppers, the New York Times noted; now that Nordstrom has abandoned the city, it no longer needs the lot—and building costs have shot up so much the project is no longer financially viable.

Other parts of the Bay Area face similar struggles. A 315-unit building in Lafayette, in the East Bay, is finally moving ahead after a 12-year delay in the courts. In nearby Atherton, a wealthy Silicon Valley enclave, residents including the billionaire venture capitalist Marc Andreessen and NBA superstar Steph Curry of the Golden State Warriors vocally opposed the construction of multifamily housing in the neighborhood on two separate occasions.

Can San Francisco meet the state’s housing goals?

The report questions San Francisco’s ability to meet the state-mandated, and very ambitious,housing goals by the 2031 deadline. To keep pace, the city needs to build over 10,000 new housing units every year over the next eight years, half of them affordable. It’s only managed about 40% of that pace so far, the report found. This year, it’s been averaging a dismal one unit a day, the report found.

Some housing advocates cheered the report. “For decades, San Francisco has flouted state laws regulating housing projects,” the pro-development advocacy organization San Francisco YIMBY said in a statement. “This report will obliterate local obstructionism in San Francisco, and SF YIMBY could not be more excited.” State Senator Scott Weiner, who authored Senate Bills 423, 4, and 593, all of which were recently signed by Gov. Gavin Newsom in an effort to reduce barriers to housing development. called the report “utter condemnation,” noting “18 policies & practices” that violate state law.

If the city doesn’t shape up, HCD warns, it will face consequences—such as losing state funds, being fined by the courts, losing its authority to determine local land use and, most severely, the “builder’s remedy,” or the automatic approval of any project meeting certain requirements.

The city’s mayor made it clear that the state could decertify San Francisco’s housing element if it fails to build more housing—-and if that were to happen, it would be “disastrous,” in her words.

“This is in addition to the ongoing and very real consequences of not building housing, which we’ve been experiencing for years,” Breed said. “People will continue to be displaced from the city they grew up in. Workers will not be able to live here and work in our restaurants, shops, and offices. Families will leave the city when they can’t find enough space.”

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