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MANAGEMENT UPDATE.

Managerial Obstacles to New Housing in San Francisco

Even though housing prices have dropped in San Francisco over the last year, the city is still too expensive for its own good, with the median housing price around $1.3 million, according to real estate corporation Redfin. That means teachers, nurses and city employees themselves can find it impossible to live in (or even near) where they’ve chosen to work.


Why hasn’t there been more of a boom in new housing in San Francisco? One answer comes from a report that the California Department of Housing and Community Development, released at the end of October. Like so many urban problems in the United States, it’s a matter of management. In San Francisco’s case, the city’s forever-long permitting process is a grave impediment to moving new housing stock onto the market.


As the report states, “According to self-reported Annual Progress Report (APR) data and prior research from the University of California, Berkeley (UCB), San Francisco has the longest timelines in the state for advancing a housing project from submittal to construction. According to 2022 APR data, it takes an average of 523 days for a housing project to be entitled, compared to 385 days for the next slowest jurisdiction in the state. It takes an average of 605 days for San Francisco to issue a building permit to an already entitled housing project, compared to 418 days in the next slowest jurisdiction.”



As Governor Gavin Newsom has said, “California’s affordability crisis is one of our own makings. The decisions we made limited the creation of housing we need. Nowhere is this fact more evident than in San Francisco.”


Many of San Franciso’s flaws are the result of flagrant violations of the state’s laws intended to keep the process of building moving along. “San Francisco has perfected the art of avoiding obligations under state housing laws by maneuvering around them through local rules that exploit loopholes and frustrate the intent of state housing laws,” according to the report. “In other instances, San Francisco’s policies and practices are inconsistent with these laws. It is also clear that the City’s local rules create constraints on production at all income levels and that San Francisco will not meet its housing element obligations without removing those constraints.”


A few examples according to the report:

  • “Subjective and vague Design Guidelines and other design standards and conditions of approval frustrate the Housing Accountability Act requirements for objective standards.” 

  • “Planners and developers reported that the City’s political bodies apply local rules in a way that signals they do not understand how state law limits their discretion in the area of State Density Bonus Law and the Housing Accountability Act.”

  • “The City’s discretionary, subjective approvals process for large, code-compliant housing projects, including Eastern Neighborhoods (ENX) and Downtown Large Project Authorization (DNX), is inconsistent with the Housing Accountability Act requirements for objective standards.”

  • “The City’s application of the Affordable Housing Fee, and Inclusionary Affordable Housing Program requirements, impose a fee on affordable units in contravention of State Density Bonus Law, and impermissibly penalize developers for utilizing State Density Bonus Law.”


The 44-page report offers some significant initiatives that would help move more housing stock into the market at a somewhat speedier pace, including efforts to:


  1. Eliminate Discretion and Subjectivity in Planning Review

  2. Reform the Local Administrative Appeals Process

  3. Expedite and Standardize the Post-Entitlement Permitting Process

  4. Increase Accountability and Transparency


San Francisco isn’t the only California city that has developed significant impediments to adding new housing, and this report can be of help to others in California and elsewhere. As it states: “While some of the barriers imposed on housing developments in San Francisco are unique, many of the findings and Required Actions in this Review can serve as lessons learned and best practices for other jurisdictions, thus facilitating faster housing approvals and increased production of homes at all income levels statewide.”


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