San Francisco

Affordable Housing Proponents Critical of Permit Streamlining Law Use Permit Streamlining Law to Build Critical Affordable Housing

A flawed law has nonetheless improved San Francisco's absurd building approval process.

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Joseph Gough/Dreamstime.com

Critics of California's SB 35, a 2017 law that created a streamlined, state-level building approval process for housing developments, are begrudgingly starting to see the benefits of the bill.

Earlier this month, the Mission Economic Development Agency (MEDA)—a San Francisco nonprofit—submitted an application to use the streamlined SB 35 process to build a 100 percent affordable, 130-unit apartment building.

If that application is approved, MEDA will be spared the onerous reviews required by the California Environmental Quality Act. It will also avoid the need to get approval from the San Francisco Planning Commission, which has the power to alter, shrink, and otherwise condition the approval of projects.

Instead, the San Francisco Planning Department would have to issue permits for the project within 60 days, which MEDA Development Director Karoleen Feng tells The San Francisco Chronicle will cut six months to a year off the approval process.

When SB 35 was first proposed, MEDA opposed it. Last July Luis Grandos, the agency's executive director, co-wrote an op-ed claiming that SB 35 would spur too much market-rate housing, in turn acting as "a short-term catalyst for displacement of low-income communities of color."

Though it is now using SB 35 to build more below market-rate housing—which MEDA thinks is the key tool to limit ever-higher housing costs—the agency remains opposed to SB 35, with Feng telling the Chronicle that it's "a one-size-fits-all policy of streamlining." At the risk of sounding cynical, this criticism boils down to MEDA, which can obviously see the benefits of streamlining when it comes to its own projects, wanting to retain the power to delay and suspend projects it doesn't like.

For instance, MEDA has a been a major opponent of Mission District business owner Robert Tillman's plan to turn a laundromat into a mostly market-rate 75-unit housing development.

Feng herself called this development "unjust," "unconscionable," and "unfair" while demanding that Tillman make his property into 100 percent affordable housing. Members of the activist group Calle 24, despite their professed support for affordable housing, have argued that even if Tillman's project were 100 percent affordable, it would still be unacceptably large and bulky.

Calle 24 and Mission anti-development activists have, through the many appeals and reviews afforded them by the San Francisco permitting process, forced Tillman to spend four years and $1 million trying to get approval for his development.

Elsewhere in the city, residents have demanded that affordable housing projects be modified to accommodate "neighborhood character."

In January, the Haight-Ashbury Neighborhood Council wrote a letter demanding that a 100 percent affordable housing project be shrunk by some two floors to preserve "neighborhood character." (The project would replace a reportedly crime-ridden McDonald's.) San Francisco's Discretionary Review process, which SB 35 allows developers to skip, would allow the council to demand just that through a laborious process of Planning Commission hearings and departmental reviews that can add months (and sometimes years) to a project's completion time.

San Francisco needs more housing to accommodate new residents as well as the natives who wish to stay there. From 2005 to 2015, the city added three jobs for each new unit of housing. Since 2010, rents have risen 43 percent; they are now the highest of any major U.S. city. A huge impediment for building more housing is a restrictive permitting process that bogs down projects in endless quests for building approval. This is true of both below-market and market-rate housing.

SB 35 is by no means a perfect solution to this problem. In September of last year, I argued against it, saying that the bill's requirement that projects pay a prevailing (union) wage would increase costs considerably, undermining the bill's goal of cutting down on housing costs. While that's still a valid critique, I now think my opposition was misplaced, given how the bill in practice is forcing through previously hamstrung projects.

In March, a 260-unit, 50 percent below-market-rate development in Berkeley—one that had been in the works for five years—became the first to apply for SB 35's streamlined review process. That was followed later in the month by a Cupertino developer hoping to convert a vacant mall into 2,400 units of housing, half of which would be rented out at below-market rates.

These are baby steps compared to the scale of California's housing shortage. But they are steps nonetheless.

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  1. I HAVE SEX WITH DOGS! WHAT’S UP WITH THAT!

  2. At the risk of sounding cynical, this criticism boils down to MEDA, which can obviously see the benefits of streamlining when it comes to its own projects, wanting to retain the power to delay and suspend projects it doesn’t like.

    Bureaucracy is a weapon too powerful to be wielded by the mortals.

    1. As a member of the NBA (National Bureaucracy Association), I repudiate your attempt to take away my freedom to impose onerous restrictions on behavior I don’t like and people I hate.

      1. Sssshhhhh. The first rule of NBA is…

        1. Traveling is okay if it’s a star doing it?

          1. Excuse me, but that’s a bit too appropriate.

            1. Do you want me to Michael Richards this thread?

    2. wanting to retain the power to delay and suspend projects it doesn’t like.

      And it sounds to me like the projects they don’t approve of are the ones that might attract wypipo. At the risk of sounding cynical.

  3. I wonder how many of these market rate projects will overrun cost and they will petition to raise their rates and once again the the low man is screwed over

    1. I just wonder how many of the “below market value homes” will go to relatives of the city council members.

      1. Close. They will be blight, torn down, and replaced by giant condos owned by city council member relatives.

    2. Honestly, I think zero would be the right number. Below Market Rate (BMR) development is well-defined in legal terms in SF and is entwined with rent control laws and baked into covenants for unit owners. There isn’t a lot of wiggle room. If you buy a BMR unit and go to sell it years later, your profit is limited to a set maximum and you are required to sell the property below market rate to the next owner.

      The BMR process for renters and buyers uses a lottery system. Also, “BMR” is not always super-cheap. There are several levels based on percentage of average income for the area so a unit could be intended for “50%” or “80%” meaning your household income is below 50% of the local average. It goes up to 120% (if I recall correctly.) So it covers the very poor through to middle class. It isn’t uncommon to see a single development have various numbers of each sort along with some full market rate units to ensure the developer makes a reasonable ROI.

      Whatever you think of the system (and I offer no opinion here), it’s not corrupt in the ways you elude to. It is well-intentioned and people who need housing do get it.

      1. It’s a lottery. Which means 99% of the applicants are not getting the housing they “need”.

      2. shawn_dude|4.10.18 @ 4:31PM|#
        “Honestly, I think zero would be the right number. Below Market Rate (BMR) development is well-defined in legal terms in SF and is entwined with rent control laws and baked into covenants for unit owners. There isn’t a lot of wiggle room. If you buy a BMR unit and go to sell it years later, your profit is limited to a set maximum and you are required to sell the property below market rate to the next owner.”

        I have no evidence otherwise, but I have doubts that a gov’t intervention in a market effort does what it claims.
        —————————–
        “Whatever you think of the system (and I offer no opinion here), it’s not corrupt in the ways you elude to. It is well-intentioned and people who need housing do get it.”

        “Well intentioned”? Like the road to hell? And then you do offer an opinion.
        Your assurances are amusing, given the innate corruption of the SF supervisors; see Chris Daley for example.

  4. Did Christian consult with our resident expert from San Fran Sicko? Our man sevo!

  5. Do people not realize that this “half affordable-housing” nonsense just means that the other half are paying inflated rates for the pleasure of living among the poors?

    1. They also don’t see that building more housing of any kind allows some people to move out of their middling housing into fancier housing, which allows people in less-than-middling housing to move up, which eventually makes room at the bottom for the so-called affordable housing. Whereas if you only build cheapo so-called affordable housing, you’ve got the same people fighting for the same crappy cheapo housing. No one moves down into affordable housing unless they are desperate.

      1. It’s almost like Jane Jacobs, whom everyone on the left claims to adore but in fact seems completely misunderstood by them, didn’t famously espouse that exact process in a lengthly book demolishing the ideas behind “urban renewal” almost sixty years ago or anything.

    2. I can understand your confusion, especially if you don’t live in the Bay Area. But to directly answer your question, they very much do understand this and they think this is a feature and not a bug.

      1. I live in NYC which means we have the same failed programs. The point I’m getting at is why would anyone willingly choose to pay more than market rate to subsidize some poor people living in their building? That is not rational behavior.

  6. It’s amazing, predictable, obvious, and all round messed up the way these central planning statists distort markets, complain of market failure, add more distortions in a vain attempt at “fixing” the market failure, repeat ad nauseum, and never ever see the bizarro world they have created as statist failure.

    1. Sometimes they view it as a failure of the state, the biggest problem might be that people believe there is no alternative to the state. It is universal; it is all there is. They believe there must be some state solution to the problem, because the state is all there is.

      And this is very common belief. Read even posters here, and see how often things are phrased solely within reference to the state. It’s a hard break to make, but realizing that the issue isn’t that the state is doing the wrong things, but that the state is inherently flawed is maybe what I consider to be the fundamental libertarian jump.

      And it’s a radical belief, that defines it apart from almost every political philosophy that has ever existed.

  7. We saw a townhouse in DC where the price was too good to be true. New construction and everything. Then we realized it was “affordable housing” and we were above the income level. But then we realized that anyone with an income below the cutoff could not realistically afford the house even at the special reduced price. How the hell is that a good idea to restrict the purchase to only those who couldn’t really afford it. The house was listed at $379k and the cutoff was a total household income of around $70k. I think if you had a family of 4 it bumped it up to $80k. Again, how do you afford to raise a family of 4 and pay the mortgage on that house? It’s ridiculous.

    1. I forget the exact numbers but I swear I’ve read that here in NYC there are folks making six figures living in “affordable housing”. Everybody knows it’s a scam and a lottery for the connected.

    2. I thought this type of set-up-to-fail lending (subprime?) was a major contributor to the ’08 collapse? Everyone frames it that banks foolishly took on loans they knew had a high risk of default because they were greedy, but that doesn’t make any sense at all. If they wanted to make money they’d compete for those with good credit; as seen by my roommates with very good credit getting a half-dozen CC offers a week. Seems the banks were giving mortgages to unqualified buyers because they had to and/or because some government institution would insure their losses.

      I get the spiral of bad credit. I began my adult life with bad credit and my mother had even worse credit. I couldn’t even get a CC out of college; I had to get a $100 line of credit, then a $250 27% interest rate CC from my bank and work up. I’m in no hurry to get a house, but if I was it’d be a nightmare, so I think banks taking a risk on borderline customers is admirable and can really help them get on the right track. It’s not great business, though.

  8. Wow a quasi-palindromic headline. Well done.

  9. 50 percent below-market-rate development in Berkeley

    When these projects are labeled “below-market-rate” does that mean “subsidized” and only means-tested residents will be allowed to move in?

  10. “When these projects are labeled “below-market-rate” does that mean “subsidized” and only means-tested residents will be allowed to move in?”

    In SF, it means they are priced at some arbitrary level pulled out of the ass of the ass setting the price. They are “subsidized” by those paying what are now inflated costs for the remaining units, thereby raising the “market price”, meaning the price of the next tranche of units is inflated by the amount required to make the developer whole on the last tranche.
    Of course our idiot supervisors hope that the developer, out of the goodness of her heart, will simply reduce the profit to accommodate the wishes of the supervisors for unicorns.
    Or, perhaps, they are cynical enough to know better, but continue to pitch ‘free shit’ to the idiots.
    Or both.
    Regardless, there are common enough stories regarding Ms X who has lived in the projects for 25 years with all 8 kids and wins the loto for the new BMR housing, only to realize that it ain’t the projects.
    She now has to pay the HOA fees monthly or get the hell out!
    I don’t yet know how the market for those conditions has worked out, but you can be sure it is nothing like the ‘oh, so concerned’ idiots hoped for.

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