San Francisco

San Francisco Bureaucrats Can Shoot Down Almost Any Housing Project They Want. This Ballot Initiative Would Change That.

Mayor London Breed's Affordable Homes Now initiative would streamline the approval of code-compliant housing projects as long as developers include additional affordable units.

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San Francisco Mayor London Breed is proposing a ballot measure that would eliminate city bureaucrats' ability to shoot down code-compliant housing developments. In exchange, the developers would have to include more affordable units than the city already requires.

On its face, it's a pretty marginal reform. For the City by the Bay, it's a radical gamechanger.

"Anyone who tells you that we don't need fundamental reforms to building housing, or that we need years of review before a project can be approved while we're in the middle of a historic housing shortage, is simply wrong," Breed writes in an essay announcing the Affordable Homes Now ballot initiative. "We can shave years from project approval and save millions of dollars of project costs on 100% affordable housing."

In San Francisco, every single building permit is officially issued at the discretion of the city's Planning Commission.

That means that even if someone's proposal for a new single-family home or falafel restaurant conforms to the city's labyrinthine zoning code, commissioners can still demand changes or, in most cases, reject the application entirely.

Members of the public can also request that commissioners use their discretionary authority to review a particular planning application, a privilege that has been weaponized by businesses to stifle competitors, by neighbors to block unwanted development, and by activists to shake down deep-pocketed developers.

Breed's proposed ballot initiative would amend the city's charter to make multi-family housing projects "as-of-right" if they include 15 percent more affordable units than what is already required or are 100 percent affordable. That means they would receive a simplified administrative review by city staff and skip any discretionary review from the planning commission. Permits would have to be issued within six months.

Currently, projects of 10 to 24 units must make 13.5 percent of their units affordable, while buildings containing more than 25 units must make 20.5 percent of them affordable. In this context, an "affordable" unit is one where rents are capped at 30 percent of a tenant's income and the tenant must fall within a specific income bracket.

This policy is known as inclusionary zoning.

"While I ultimately don't think either optional or mandatory inclusionary zoning programs are a solution to broad-based affordability, Mayor Breed's proposal can't make things worse," says Emily Hamilton, a scholar at George Mason University's Mercatus Center.

Hamilton has researched these policies in Maryland and Virginia. She found that mandatory inclusionary zoning programs increase overall home prices by one percent per year.

That wasn't true for opt-in inclusionary zoning programs that gave developers permission to build taller, denser buildings in return for their voluntary inclusion of affordable units. These voluntary programs did not act as a tax on development. But they also didn't produce much affordable housing, except in communities with very strict limits on density.

Hamilton says Breed's proposal is more like the voluntary inclusionary zoning programs. Whether it actually produces many affordable units is difficult to determine, she says.

Renting out more than a third of your units at below-market rates is a big cost to absorb. San Francisco projects that have tried to include that many affordable units have stalled.

But the city's permitting process is so lengthy and onerous—taking four years on average to approve multi-family projects—that any opportunity to bypass it would be worthwhile. That's particularly true at a time when construction costs continue to skyrocket, making every delay all that more costly.

Hamilton notes that the 100 percent affordable projects that would be permitted "as-of-right" in Breed's proposal could be rented out to tenants making up to 140 percent of the city's median income. In San Francisco, that would allow developers to charge monthly rents of more than $4,000 for some families.

"It might be the case that developers can provide these units without incurring a big cost to do so," says Hamilton, "in which case it would just allow more housing to be built where lots of people want to live at a lower price-point."

"Building in [San Francisco] is expensive. It doesn't have to be complicated too," said Sharky Laguana, president of the city's Small Business Commission, in a press release, adding that the proposal "gets government out of the way."

Breed's ballot measure would also put an end to her city's most egregious development battles, where activists try to wring more concessions out of developers by gumming up the approval process with cynical, often absurd complaints.

Some might recall the case of Robert Tillman, who wanted to convert a laundromat he owned in the city's Mission District to an apartment building. Though his land was already zoned for housing, activists were able to delay the project for years by claiming his laundromat was a historically significant building and that the building he wanted to erect would cast shadows on an already shaded playground.

Tillman told me in 2018 that what he wanted more than anything was certainty.

"Just tell me what the rules are, and I'll either make a decision to build something based on those rules or I'll make a decision that it's not economical," he said. "Don't change the rules on me midstream, or put in place rules and then act as if they don't exist."

Breed voted to delay Tillman's project when she was still on the Board of Supervisors But her initiative would provide the certainty that Tillman desires.

Though this would be a marked improvement, it's important to stress that the initiative would not change the city's underlying zoning code. All the restrictions on density that exist now would remain in place.

Supporters have their work cut out for them to even get the measure on the ballot. The New York Times notes that it has to get 50,000 signatures from registered voters in a city of 900,000 people.

If it wins, it will be a marginal, but nevertheless significant, improvement on a deplorable status quo.

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  1. In exchange, the developers would have to include more affordable units than the city already requires.

    So this is an invitation to offer a bribe?

    1. “So this is an invitation to offer a bribe?”

      And anyone who thinks this will help with housing costs it an econ-idiot.
      Those BMR units get paid for by raising the prices on the market-rate units, thereby pushing the market rate higher. And since the BMRs are fixed as a percentage of the market rate, why, imagine what happens to the BMR prices!
      Think of it as M/W ‘logic’ applied to housing costs.

      1. Math is not a strong point in San Fran.

    2. The lawless, unconstitutional way SF is run is certainly an invitation to the feds to place it under martial law until lithe rule of law can be restored.

      1. Import Not Americans, Become Not America.

    3. The median income in San Francisco is 96,625. A market-rate one bedroom apartment rents for $3000-$4000/month. Evan at $3000/month, you need to make $108,000/year to afford a market-rate one bedroom apartment. A majority of San Francisco voters will probably never be able to afford a market-rate apartment. If they want to move, their best hope is to enter the lottery for a BMR apartment.

      Also, more market-rate apartments bring more rich people, and drive up the rent for commercial real estate, which makes things more expensive. For example, regular grocery stores get gentrified by luxury grocery stores.

  2. “Additional affordable units”.

    IT’S BLOODY SAN FRANSISCO! NOT EVEN THE RICH CAN AFFORD TO LIVE THERE!

    1. Pfshaw! Living in San Francisco doesn’t have to cost you a dime if you know where to look.

      1. Who needs a place with a toilet anyway?

        1. All the world’s a toilet, a young man merely need avail himself of the facilities.

          1. Your head’s a toilet

  3. The easiest and fastest way to affordable housing is to confiscate it. All property owners are clingers and shouldn’t have property anyway

    1. The Denver city council agrees!

    2. Sometimes it is difficult to tell the original Rev from the parody account even after careful inspection.

      1. The real one is usually angrier than the fake.

      2. The parody one is much funnier/smarter/wears clean underware/better looking, but can’t spell as good

        1. Nice to see you back, Reverend. 🙂

      3. He’s got the tone right.

        Take some Stormfront dude back in time, and raise him in SF.

    3. You know who else loves property confiscation as a means to his (or her) end?

      1. LA? Berlin? New London? New Jersey?

      2. Dora’s pal Swiper?

        1. Swiper, no swiping!!

  4. I’m creating a start up that builds houses out of human feces. That way the homeless can make their own houses in San Francisco. That’s what your car disrupting real estate.

    1. Dung huts, that is a thing, really.

    2. That reminds me of an old Eastern European joke I once heard. A cop is walking down the street and sees a homeless man sculpting a statue. “Hey, what are you doing” the cop asks.
      “I am sculpting?”
      “With what?”
      “Mud and shit, mud and shit.”
      “And what are you making?”
      “I am sculpting a soldier.”
      So the cop nods and lets him continue, as the guy seems quite talented.
      The next day, the cop sees the homeless man there again, and asks him what he is doing.
      “I am sculpting?”
      “With what?”
      “Mud and shit, mud and shit.”
      “And what are you making?”
      “I am sculpting a politician.”
      So the cop nods again appreciatively, and lets him continue. The day after, the cop again comes upon the homeless man, hard at work.
      “Let me, guess, sculpting again? What are you making this time?” the cop asks.
      “I am making a lawyer.”
      “Hey, you should sculpt a policeman next,” the cop says.
      “Ah, I would,”the homeless man replies, “but there is never enough shit for that.”

  5. Sure, you can keep trying to pull the wool over millenials or GenZers eyes, but they are going to realize that 80% or so of the market units are paying for 20% of the affordable units (Obamacare for housing!). Inflation rises while the affordable units stay equal or ‘fixed’ based on salary. Not sure the lenders or land developers will jump on this. Someone here posted a beautiful high-rise in Portland O that is sitting almost empty (well, I guess except for the affordable units). Whoever the lenders and developers of that thing lost their shirts.

    Build MARKET RATE housing without the social engineering, but its San Francisco- – and…

    1. I do not believe this generation will figure it out, economically.

      A lot of those downtown buildings are just built in bad locations.

  6. Sharky Laguana, president of the city’s Small Business Commission

    Best… name… ever.

  7. “Just tell me what the rules are, and I’ll either make a decision to build something based on those rules or I’ll make a decision that it’s not economical,”

    Tillman learned the first lesson of Libertarianism: There’s no power to be wielded in clear laws with bright lines. it’s the arbitrary and vague law where power can truly be exercised.

    1. “Did you really think we want those laws observed?” said Dr. Ferris. “We want them to be broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against… We’re after power and we mean it… There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced or objectively interpreted – and you create a nation of law-breakers – and then you cash in on guilt. Now that’s the system, Mr. Reardon, that’s the game, and once you understand it, you’ll be much easier to deal with.”

  8. Any requirement to include “affordable housing units” is a violation of the takings clause and is unconstitutional. It’s just a shakedown racket to get private businesses to do their work for them

    1. There is no such thing as “affordable housing” in this context. It is subsidized housing at the expense of those who don’t qualify for the subsidy.

    2. More importantly, it’s a way to keep housing costs high while appearing to do something about the affordability crisis.

      1. Ha! Another chance for a mangled quote from the HBO Series, John Adams:

        The art of diplomacy in San Francisco, is accomplishing little while appearing to do much!

  9. Cities that have craploads of regulations that raise the cost of building cannot build affordable housing. What they can do is have it subsidized so the rent is cheaper for the tenet. But someone else is picking up the tab.

    It’s like the idiots in NYC that think they can build more affordable housing on top of an 18 Billion dollar deck over the Sunnyside train yard.

    1. It seems that particular project fell through already, though not before they eminently domained some people’s stuff, of course.

  10. Does CA actually follow ballot referendums the politicians disagree with? Prop 8 suggests otherwise

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