In a sign of California housing politics' increasingly pro-supply tilt, state housing officials are openly praising San Francisco Mayor London Breed for vetoing a local ordinance that would have made development much more difficult.
The vetoed ordinance, passed in a contentious 6–4 vote by the San Francisco Board of Supervisors earlier this month, was sold as abolishing single-family-only zoning districts in the city, permitting four-unit homes (fourplexes) to be built on properties where only one dwelling was previously allowed. On the surface, this may sound sensible and deregulatory. But the bill had so many poison pills stuffed inside of it that it would actually make San Francisco's housing shortage worse.
"Instead of cutting bureaucracy and reducing project costs," Breed explained in a statement Thursday afternoon, "the Board added many new requirements and imposed new financial barriers that will make it even less likely for new housing to be built."
Under the vetoed ordinance, builders would have to own their property for five years (or have inherited it from a family member) before they could build a fourplex on it. The stated intent of this provision was to "discourage speculation." The effect is to exclude professional developers from the market.
The ordinance would have also required that the new units be placed under the city's rent control program. That further disincentivizes property owners from taking on a fourplex project.
The ordinance was also an attempt to route around a 2021 state law, S.B. 9, that allows property owners to divide single family-zoned properties in two and build duplexes on each half. That law already effectively allowed property owners to build four units on single-family properties. It also required local governments to "ministerially" approve these lot splits and duplexes without endless rounds of public hearings and bureaucratic delays.
But by abolishing single-family zoning completely, San Francisco's fourplex ordinance meant that S.B. 9's streamlining provisions wouldn't apply anywhere. Instead, newly legal duplexes, triplexes, and fourplexes would be subject to the city's discretionary review process.
That process allows third parties to appeal building applications to the city's Planning Commission. Sponsors of totally legal, zoning-compliant projects that get hit with discretionary review have to make the case for their development at public hearings before the commission, where neighborhood critics get an opportunity to air their grievances. The planning commission has the power to impose new conditions beyond what the zoning code requires. They can even deny a project outright.
The process could not be more offensive to property rights or better designed to stop new housing construction. Both city and state officials have identified it as particularly burdensome in low-density neighborhoods where new fourplexes would have been legalized.
In a surprise move, the California Department of Housing and Community Development (HCD)—which is partially responsible for enforcing state housing law—issued a statement that "applauded" Breed's veto.
"The fourplex ordinance evades the City's obligations under SB 9 to provide ministerial approval for small-scale projects," reads the HCD statement. "Moreover, the ordinance would maintain the existing discretionary approval process and impose more onerous conditions and requirements when compared to SB 9. Taken together, these regulatory hurdles will render such projects financially infeasible."
California has decades-old laws on the books that theoretically limit local governments' ability to say no to new housing development. Prior to the rise of the YIMBY movement ("yes in my backyard"), these laws have mostly gone unused and unenforced. But the past few years have seen state officials do more to hold local regulators accountable. HCD's statement is yet more evidence of the state's interest in allowing more building.
Its praise of Breed's veto also comes at a crucial time in California's planning process.
Once every eight years, municipalities in the Golden State are required to come up with "housing elements" that describe how they will facilitate enough housing development to meet projected demand. Those housing elements are supposed to include plans for eliminating constraints on new housing construction. If they don't, HCD can reject the element—and a city without a compliant housing element can lose access to state grants.
A non-compliant housing element also triggers a provision of state law known as the "builder's remedy," which prevents cities from using their zoning codes to deny housing projects that include a certain number of affordable units.
Christopher Elmendorf, a law professor at the University of California, Davis, has argued this could potentially allow developers to build projects at unlimited density.
HCD is currently reviewing San Francisco's submitted housing element. Its praise of Breed's veto has a clear subtext, Elmendorf tweeted last week: "get real or face consequences."
In short, San Francisco politicians' queasiness about fourplexes could force them to permit skyscrapers instead.