As California Embraces Development, San Francisco Mayor Vetoes Fake Housing Reform Bill

The proposed policy was offensive to property rights and disincentivized construction. The mayor's rejection of it shows the state's increasing interest in allowing more building.

In a sign of California's increasingly pro-development tilt, state housing officials are praising San Francisco Mayor London Breed for vetoing an ordinance that would have made homebuilding much more difficult.

The vetoed ordinance, passed in a contentious 6–4 vote by the San Francisco Board of Supervisors in July, was sold as abolishing single-family-only zoning, permitting four-unit homes (fourplexes) to be built instead.

That sounds sensible and deregulatory. But the bill was loaded with poison pills. Builders would have had to own their property for five years, or inherited it, before they could build a fourplex. 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 new fourplexes to be rent-controlled, further disincentivizing construction.

The sneakiest part of the legislation was an attempt to route around S.B. 9, a state law 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 localities to "ministerially" approve lot splits and duplexes without public hearings and bureaucratic delays.

By abolishing single-family zoning, San Francisco's fourplex ordinance meant that S.B. 9's streamlining provisions wouldn't apply. Instead, newly legal fourplexes would be subject to the city's discretionary review process, which allows third parties to appeal building applications to the city's Planning Commission. Sponsors of legal, zoning-compliant projects that get hit with discretionary review must make the case for their development at public hearings where neighborhood critics get an opportunity to air their grievances. The planning commission has the power to impose new conditions or deny projects completely.

The process could not be more offensive to property rights or better designed to stop new housing. City and state officials have identified it as particularly burdensome in single-family-zoned neighborhoods.

In a surprise move, the California Department of Housing and Community Development (HCD) issued a statement that "applauded" Breed's veto.

"The ordinance would maintain the existing discretionary approval process and impose more onerous conditions and requirements when compared to S.B. 9," reads the HCD statement. "These regulatory hurdles will render such projects financially infeasible."

California has many laws that theoretically limit local governments' ability to say no to new housing. Prior to the rise of the "yes in my backyard" (YIMBY) movement, these laws went unused and unenforced. The past few years have seen state officials do more to hold local governments accountable. The HCD's statement is more evidence of the state's interest in allowing more building.