Damning New Audit Finds San Francisco Takes 3 Years To Approve New Housing

The state housing officials who performed the audit describe San Francisco's approval process as a "notoriously complex and cumbersome" mess.

San Francisco takes three years on average to approve and permit a new housing development, the longest timeline of any jurisdiction in California, and the city is out of compliance with numerous state laws requiring expedited housing approvals.

That's the damning, not necessarily surprising, findings of a new state audit released yesterday that found the city's housing policies and practices added up to a "notoriously complex and cumbersome" mess that will ensure San Francisco falls well short of its state-set goal of building 82,000 units by 2031.

Currently, the city is producing only about 4,000 homes per year, or less than half of what it needs to hit that 82,000-unit goal. The state audit also found that the city takes 523 days on average to issue planning approval for housing projects and another 605 days to issue building permits to already approved projects.

"This audit puts cities across California on notice: there will be no more leniency for illegally obstructing housing construction," said state Sen. Scott Wiener (D–San Francisco), the author of a number of state laws the city is out of compliance with, in an emailed statement. "San Francisco has added layer upon layer of unnecessary discretion and bureaucracy for decades."

This first-of-its-kind audit was launched by the California Department of Housing and Community Development (HCD) in August 2022. It came in response to a series of increasingly fiendish decisions by the San Francisco Board of Supervisors to route around state laws requiring them to approve new housing.

One notorious episode came in late 2021 when the board voted to require the sponsor of a planned 495-unit residential tower slated to replace a Nordstrom's parking lot to perform an additional environmental analysis of their project.

That was despite the fact that the project sponsor had already produced a 1,000-page environmental report on the project. After the vote, individual supervisors told the San Francisco Chronicle their vote was motivated by affordability concerns, not its environmental impact.

California law requires cities to approve projects that comply with the zoning code. If a city rejects a zoning-compliant project, state law entitles the project sponsor to sue in order to get their permits.

But by asking the developer of the Nordstrom parking lot project to produce endless additional environmental reports, the city was keeping the project in a legal twilight zone where it was neither approved nor denied.

This was followed up by an even more clever scheme by a majority of the Board of Supervisors to thwart a state law, S.B. 9, that legalized duplexes on single-family lots and required localities to approve these duplexes "ministerially."

Ministerial approval meant the San Francisco Board of Supervisors couldn't exercise their normal powers to say no to individual, otherwise code-compliant duplex projects.

But rather than bow to the state requirements in S.B. 9, the board voted to eliminate single-family zoning altogether. Because S.B. 9 only applies to single-family-zoned properties, that decision effectively nullified the law. Duplexes were legal on paper, but the San Francisco Board of Supervisors retained the ability to reject any one individual duplex project.

These are not isolated examples either, as the HCD audit makes clear.

"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," reads the audit.

To remedy the situation, HCD issued 18 required actions, alongside another 10 recommended actions, the city needs to take to come into compliance with state housing law.

That includes the elimination of "discretionary review"—a process by which third parties can file an appeal of an otherwise code-compliant project and the Board of Supervisors can ultimately decide whether it gets permits or not.

The state is also calling on San Francisco to reform its environmental review practices. Right now, the city requires developers to study a host of environmental impacts, including shadow and wind impacts, that go beyond what (already cumbersome) state environmental law requires.

Some might remember the case of Robert Tillman, whose plans to convert a laundromat he owned in the city's Mission District into an apartment building were frustrated by the city's requirements that he do not one, not two, but three separate shadow studies.

HCD's audit makes clear that San Francisco's average three-year timeline for permitting new housing is a problem the city government has created for itself with endless, meaningless process, red tape, and delay.

Neighboring Oakland approves comparable housing projects three years faster, the report notes. Affordable housing projects that make use of a state streamlining law the city hasn't managed to hamstring can get planning approval in just three months.

There's some evidence the city is getting its act together. Sort of. In April, it finally approved the Nordstrom parking lot project. Mayor London Breed vetoed the Board of Supervisors' effort to route around S.B. 9. A new state law passed earlier this year would conceivably allow more projects to escape discretionary review and endless environmental studies.

Nevertheless, many of the things San Francisco needs to do to get its housing house in order require the Board of Supervisors to act and pass proactive, pro-supply policies. As yesterday's audit makes clear, if there's any elected body less inclined to do that, it's the San Francisco Board of Supervisors.