MENU

Reason.com

Free Minds & Free Markets

This Insane Battle To Block a New Apartment Building Explains Why San Francisco and Other Cities Are So Expensive

Bob Tillman has spent nearly 5 years and $1.4 million trying to convert his laundromat into new housing.

Bob Tillman has spent nearly five years and $1.4 million on a legal battle to turn his coin-operated laundromat into an apartment building. His saga perfectly encapsulates the political dysfunction that's turning San Francisco—once a beacon for immigrants and home of the counterculture—into an exclusive playground for the ultra-wealthy.

The median cost of a single-family home in San Francisco is already five times the U.S. average, and the city now has the highest rent per square foot of any municipality in the nation. The explanation for the crisis is simple: As the city's population has surged, developers have found it nearly impossible to construct more housing. About 80 percent of San Francisco's existing buildings were already standing in 1980.

Tillman has owned his small laundromat in the Mission District for 20 years. In 2013, with the housing market hitting record highs, he decided to tear it down and build an eight-story, 75-unit apartment building. (Christian Britschgi first covered Tillman's project for Reason back in February.)

At first, it didn't seem like a controversial project: Nobody lives above the laundry, the building wouldn't displace anyone, it qualified for a density bonus and streamlined approval process under state law, and the site was already zoned for housing. While San Francisco passed a comprehensive zoning code in 1978 that restricted the construction of new housing to certain areas, mandated design elements, and limited the height of new structures in some parts of the city to just 40 feet, none of those regulations stood in the way of Tillman's plans.

"If you can't build here, you can't build anywhere," he told Reason.

But San Francisco developers are still required to get permission from city officials for any new construction, so, in early 2014, Tillman began submitting paperwork to the City Planning Department. He went through an environmental review, an application for a conditional use permit, and multiple public hearings.

In late 2017, the Planning Commission was ready to vote on Tillman's project, three and a half years after he first applied to build. That's when the real fight started.

The first hurdle came when the Planning Commission ordered a detailed historical review, based on a claim that various community groups had offices on the property in the 1970s and 80s, so the site might qualify for preservation. The resulting 137-page study cost Tillman $23,000 and delayed him an additional four months. It found that the laundry didn't merit landmark status.

But Tillman's project was still far from being approved. City law says that any individual or group, no matter where they live, can pay a $617 fee to appeal a decision by the Planning Commission. In this case, the challenge came from an organization called Calle 24, which declined Reason's interview request.

Calle 24 is one of several neighborhood groups determined to stop gentrification in the Mission, a neighborhood that's home to a working-class, Latino community. In the late 1990s, wealthier white residents starting moved in, driving up housing prices faster than in the rest of San Francisco. The group opposes market-rate housing on the grounds that it displaces low-income residents, and it set out to extract major concessions from Tillman.

Todd David, the executive director of the non-profit San Francisco Housing Action Coalition, attributes displacement in the Mission to the failure to build new housing. "When you have people with resources competing with people with fewer resources for a limited commodity, who's going to end up with that commodity?" David told Reason.

San Francisco's stringent rent control laws can slow that process. In buildings that were constructed prior to June of 1979, which describes about three-quarters of the city's existing rental properties, landlords can't increase rent by more than the rate of inflation. One year, owners of controlled units were allowed to boost rents by just 0.1 percent. In the Mission, this has allowed some long-term tenants to stay put, but rent control discourages new housing construction and merely delays the inevitable. When a tenant dies or moves out, landlords can raise the rent to market levels.

The city has tried to slow gentrification by requiring that all new buildings set aside a portion of their apartments for subsidized housing. In the case of Tillman's project, 11 percent of the units would be available only to families that earn less than 55 percent of the area's median income.

Organizers with Calle 24 said this wasn't nearly enough. At Tillman's first hearing before the Planning Commission, advocates asked for another delay to work out a deal for him to sell the laundry to a nonprofit that would use donations and government subsidies to build 100 percent affordable housing.

In November of 2017, the Planning Commission approved Tillman's project over the fierce objections of anti-development activists. After the Commissioners rejected another delay tactic, Calle 24 appealed the ruling to the San Francisco Board of Supervisors, the city's primary legislative body. That process would take another seven months.

Tillman feared his project was dead. The laudromat is in an area of the city represented by Supervisor Hillary Ronen, who's closely allied with the community groups fighting to stop the project. (Ronen didn't respond to Reason's interview request.) When the 11 members of the legislative body consider a local project, they generally defer to the supervisor who has home jurisdiction.

The Supervisors held a public hearing on the project on June 19, 2018. Four and a half years into the process, Ronen and the other Supervisors raised a new issue: Citing the California Environmental Quality Act (CEQA), an environmental law, they expressed concern that the building would cast a partial shadow on a playground next door. The Supervisors voted to delay the project.

Tillman says such shadows are not a legitimate grounds for appeal under CEQA, and that the Supervisors manufactured the issue to delay his plans further. So he sued San Francisco for $17 million in damages, or what he says his building would have generated thus far if not for the city's illegal delays. Litigation is rare tactic by San Francisco developers, who fear political retaliation on future developments. With only one project, Tillman had less to lose.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • loveconstitution1789||

    I am sure Bob Tillman participated in the Left-wing movement of San Francisco government. Maybe not but anyone who didnt sell their land and flee Stalin Francisco decades ago is fine with parts of the Socialism taking over California.

    Its still no excuse and we should fight Socialism 24/7. Reason just tends to pick bad examples for the face of outrage.

  • tlapp||

    The mistake was not selling the highly valued real estate and investing where investment is welcome. Bad decision to try and to business in San Francisco.

  • operagost||

    I wonder how many years it takes to sell a property, though.

  • Sevo||

    "I wonder how many years it takes to sell a property, though."

    "In hot markets such as San Francisco, homes may spend just a few weeks on the market before they sell."
    https://www.realtor.com/advice/sell
    /how-long-does-it-take-to-sell-a-house/

    Those are residences. Properties needing development, not so much.

  • Ama-Gi Anarchist||

    Yea, I'm finding it hard to muster up sympathy for this fellow since the likelihood he's a Proggie jackass being eaten by his own ideology. If not, then yea, he was a fool not to flee The People's Democratic Republic of San Franciscostan years ago....

  • Quo Usque Tandem||

    "city law says that any individual or group, no matter where they live, can pay a $617 fee to appeal a decision by the Planning Commission.

    How can you possibly get anything done with that on the books? Must be like working for Amazon where any asshole can anonymously throw darts at you.

  • Longtobefree||

    What part of $617 dollar fee did you not understand?

  • Unicorn Abattoir||

    I'm just curious as to how a committee (there had to have been a committee) determined the fee to be $617.

  • JFree||

    Well it's actually a $20 fee for the city, plus $666 for Satan - who then delivers 69 back to SF in appreciation for services rendered to Satan by SF over the years.

  • Quo Usque Tandem||

    Chump change, in the scheme of things. Not that "stake holders" like to actually lay out any dough to voice their concerns.

  • Trainer||

    That's why they have donors. If you play your cards right, the need for $617 to stop a building could turn into tens of thousands of dollars in donations.

  • Qsl||

    Shieeit.

    I may have to start up a collection to randomly oppose any decision by the Planning Commission.

    You can't purchase that amount of chaos so cheaply anyplace else.

  • Last of the Shitlords||

    Aplly for a grant. Turn your enemy's power against him.

  • Longtobefree||

    Come on. The guy is white. Why should he be allowed to do anything in San Francisco except pay taxes?

  • Last of the Shitlords||

    And also be the brunt of accusations of racism and white privilege.

  • Sevo||

    "The laudromat is in an area of the city represented by Supervisor Hillary Ronen, who's closely allied with the community groups fighting to stop the project. (Ronen didn't respond to Reason's interview request.) When the 11 members of the legislative body consider a local project, they generally defer to the supervisor who has home jurisdiction."

    A lot of the N-Ps in SF are funded by the city government, and they are 'friendly' (shall we say) with the supervisors. In fact some of the people who work there might even help out during the elections.

  • Agammamon||

    Something I don't understand.

    How can a laundromat be so profitable that it would be worth 1.4 million in just an attempt to get permission to build?

  • Agammamon||

    Nevermind, misread this.

  • Uncle Jay||

    Ten thousand dollars a month is a small price to knowing there are city and county bureaucrats and politicians can now afford their third luxury car, their fourth vacation home in the Bahamas and enough money in their pockets to last them for the next hundred thousand years.
    No sacrifice is too great to ensure our ruling elites are having a comfortable life at our expense.

  • Alsø alsø wik||

    I think my favorite part is the $23K and four months for a 137 page report on whether it's an historical site when *it's already been a laundromat for 20 years*.

  • Trainer||

    The 70's and 80's were incredibly historic times.

  • JeffreyL||

    +1

  • operagost||

    Harvey Milk forgot his socks in one of the dryers and never came to pick them up.

  • operagost||

    LOL, yes, I know he was killed in 1978 but I was shooting from the hip.

  • Trollificus||

    Did you eat too many Twinkies or something?

  • You're Kidding||

    Gentrification is the best thing that can happen to much of SF. It really isn't what people think it is. That 80%+ housing built prior to 1980 is pretty shitty and even squalid. It is absolutely not the highest and best use of the land at all.

    There are whole swaths of SF residential housing that should be bulldozed and replaced with high density, high rise apartments.

    On the east coast, the weather tends to make this happen.

    Full disclosure, I'm fourth generation San Franciscan.

    For any who want to "preserve" the mission as it's been for the previous 50 years, I dare you to go back to 1980 and walk SOMA after dark.

    People can be so stupid!

  • Earth Skeptic||

    I am so ready for the big earthquake that turns SFC into a smoking rubble pile. Then the show will be even better.

  • miketol||

    If San Francisco had the same city government in 1906 as it does today; they would still be rebuilding from that one.

  • Robert||

    How does gentrif'n drive up housing prices, when it adds to the housing stock? As near as I can tell, improving the surroundings make the place more desirable, thereby increasing quantity demanded more than the increase in quantity supplied. Am I right? But how could that be true in SF, where housing prices are already so high? Can they go even higher?

  • CE||

    Yeah, but you're using logic, and logic is racist and classist.

  • MJBinAL||

    No, no, no, it is MATH that is racist and classist. (seriously, the proggies have claimed this to be true)

  • MatthewSlyfield||

    "How does gentrif'n drive up housing prices"

    Because it increases demand on an artificially restricted supply.

  • MoreFreedom||

    "'When you have people with resources competing with people with fewer resources for a limited commodity, who's going to end up with that commodity?' David told Reason."

    Seems David thinks because some "people with resources" want to live in SF in homes that "people with fewer resources" also want, we need to make sure no one makes more homes/apartments available to lower the level of conflict so people can get what they want. In short, we're using government force to screw the people with resources because we're envious.

  • Best Newborn Photographer||

    Look good, but you can't purchase that amount of chaos so cheaply anyplace else.

  • flyfishnevada||

    I'm having a difficult time seeing how building more housing in a city with a housing shortage is a bad thing. This looks like end game stuff when it comes to overzealous city planning. You just get to a point where you've planned the crap out of everything and it all grinds to a halt under those burdens. Nobody gets what they want but the advocates and the bureaucrats just keep blocking projects because they've forgotten what the objective is.

  • CE||

    it's already zoned for housing. and he still can't build housing there without a million-dollar legal battle that takes years.

  • Trainer||

    What's the second rule of holes?

  • MatthewSlyfield||

    See the first rule.

  • mpercy||

    After you stop digging, you're still in the hole.

  • polijunkie100||

    So the only way San Francisco will be able to build new housing is when the Big One comes along and knocks the old structures flat.

  • MatthewSlyfield||

    Nope, because then a non-profit advocacy group will pop up demanding that the ruins of San Francisco be preserved as is as a monument/mass-grave-site.

  • Sevo||

    If you lived here, you'd find few people laughing at that and many nodding agreement.

  • Eeyore||

    Reminds me of Alcatraz, which is ruin preserved as a monument to the past. They even spend money to stabilize it in its current state of decay.

  • Wizard4169||

    Or else demand that every structure be rebuilt exactly as it was before the quake, in the name of historical preservation.

  • Trollificus||

    I liked that part where that Ronen bitch accused him of managing his property "FOR HIS OWN BENEFIT"!! As if that were the revelation of some damning secret motivation. Wow.

  • ||

    I thought the first rule of holes was you don't talk about holes.

  • ||

    Time to do build something that would be incredibly offensive to the groups blocking it but still arguably legal. Like a big giant neon dick anally raping the Statue of Liberty wearing a Calle-24 t-shirt with a 2-story #MeToo billboard underneath.

    The activists will be simultaneously insulted but also wouldn't dare take it down because they have to believe the Statue.

  • Sevo||

    I'm going to assume I'm posting to those who figure the market is nearly always right. You might think a Telsa is a piece of shit, but the market, distorted by the gov't and the social signalling, means that a Tesla is worth $100K or so; The market has spoken.
    Tillman bought 20 years ago. I applaud him for making the statement, but he could off the property to a developer right now for probably 10-20 times what he paid 20 years ago.
    The SF city government is among the worst in the US:
    "The Worst-Run Big City in the U.S."
    [...]
    "It's time to face facts: San Francisco is spectacularly mismanaged and arguably the worst-run big city in America."
    https://archives.sfweekly.com/sanfrancisco/the-
    worst-run-big-city-in-the-us/Content?oid=2175354
    That pathetic excuse for a government has screwed the market so far that a rental property is worth 25%-50% empty than fully rented.
    But as I type, I look over my right shoulder into the brightly-lit skyline.Aafter enjoying a crab/sour-dough/dry-white lunch from a restaurant overlooking the bay.
    The city government has a built in buffer; it takes a LOT of fucking up to fuck up one of the most beautiful places in the world. And they have not yet done so.

  • gordo53||

    Perhaps the lawsuit will generate more revenue than the proposed apartment building. The city owes the guy some money. Not much doubt about that.

  • ||

    the building would cast a partial shadow on a playground next door

    But that's for the children: that way the little tykes don't get melanoma.

  • ejhickey||

    "When a tenant dies or moves out, landlords can raise the rent to market levels."

    An incentive program.

  • Business Broker Maryland||

    Yes, you just get to a point where you've planned the crap out of everything and it all grinds to a halt under those burdens.

  • Flinch||

    Politicians are locked into a love of stasis. As population grows and technology changes, this creates a scarcity of resources problem, which empowers them by default without any official act. Any wonder they live in fear of climate change? Change means... they lost control. Boo hoo.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online