Long permitting process makes S.F.’s housing crisis even worse

Mayor Breed’s spiked ballot measure would have been a “small piece” of the solution

Last Wednesday, the Board of Supervisors and Mayor London Breed reenacted a now-familiar ritual.

The Mayor, along with Supervisor Ahsha Safaí, proposed a June ballot measure that would have streamlined the permitting process for certain housing developments. A majority of the Board’s Rules Committee, consisting of Supervisors Aaron Peskin and Connie Chan, summarily struck it down.

It was yet another installment in the ongoing feud between Mayor Breed and the progressive camp of the Board of Supervisors, and another chapter in The City’s continuing struggle to find consensus on housing issues.

But the squabble also highlighted a facet of housing policy that often gets overlooked in San Francisco: lengthy permitting times.

An academic study, funded in part by the California Air Resources Board and published in draft form in September, suggests this issue merits a lot more attention.

It usually takes more than two years to fully approve a housing development in San Francisco, about five times longer than in Oakland, according to the study. All of that dead time translates to higher costs to developers and thus higher rents in new buildings. And that means less new housing getting built overall, especially in litigious wealthy neighborhoods.

The study, which looks at how local policy advances the state’s climate and housing affordability goals, found that San Francisco is an “extreme outlier” in terms of housing permitting times in a data set of 20 California cities. In fact, the study found that permitting times may be just as big of a factor as zoning in holding back San Francisco’s housing production.

“When you take that long for code compliant multifamily (housing development), we do think your regulatory environment may be as prohibitive as a jurisdiction where you have very little land zoned for housing at all income levels,” says Moira O’Neill, the study’s lead author and a senior research fellow at the UC Berkeley Center for Law, Energy & the Environment.

In an analysis of 140 developments in San Francisco between 2014 and 2017, the median time between the initial project application and final entitlements (not including building permits) was nearly 27 months. That’s eight months longer than the city with the next-longest permitting time, Palo Alto, at about 19 months.

The median permitting time in Oakland was just over 5 months; in Los Angeles, 10 months; in San Diego, 14 months; and in San Jose, nearly 18 months.

The biggest reason for the discrepancy appears to be the fact that San Francisco’s city charter makes all development permits discretionary. That means every development, even ones that conform to zoning regulations, still must be individually reviewed by the Planning Department and other agencies. It also means all development projects are potentially subject to discretionary review by members of the public, adding even more time to project approvals.

In most of the 20 cities the study analyzed, at least some zoning-compliant projects can be approved “ministerially,” without additional layers of government or community involvement. However, San Francisco’s permitting process is considerably lengthier than other cities that also require discretionary review, which suggests this is “a political science question” as much as a regulatory one, O’Neill says.

The study highlights how zoning for more housing does not necessarily lead to speedier development. Nine zoning-compliant projects in the Eastern Neighborhoods Specific Plan area — a rezoning of the Mission, Potrero Hill, Dogpatch, and parts of SoMa passed in 2008 — took at least 38 months to approve.

The few projects that were proposed for wealthy neighborhoods saw by far the longest permitting times. Three market rate projects proposed in the “highest-resource neighborhoods,” as measured by economic, environmental, and educational outcomes, had a median permitting time of 90 months. The study also found that just 2% of the affordable housing units approved over the study period were in high- and highest-resource neighborhoods.

The study authors conclude that these findings have a real impact on housing availability and affordability. San Francisco’s long permitting times increase “uncertainty in the development process, limiting development to investors that can manage the risk and handle holding costs that span years,” the study reads. “This regulatory environment may have promoted development of extremely expensive housing.”

In other words, the housing that does make it out of San Francisco’s planning process can typically only be built by deep-pocketed players whose business model depends on ultra-high rents. Long permitting times also affect the total number of homes that get constructed, contributing to The City’s chronic housing shortage.

The Planning Department has long been aware of this problem

In 2014, The City’s Housing Element, a document guiding development in San Francisco for the following eight years, identified excessive discretionary reviews as a problem that needs to be addressed. The upcoming Housing Element, which is currently in draft form, calls for “streamlined review” of smaller projects that can offer affordable housing for middle class people without subsidy.

Since 2018, permit times for 100 percent affordable housing developments have improved considerably, thanks to a state law from Sen. Scott Wiener, SB 35, that exempts these projects from discretionary review.

The proposed permit streamlining ballot measure from Breed and Safaí would have fixed “a small piece of a much bigger problem,” says Chris Elmendorf, a professor of Law at UC Davis and an expert in California housing law.

The ballot measure would have required ministerial approval within 180 days of developments that are at least 25 units in size, constructed with union labor and provide at least 15% more affordable housing than typically required. Critics felt the additional affordable housing requirement was disingenuous, as it included homes affordable to those making up to 140% of area median income.

It’s hard to imagine how San Francisco will meet its state-mandated Housing Element goals — 82,000 new homes, concentrated in high-resource neighborhoods — without even more dramatic changes to permitting policy than Breed’s spiked proposal, Elmendorf said.

“The City’s going to do this West Side upzoning as part of the new housing plan, which in theory is great,” Elmendorf said. “But how do you do that in a way that works while you also have this discretionary review provision in the charter? That seems to be the totally unanswered question.”

bschneider@sfexaminer.com

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