State warns SF it may lose funding if city doesn't meet housing goal

SAN FRANCISCO (KGO) -- You've probably heard the term "streamlining" when it comes to the permit process for new housing in San Francisco. Yet despite efforts to build 82,000 new housing units in the next eight years, San Francisco's streamlining process hasn't gone far enough to meet that goal. So, California has put San Francisco on notice by threatening to lose millions in funding.

The building process in San Francisco can be summed up in one or two words.

"Slow and convoluted," said Marc Lindsell, who like many architects and builders agrees San Francisco takes too long to approve new housing.

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When it comes to issuing new housing permits, the latest numbers show that so far this year San Francisco has granted 182 permits, whereas San Jose with a slightly larger population has issued 1,448.

"We're expected to deliver 82,000 units in the next eight years yet there is no urgency," complained Mayor London Breed.

It's this simple, San Francisco has a number of city policies and practices that are out of compliance with the state. The state describes them as old and impractical policies that are causing unnecessary delays.

For example, a project at 469 Stevenson Street has been delayed because some on the Board of Supervisors believed it would cause gentrification. So the way they halted the project was to use the California Environmental Quality Act (CEQA).

"Unfortunately, it is now being used to stop housing and other projects even if those projects are environmentally beneficial," explained State Senator Scott Wiener.

San Francisco also allows anyone to object to a project, even if it meets all the requirements. That discretionary review can take months.

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That's the case with the 2550 Irving Street project, which offers 90 units of affordable housing. A neighborhood group objected and the project was delayed pending several appeals. After losing all appeals the project has finally been given the green light to start construction in Spring of 2024.

Senator Wiener says San Francisco also violates the state's density bonus law, where builders can add more units if they add more affordable housing but San Francisco frequently adds an additional fee.

"That's, I think illegal," added Wiener.

Yet, they have been allowed. These discretionary objections and added fees are unique to San Francisco and they are intended to go away after the legislature passed SB 423 authored by Senator Wiener.

"SB 423, starting early next year will sweep away a lot of the obstacles that San Francisco has put up to block housing," explained Wiener.

The California Department of Housing and Community Development asked researchers at U.C. Berkeley to analyze San Francisco's housing approval practices and policies. This is the takeaway from that report.

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San Francisco Mayor London Breed continues to push her "Housing For All" program to make it easier to build more housing.

"The procedural rules are a problem in terms of achieving those supply goals and the production targets," said Moira O'Neill, one of the U.C. Berkeley researchers who worked on the project.

The same is true for smaller home projects.

"Some people have lost the opportunity to build just because interest rates have gone up and it's taken a year or two to get their property approved and now they can't get a loan for them to do the project anymore," said Marc Lindsell of 2M Architecture.

San Francisco's mandated 82,000 new units would bring the cost of housing in the city down.

"Because there isn't enough housing in the city of San Francisco, especially affordable housing, we are seeing homelessness climb to record levels," said Gustavo Velasquez, director of the California Department of Housing and Community Development.

But here's the rub, if San Francisco doesn't act quickly to streamline the building process, the state has said it could withhold state funding.

"But if the state pulls out, then we can kiss affordable housing in San Francisco goodbye," said Breed.

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